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MATSA RESOURCES LIMITED — Capital/Financing Update 2018
Jul 17, 2018
65296_rns_2018-07-17_1fe21f5f-04db-4710-96ba-b017cf23b800.pdf
Capital/Financing Update
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Matsa Resources Limited
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LIMITED ABN 48 106 732 487
ASX Announcement
18[th] July 2018
Mining to Commence
Red Dog Gold Project
Highlights
CORPORATE SUMMARY
Executive Chairman
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Red Dog Gold deposit gets green light with mining activities to commence early August and to be completed within 16 weeks
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Mining study parameters for the Red Dog gold mine are:
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All in sustainable cash cost (AISC) of A$1,294 per oz gold
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Cash surplus A$5.4M after all operating costs
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Total production 182,000t @ 2.5g/t Au (13,400 recovered oz gold)
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Total material movement 0.6Mt at a strip ratio of 2.4:1
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AngloGold Ashanti to buy all ore produced through an ore purchase agreement with ore treated at SDGM
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All statutory and regulatory approvals are in place
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Contracts for mining and haulage being finalised
Paul Poli
Director
Frank Sibbel
Director & Company Secretary
Andrew Chapman
Shares on Issue
176.93 million
Unlisted Options
13.70 million @ $0.25 - $0.30
Top 20 shareholders
Hold 51.68%
Share Price on 17[th] July 2018
15.5 cents
Market Capitalisation
$27.42 million
Head Office: Suite 11, 139 Newcastle Street, Perth Western Australia 6000 Tel : +61 8 9230 3555 Fax: +61 8 9227 0370 Bangkok Office: Unit 1801, Pacific Place 2, 142 Sukhumvit Road, Klongtoey, Bangkok 10110 Tel : +66 0 2653 0258 Fax : +66 0 2653 0258 [email protected] www.matsa.com.au
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Matsa Resources Limited
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Matsa Resources Limited (“Matsa” or “the Company” ASX: MAT) is pleased to report the results of a mining study at its Red Dog gold deposit. The study shows that the mine will produce a cash surplus of A$5.4M over a period of 3 months which includes all mining and haulage of gold ore to AngloGold Ashanti Australia Limited’s (AGAA) Sunrise Dam Gold Mine (SDGM) treatment facilities.
The board of Matsa has decided to commence mining at the Red Dog gold deposit as soon as possible. The capital and operational cash requirements of the mine can be funded by Matsa’s existing cash reserves without the need to raise any additional capital.
Mining Study Overview
Matsa has completed a mining study on the Red Dog gold depsoit. The mine has a short mine life of only 3 months, with 1 month for establishment prior to mining and is expected to generate a cash surplus of A$5.4M at a gold price of A$1,700 per oz. All necessary approvals and ore purchase agreement are in place, with contracts for mining and haulage being finalised. Mining activities will commence in early August.
Key statistics of the Red Dog gold project are presented in Table 1 below.
| KeyProject Statistics | |
|---|---|
| Mineral Resources | |
| Indicated Resources: 333,000t at 2.3g/t Au | 24,800 oz |
| Inferred Resources: 35,000t at 1.4g/t Au | 1,500 oz |
| Total Resources: 368,000t at 2.2g/t Au | 26,300 oz |
| Ore Reserves | |
| Probable: 182,000t at 2.5g/t Au | 13,400 oz recovered |
| Production Summary | |
| Mine Plan: 182,000t at 2.5g/t Au | 14,500 oz |
| Life of Mine,mining (months) | 2 |
| Life of Mine,incl. haulage & rehab(months) | 4 |
| StripRatio(Waste : Ore) | 2.4 : 1 |
| Metallurgical Recovery | 92.5% |
| Gold Mined(oz) | 14,500 oz |
| Gold Produced(oz) | 13,400 oz |
| Project Economics | |
| Gold Price(A$/oz) | 1,700 |
| Revenue(A$M) | 22.7 |
| Costs(A$M) | 17.3 |
| Cash Surplus(A$M) | 5.4 |
| AISC(A$/oz) | 1,294 |
Table 1: Key Project Statistics
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Matsa Resources Limited
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Forward Looking and Cautionary Statements
Information included in this release constitutes forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue” and “guidance” or other similar words, and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs.
Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, staffing and litigation. Forward looking statements are based on the company and its management’s assumptions made in good faith relating to the financial, market, regulatory and other relevant environments that exist and effect the company’s business operations in the future. Readers are cautioned not to place undue reliance on forward looking statements.
Forward looking statements are only current and relevant for the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the Company does not undertake any obligation to publicly update or revise any of the forward looking statements or advise of any change in events, conditions or circumstances on which such statement is based.
The Company believes that it has a reasonable basis for making the forward-looking statements in this announcement, including with respect to any production targets and financial estimates, based on the information compiled in this announcement. Key aspects of the mining study were compiled by specialist consulting groups, each with a particular expertise for the area of study reported. The Company considers that the investigations and studies carries out for this study comply with the requirements of a mining study.
Project Background
Red Dog is 100% owned by Matsa Resources Limited and located just north of Mount Celia Road and west of the Saracen Haul Rd near Mt Howe Well, approximately 25km west of Matsa’s Fortitude Gold Mine, 7km west of Second Fortune Gold Mine and 10km south of Butchers Well gold deposit. The tenement package comprises 3 mining licences and associated Miscellaneous Licences (Figure 1).
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Matsa Resources Limited
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Figure 1: Red Dog Location Plan
Study Parameters
The Red Dog Mining Study has been based on the following parameters:
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The JORC 2012 Red Dog Mineral Resource Estimate of 369,000t at 2.2g/t for 26,300oz Au (MAT announcement to the ASX dated 18th January 2018) .
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Open pit and haulage operation conducted by contractors
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Purchase of ore by AGAA and processed at AGAA’s SDGM processing facility
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Matsa will manage all mining activities
Mining Study Participants
The study was managed by Matsa. Contributing consultants include:
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Optiro Consulting - Resource Estimation and Pit Optimisations
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Orelogy - Mine Design
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Peter O’Bryan & Associates - Geotechnical
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Macromet and ALS Metallurgy - Metallurgy
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AQ2 - Water Management
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Gerrard Consulting - Environmental Management
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Terrestrial Ecosystems - Fauna, Short Range Endemics and Subfauna
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Plantecology - Flora
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Landloch - Waste Rock Design
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GLSC and Snappy Gum - Heritage
Key Outcomes
Key outcomes for the Mining Study are provided in Table 1. The Ore Reserve, classified in accordance with the JORC Code (2012), constitutes almost 100% of the Mine Plan, with only 100t for 10 oz Au within the pit design deriving from Inferred Resources. As this Inferred Resource material is less than the rounding error, it has not been reported in the key statistics.
| KeyProject Statistics | |
|---|---|
| Mineral Resources | |
| Indicated Resources: 333,000t at 2.3g/t Au | 24,800 oz |
| Inferred Resources: 35,000t at 1.4g/t Au | 1,500 oz |
| Total Resources: 368,000t at 2.2g/t Au | 26,300 oz |
| Ore Reserves | |
| Probable: 182,000t at 2.5g/t Au | 13,400 oz recovered |
| Production Summary | |
| Mine Plan: 182,000t at 2.5g/t Au | 14,500 oz |
| Life of Mine,mining (months) | 2 |
| Life of Mine,incl. haulage & rehab(months) | 4 |
| StripRatio(Waste:Ore) | 2.4 : 1 |
| Metallurgical Recovery | 92.5% |
| Gold Mined(oz) | 14,500 oz |
| Gold Produced(oz) | 13,400 oz |
| Project Economics | |
| Gold Price(A$/oz) | 1,700 |
| Revenue(A$M) | 22.7 |
| Costs(A$M) | 17.3 |
| Cash Surplus(A$M) | 5.4 |
| AISC(A$/oz) | 1,294 |
Table 2: Key Project Statistics
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Project Approvals
All regulatory approvals for mining are in place and include:
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Native Vegetation Clearing Permit
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Mine Plan
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Mine Closure Plan
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Mining Proposal
Mineral Resource and Geology
The Red Dog Mineral Resource Estimate totals 369,000t at 2.2g/t for 26,300oz Au (MAT announcement to the ASX dated 18th January 2018) .
| Material | Indicated | Inferred | Total |
|---|---|---|---|
| Tonnes t Grade g/t Gold ounces |
Tonnes t Grade g/t Gold ounces |
Tonnes t Grade g/t Gold ounces |
|
| Oxide Transitional/Fresh Total |
2,000 1.3 100 330,000 2.3 24,700 333,000 2.3 24,800 |
2,000 0.9 100 33,000 1.4 1,500 35,000 1.4 1,500 |
5,000 1.1 200 363,000 2.2 26,200 368,000 2.2 26,300 |
Table 3: Mineral Resources Jan 2018 - reported at 0.5g/t Au cut-off and no pit constraints
Red Dog, formerly known as Tin Dog, was discovered by Whim Creek Consolidated in 1984. The Red Dog project occurs within the Archaean greenstone belt, consisting of a predominately intermediate to mafic volcanic sequence with interbedded sediments and Banded Iron formations (BIF). In 1985, Hallberg identified the N-NNW trending Mt Hornet Fault to the west of the Red Dog project as a complex zone of ductile deformation. Local geology at Red Dog comprises basalt and andesite. In the volcanics, mineralisation appears to be associated with an increase in the abundance quartzcarbonate veining. The highest grades are found in crackle breccia. Hosted in silica washed basalt, mineralisation is related to zones of intense micro-fracturing with hematite, pyrite, silica flooding and carbonate alteration halos. Typically, the ore is lighter coloured than the surrounding basalt due to alteration. Gold mineralisation appears to be flat lying, 2 - 3m thick and typically 6 - 7m below surface.
Mining
Material Mining Assumptions
The output from this study carries a confidence level of +/- 20%.
An allowance has been made for in pit grade control and is applied on a cost per tonne of ore mined basis.
Classification Criteria
The 2018 Red Dog Mineral Resource estimate was used to determine the ore reserves. The Ore Reserves have been estimated from the ore classified as indicated only, there has been no Inferred Ore included in the Ore Reserves.
Mining will be carried out by a mining contractor with technical and management direction from Matsa. The mine consists of one open pit and incorporates drill and blast, load and haul and ore and waste management tasks.
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Material movement is scheduled and costed based on quotes received during a tender process. Mining is scheduled to operate at approximately 30,000 bank cubic metres (BCM) per month, using a 120 - 130t excavator and a fleet of 777 dump trucks. Pre-mining activities include upgrade of the haul route and site preparation. Mining will commence prior to ore haulage in order to construct a manageable run of mine (ROM) stockpile. Mining of the open pit is scheduled to take 2 months to complete with ore haulage to the mill continuing for a further month.
All ore mined will be hauled from the local ROM to the SDGM external treatment facility using standard triple road-trains along a privately held haul road. The study was based on a FIFO workforce working on single shift, which will be accommodated at the Company’s 100% owned Red October Village and commuting between the Red October Village and the minesite.
Dilution parameters applied to the Mineral Resource estimate as modifying factors for Reserve calculation include a mining dilution of 15% and a mine recovery of 95% being used in the study. This is considered appropriate for a flat lying deposit.
Financial modelling results indicates the project shows a positive cash flow with or without the inferred material as this material totals only 10 oz Au and does not significantly impact project financials.
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Figure 2: Red Dog Site Layout Plan
Geotechnical
The Red Dog pit is less than 20m deep and comprises largely of strong transitional to fresh material. Transitional material outcrops at surface over much of the deposit with oxide material restricted largely to the periphery of the mineralised area. Peter O’Bryan and Associates completed a desktop geotechnical study and concluded walls up to 20m face height can be up to 70[o] angle and constructed without berms.
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Ore Reserves and Mine Plan
The Ore Reserves are reported according to the JORC Code 2012 Edition. The Indicated category portion of the Mineral Resource estimate (Table 3) was converted to Probable Ore Reserves after material modifying factors were considered. Those modifying factors are discussed in this report and include mining method, geotechnical considerations, metallurgy and ore processing, infrastructure, transport and services and costs. Confidence in these factors is considered consistent with a Probable Ore Reserve classification. Mineral Resource estimates are reported inclusive of those Mineral Resources converted to Ore Reserves. The Probable Ore Reserve estimate is provided in Table 4.
Ore Reserves are based on a gold price of A$1,700/oz Au. Ore dilution of 15% and ore loss of 5% has been assumed. A mill recovery of 92.5% has been used in metal estimations.
| Material | Tonnes | Gold (g/t) | Ounces Au Recovered |
|---|---|---|---|
| Oxide | - | - | - |
| Transitional | 127,000 | 2.5 | 9,300 |
| Fresh | 55,000 | 2.4 | 3,900 |
| Total | 182,000 | 2.5 | 13,400 |
Table 4: Red Dog Probable Ore Reserve
Figures are rounded to reflect appropriate levels of confidence. Apparent differences may occur due to rounding
The Mine Plan is presented in Table 5. A minor amount of inferred material totalling 110t for 10 oz Au is included in the mine plan. This amount is within the rounding errors of the Ore Reserve and Mine Plan estimates.
| Material | Tonnes | Gold(g/t) | Ounces Au |
|---|---|---|---|
| Oxide | - | - | - |
| Transitional | 127,000 | 2.5 | 9,300 |
| Fresh | 55,000 | 2.4 | 3,900 |
| Total | 182,000 | 2.5 | 13,400 |
Table 5: Red Dog Mine Plan (includes Inferred Resource Material)
Figures are rounded to reflect appropriate levels of confidence. Apparent differences may occur due to rounding
Metallurgy and Ore Processing
Red Dog metallurgical work was managed by Macromet using ALS Metallurgical Laboratories for testwork. A total of 8 composites of Red Dog ore were collected for analysis for a range of assay grades and for transitional and fresh rock types.
Testwork recoveries using AGAA’s Sunrise Dam testwork methodology and including gravity, floatation, regrind and cyanidation processing techniques provided 92% - 95% gold recovery. The weighted average of 92.5% recovery has been used in financial modelling.
Bond Ball Mill Work indices ranged from a moderate 14.4 kW/t (SPRK20) to very hard characteristics of 23.4 kWh/t (Fresh) and generally increasing with depth of the ore type. The majority ore type (SPRK5) BBMWi value of approximately 20 kWh/t indicates hard ball milling characteristics.
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Gravity Au recovery to amalgam at the tested 140 μm P80 grind size demonstrated relatively consistent extraction (13% to 31%) for an average of approximately 21% for the entire programme.
Ore processing will be via AGAA’s Sunrise Dam processing facility. Terms for ore purchase have been agreed and financial modelling has been based on the agreed parameters. No deleterious elements were noted.
Infrastructure, Transport and Services
Infrastructure for mining will be mobilised by the mining contractor and will include workshop, offices and facilities, power and fuel storage. All facilities will be removed and land rehabilitated post mining.
The Red Dog open pit is above the water table and while there is no dewatering requirements, water will be required for dust suppression. An agreement to take water for dust suppression from the nearby Second Fortune mine is in place.
The haul route to the SDGM mill is based on existing roads. Upgrade of these roads is required to allow for haulage and these works have been costed and scheduled as part of the study.
Accommodation will be at Matsa’s Red October Village, located 30km by road to the north.
Costs
All costs have been considered as operating costs due to the short mine life. Total cost to mine is A$17.3M. Mining and haulage costs are based on received quoted rates. Flights, accommodation, services and other non-mining costs are derived from costs incurred at Mata’s recently completed Fortitude trial mine. There are no sustaining capital costs. A breakdown of costs is shown in Figure 3.
Approvals and Permitting
During the mining study, Matsa lodged all necessary applications with the appropriate authorities. On 7 June 2018, Matsa advised that it had received approval from the Department of Mines Industry, Regulation and Safety (DMIRS) for its Mining Proposal, Mine Closure Plan and Project Management Plan for its Red Dog Gold mine and that all regulatory approvals had now been received.
Land Tenure and Social Heritage
The Mineral Resource and proposed mining area covers 1 granted mining lease. Matsa Gold Pty Ltd (a wholly owned subsidiary of Matsa) is the 100% owner of the tenements which are located on the Mt Yundamindra pastoral lease.
Mr R Hodges and Mr M Hodges hold a 2.25% net smelter royalty for production up to 10,000oz of gold and a 1.5% net smelter royalty thereafter. No other 3[rd] party royalties apply apart from the normal state government royalties.
There are no native title claims over the area. The heritage survey located three small heritage sites outside of the operational envelope that are planned to be protected.
There are no impediments to obtaining a license to operate.
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Figure 3: Cost breakdown
Mine Schedule
The mine schedule is based on equipment and schedules supplied during the tender process. Mining of the single pit is expected to occur over 8 – 9 weeks on single shift producing 13,400 ounces of gold at an All in Sustainable Cost (AISC) of $1,294 per recovered ounce. The same timeframe for haulage to the SDGM processing facility via a delayed start until ROM stockpiles are established is expected (Figure 4).
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Figure 4: Mine Schedule
Cut-off Grade
The Ore Reserve has been reported at a cut-off grade of 1.5g/t Au. The Ore Reserve cut-off grade was based on an optimisation using mine and mill costs, mining and mill recoveries and an open cut mining method as detailed herein. A gold price of A$1,700 was used.
Sensitivity Analysis
Sensitivity analysis for gold price, grade and costs were estimated at +20% to -20% variation to base case assumptions. The analysis indicates the project is viable within these sensitivities.
| OperatingSurplus($M) | OperatingSurplus($M) | OperatingSurplus($M) | |||
|---|---|---|---|---|---|
| Parameter | 80% | 90% | Base Case | 110% | 120% |
| Au Price (A$/oz) - Base Case A$1700 |
3.1 | 4.2 | 5.4 | 6.6 | 7.7 |
| Grade (g/t) - Base Case 2.5g/t Au |
1.1 | 3.3 | 5.4 | 7.6 | 9.7 |
| Costs ($t) - Base case A$17.3M |
8.8 | 7.1 | 5.4 | 3.7 | 2.0 |
Table 6: Sensitivity Analysis (A$M)
Funding Requirements
Matsa is a well funded and diversified mineral exploration and mining company. Matsa has a market capitalisation of A$27.4M and cash and liquid assets of approximately A$8.8 million as at 30[th] June 2018.
Matsa has the financial capacity to internally fund the capital and maximum cash requirements of this project.
Opportunities
The mining study represents an opportunity for Matsa to create a significant low risk cash surplus. By opening up the ore deposit there is also the opportunity to learn the detailed geological controls of the mineralisation to assist in further exploration.
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Risks
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A key number of risks that are normal for this type of operation have been identified, such as:
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Reduction in the $A gold price will negatively impact on revenue
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Confidence in the geological model
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Achieving the unit cost mining rates as used in the study
For further information please contact:
Paul Poli Executive Chairman
Phone +61 8 9230 3555 Fax +61 8 9227 0370 Email [email protected] Web www.matsa.com.au
Competent Person Statements
The information in this report that relates to Exploration results is based on information compiled by Mark Csar, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mark Csar is a full time employee of Matsa Resources Limited. Mark Csar has sufficient experience which is relevant to the style of mineralisation and the type of ore deposit under consideration and the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mark Csar consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The information contained in this ASX release relating to Mineral Resources has been compiled by Susan Havlin of Optiro Ltd. Susan Havlin is a Member of The Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Susan Havlin consents to the inclusion in the report of the matters based on her information in the form and context in which it appears.
The information in this report that relates to Ore Reserve results is based on information compiled by Mr Frank Sibbel, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Sibbel is a non-executive director of Matsa Resources Limited. Mr Sibbel has sufficient experience which is relevant to the style of mineralisation and the type of ore deposit under consideration and the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Sibbel consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
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Appendix 1 - Matsa Resources Limited – Red Gold Deposit
Section 1 Sampling Techniques and Data
(Criteria in this section apply to all succeeding sections.)
| Criteria | JORC Code explanation Commentary |
|---|---|
| Sampling techniques |
Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling. RC drilling using cyclone split on 1m intervals. Samples typically 2- 3 kg and pulverized to 50g charge for FA-AAS. Historical: RAB and RC drilling sampled with drill chips. RAB sampled with 2 to 5m composites with 1m splits in areas of elevated results. RC drilling sampled at 1m intervals. Samples were sub-split for assay by Aqua Regia or Fire assay. Measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used. Aspects of the determination of mineralisation that are Material to the Public Report. In cases where ‘industry standard’ work has been done this would be relatively simple (eg ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information. |
| Drilling techniques |
Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc). RC drilling using face sampling bit. Historical: Details of pre 2015 (Billiton/Newmont/SOG) drilling by RAB, RC and Diamond methods unknown. Post 2015 RAB drilling carried out with small scale rig using 60mm drill bit Post 2015 RC drilling carried out by 5 inch face sampling bit with KDA 250 RC Rig. |
| Drill sample recovery |
Method of recording and assessing core and chip sample recoveries and results assessed. Recoveries visually assessed for weight consistency. Historical: No records of recovery noted is records. Shallow drilling is expected to have high recoverybased on nearbydrillingexperience. |
| Measures taken to maximise sample recovery and ensure representative nature of the samples. Geologist on rig whilst drilling. On-rig assessments and remedy, if required, completed at rig. Historical: No record noted. |
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| Criteria | JORC Code explanation | JORC Code explanation | Commentary | |
|---|---|---|---|---|
| | Whether a relationship exists between sample recovery and grade and | No relationship between recovery and grade noted in QA/QC review. | ||
| whether sample bias may have occurred due to preferential loss/gain of | Historical: Not determined | |||
| fine/coarse material. | ||||
| Logging | | Whether core and chip samples have been geologically and geotechnically | Chips have been logged for, but not limited to qualities including lithology, | |
| logged to a level of detail to support appropriate Mineral Resource | hardness, oxidation and weathering. This detail is considered appropriate for | |||
| estimation, mining studies and metallurgical studies. | ongoing studies. Logging in generally qualitative in nature. Holes have been chip | |||
| | Whether logging is qualitative or quantitative in nature. Core (or costean, | trayed for reference. All holes and intervals have been logged. | ||
| channel, etc) photography. | Historical: A limited number of holes have qualitative geological logging. A | |||
| selected number of samples have been petrographically described in detail. | ||||
| | The total length and percentage of the relevant intersections logged. | |||
| Sub-sampling | | If core, whether cut or sawn and whether quarter, half or all core taken. | RC chips sub-sampled using cone splitter and sampled dry. Splitter regularly | |
| techniques and | checked for cleanliness and correct operation. Duplicates taken 1:20. QAQC | |||
| sample preparation |
| If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry. |
samples taken at 1:20. Sample weights of ~3kg documented are considered adequate. All samples were dry. Historical: NQ Diamond holes are RC pre-collared in the area of interest (top |
|
| | For all sample types, the nature, quality and appropriateness of the sample | 50m). Data on subsampling methodology of holes drilled prior to 2015 is absent. | ||
| preparation technique. | Some early historical drill programs report selective sampling, assumedly on | |||
| | Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples |
visual veins. This may limit validity of some intersections. Since 2015, holes DDRC21 to 33 were spear sampled and DDRC34 to 57 were riffle split. Sample prep in Lab is standard for all assay procedures. Samples, where recorded, were |
||
| | Measures taken to ensure that the sampling is representative of the in situ | sent to industry labs. Anomalous composites repeated with individual 1m splits. | ||
| material collected, including for instance results for field duplicate/second- | Unknown Sample weights of ~3kg documented are adequate for fine gold. | |||
| half sampling | ||||
| | Whether sample sizes are appropriate to the grain size of the material being | |||
| sampled. | ||||
| Quality of | | The nature, quality and appropriateness of the assaying and laboratory | Samples were dispatched for gold determination by Fire Assay with AAS finish, | |
| assay data and | procedures used and whether the technique is considered partial or total. | which are industry standard processes. Standards/blanks used for QAQC at 1:20 | ||
| laboratory | sampling frequency. No significant bias noted. | |||
| tests | Historical: Assay accuracy determined by laboratory QACQ processes. Standards, | |||
| blanks and duplicates are incorporated in the sample submissions to quantify | ||||
| any accuracy or precision issues. Historical: Samples were dispatched for low | ||||
| level gold determination by Fire Assay or Aqua Regia, which are industry | ||||
| standardprocesses. Assayaccuracydetermined bylaboratory QACQ process. | ||||
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| Criteria | JORC Code explanation Commentary |
|---|---|
| Drilling QAQC not recorded. Lab reports show standard industry QA QC procedures in place. |
|
| For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc. Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) andprecision have been established. |
|
| Verification of sampling and assaying |
The verification of significant intersections by either independent or alternative company personnel. All results were checked by senior staff. Several holes were twinned adjacent to historical RC holes. Data logged electronically on site with automated validation procedures and data entry checks. Data transferred to company database on completion of program. No adjustments to assay data made. Historical: Composites validated by individual 1m splits. No twinned holes carried out. Historical data transferred from publically available reports. Post 2015 data available as hardcopy reports. No amendments to assay data have been made. The use of twinned holes. Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols. Discuss any adjustment to assay data. |
| Location of data points |
Accuracy and quality of surveys used to locate drill holes (collar and down- hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation. Holes marked out prior to drilling using decimetre accuracy DGPS (+/- 0.3m). Holes not surveyed post drilling. Historical hole collars surveyed using decimetre accuracy DGPS where collars reliably located. Red Dog is located in GDA94 UTM co-ordinate system Zone 51. A local 2 point grid transformation is used: Local MGA51 East Point 1 10539.3 438407.6 North Point 1 11020.5 6749871.0 East Point 2 11037.4 439039.9 North Point 2 10384.7 6749387.8 Topographic control via decimetre accuracy DGPS is considered suitable for level of control required. Specification of the grid system used. Quality and adequacy of topographic control. |
| Data spacing and distribution |
Data spacing for reporting of Exploration Results. Data spacing over main mineralised area is 20m x 20m, surrounded by 40 m x 40m away from mineralised area. Some historical RC drill spacing has been brought down to 10m x 10m. Samples have been composited for reporting results as appropriate using 0.5g/t Au lower cut. RC sampling was carried on a 1m basis. |
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| Criteria | JORC Code explanation | JORC Code explanation | Commentary |
|---|---|---|---|
| | Whether the data spacing and distribution is sufficient to establish the | ||
| degree of geological and grade continuity appropriate for the Mineral | |||
| Resource and Ore Reserve estimation procedure(s) and classifications | |||
| applied. | |||
| | Whether sample compositing has been applied. | ||
| Orientation of | | Whether the orientation of sampling achieves unbiased sampling of possible | RC Drilling was vertical and tests a relatively flat lying basalt/andesite unit. The |
| data in relation | structures and the extent to which this is known, considering the deposit | minimum 1m sampling interval may have diluted parts of the mineralised unit to |
|
| to geological | type. | this minimum sampling width in parts and on edges of the unit. Historical drilling | |
| structure | data was also to a minimum 1m sampling interval. No bias, apart from that | ||
| mentioned herein is thought to have occurred due to orientation of drilling | |||
| direction. | |||
| | If the relationship between the drilling orientation and the orientation of key | ||
| mineralised structures is considered to have introduced a sampling bias, this | |||
| should be assessed and reported if material. | |||
| Sample | | The measures taken to ensure sample security. | Samples transported to assay lab were collected from Fortitude site by |
| security | laboratory staff. Samples numbered and recorded. Historical: Unknown-Post | ||
| 2015 samples are either on site or relocated to another accessible area. | |||
| Audits or | | The results of any audits or reviews of sampling techniques and data. | No audit carried out. |
| reviews |
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Section 2 Reporting of Exploration Results
(Criteria listed in the preceding section also apply to this section.)
| Criteria | JORC Code explanation | Commentary | |
|---|---|---|---|
| Mineral | Type, reference name/number, location and ownership including | Tenements M39/38, M39/1009 and M39/1100 are live and held by M and R | |
| tenement and | agreements or material issues with third parties such as joint ventures, | Hodges. The tenements are operated by Matsa Resources under an option to | |
| land tenure | partnerships, overriding royalties, native title interests, historical sites, | purchase agreement with the tenement holder. There are no known | |
| status | wilderness or national park and environmental settings. | impediments to operating in the area. | |
| The security of the tenure held at the time of reporting along with any | |||
| known impediments to obtaining a license to operate in the area. | |||
| Exploration done | Acknowledgment and appraisal of exploration by other parties. | Previous explorers include CSR, Pennzoil-Vam JV, Shell Company Australia, | |
| by other parties | Billiton Australia (1985 – 1990), Billiton-Newmont Australia JV (1990 – 1992), M | ||
| Hodges – Welcome Stranger Mining (1993), M. Hodges (1994 – 1998), Goldfields | |||
| Kalgoorlie (1999), Sons of Gwalia (2000 – 2003), Wilson (2004-2011) Saracen | |||
| (2012- 2015),M. Hodges(2015 – 2017). | |||
| Geology | Deposit type, geological setting and style of mineralisation. | The deposit type being sought at Red Dog are orogenic syntectonic gold | |
| mineralisation. Gold is interpreted to be associated with major NW striking shear | |||
| zones and flat lyinglocalised shearingand alteration. | |||
| Drill hole | A summary of all information material to the understanding of the | See Appendix 2 for listing of drill holes. | |
| Information | exploration results including a tabulation of the following information for | ||
| all material drill holes: | |||
o easting and northing of the drill hole collar |
|||
o elevation or RL (Reduced Level – elevation above sea level in metres) of |
|||
| the drill hole collar | |||
o dip and azimuth of the hole |
|||
o down hole length and interception depth |
|||
o hole length. |
|||
| If the exclusion of this information is justified on the basis that the | |||
| information is not material and this exclusion does not detract from the | |||
| understanding of the report, the Competent Person should clearly explain | |||
| why this is the case. | |||
| Data | In reporting Exploration Results, weighting averaging techniques, | Intercepts are weight averaged with a lower cut of 0.5g/Au and no upper cut. | |
| aggregation | maximum and/or minimum grade truncations (eg cutting of high grades) | ||
| methods | and cut-off grades are usually material and should be stated. | ||
| Where aggregate intercepts incorporate short lengths of high grade | |||
| results and longer lengths of lowgrade results, theprocedure usedfor such | |||
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| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| aggregation should be stated and some typical examples of such | ||
| aggregations should be shown in detail. | ||
| The assumptions used for any reporting of metal equivalent values should | ||
| be clearly stated. | ||
| Relationship | These relationships are particularly important in the reporting of | All intercepts quoted relate to downhole depth. The mineralised unit is flat to |
| between | Exploration Results. | gently dipping. Intercepts in are expressed in downhole metres. |
| mineralisation | If the geometry of the mineralisation with respect to the drill hole angle is | |
| widths and | known, its nature should be reported. | |
| intercept lengths | If it is not known and only the down hole lengths are reported, there should | |
| be a clear statement to this effect (eg ‘down hole length, true width not | ||
| _known’). _ | ||
| Diagrams | Appropriate maps and sections (with scales) and tabulations of intercepts | Diagrams have been included in the text. |
| should be included for any significant discovery being reported These | ||
| should include, but not be limited to a plan view of drill hole collar locations | ||
| and appropriate sectional views. | ||
| Balanced | Where comprehensive reporting of all Exploration Results is not | Refer Appendix 2. |
| reporting | practicable, representative reporting of both low and high grades and/or | |
| widths should be practiced to avoid misleading reporting of Exploration | ||
| Results. | ||
| Other | Other exploration data, if meaningful and material, should be reported | Surface geology interpretation and geophysics exists over the area of interest. |
| substantive | including (but not limited to): geological observations; geophysical survey | |
| exploration data | results; geochemical survey results; bulk samples – size and method of | |
| treatment; metallurgical test results; bulk density, groundwater, | ||
| geotechnical and rock characteristics; potential deleterious or |
||
| contaminating substances. | ||
| Further work | The nature and scale of planned further work (eg tests for lateral | Forward activities include resource estimation and potential for mining |
| extensions or depth extensions or large-scale step-out drilling). | evaluation as well as further drilling. | |
| Diagrams clearly highlighting the areas of possible extensions, including | ||
| the main geological interpretations and future drilling areas, provided this | ||
| information is not commercially sensitive. |
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Section 3 Estimation and Reporting of Mineral Resources
(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Database | Measures taken to ensure that data has not been corrupted by, for example, | Geological and sampling data was entered directly into a computer on site. Assay |
| integrity | transcription or keying errors, between its initial collection and its use for | data was received from the laboratory in digital format and lookup tables were |
| Mineral Resource estimation purposes. | used to match sampling and assay data. Survey data was imported from DGPS | |
| Data validation procedures used. | csv output files. | |
| All geological, sampling and assay data was reviewed to ensure validity. Data | ||
| audits were conducted using industry software. Audits included checks for | ||
| missing or erroneous holes, samples, assay, hole depths, geological codes and | ||
| surveydata. Missingdata(e.g. LNR samples)recorded and noted. | ||
| Site visits | Comment on any site visits undertaken by the Competent Person and the | Mr Mark Csar is the competent Person who has visited site on numerous |
| outcome of those visits. | occasions. No Optiro personnel have been to site. | |
| If no site visits have been undertaken indicate why this is the case. | All aspects of drilling and sampling are considered by the Competent Persons to | |
| be of high industrystandard. | ||
| Geological | Confidence in (or conversely, the uncertainty of) the geological | Drilling on a 20 m x 20 m pattern shows consistency of interpretation between |
| interpretation | interpretation of the mineral deposit. | sections. |
| Nature of the data used and of any assumptions made. | An alternate mineralisation interpretation is difficult to suggest. There are | |
| The effect, if any, of alternative interpretations on Mineral Resource | isolated high grade intercepts which likely reflect short length structural | |
| estimation. | anomalism (faulting), but the influence of these appears to be less than drill | |
| The use of geology in guiding and controlling Mineral Resource estimation. | spacing. | |
| The factors affecting continuity both of grade and geology. | Lithology (MB) is largely uniform through the area. Alteration is commonly | |
| associated with mineralisation and was used to confirm grade outlines. | ||
| Grade shells were generated using a minimum 2m thickness and a 0.5 g/t gold | ||
| cut-off. This grade represents an inflection in the cumulative population | ||
| distribution and enabled the mineralisation to be captured in a coherent | ||
| envelope, which agreed with the geological model. A lower grade inflection of | ||
| 0.2 g/t gold is present but this is too low to define potential economic | ||
| boundaries. | ||
| Dimensions | The extent and variability of the Mineral Resource expressed as length | The Red Dog deposit extends approximately 240 m in a grid N-S direction and |
| (along strike or otherwise), plan width, and depth below surface to the | 200 m in an E-W direction. The mineralisation is flat lying and extends from just | |
| upper and lower limits of the Mineral Resource. | below surface to a depth of at least 30 m below the surface. Mineralisation is | |
| typically3 -14 m thick. |
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| Criteria | JORC Code explanation | Commentary | |
|---|---|---|---|
| Estimation and | The nature and appropriateness of the estimation technique(s) applied and | Estimation was completed in Datamine Studio RM using dynamic anisotropy on | |
| modelling | key assumptions, including treatment of extreme grade values, domaining, | an Ordinary Kriged (OK) model to estimate the gold grade. Grades were | |
| techniques | interpolation parameters and maximum distance of extrapolation from data | estimated into parent blocks of 10 mE by 10 mN by 5 mRL. Sub-celling down to |
|
| points. If a computer assisted estimation method was chosen include a | 5 mE by 5 mN by 1.25 mRL was employed for resolution of the mineralisation | ||
| description of computer software and parameters used. | boundary. | ||
| The availability of check estimates, previous estimates and/or mine | The mineralisation wireframe was used to code both the 1 m composites as well | ||
| production records and whether the Mineral Resource estimate takes | as the block model. | ||
| appropriate account of such data. | Kriging neighbourhood analysis was performed to optimise the block size, | ||
| The assumptions made regarding recovery of by-products. | sample numbers, and discretisation levels with the goal of minimising | ||
| Estimation of deleterious elements or other non-grade variables of | conditional bias in the gold grade estimates. | ||
| economic significance (eg sulphur for acid mine drainage characterisation). | A total of three search passes was used, with the first search pass set to the range | ||
| In the case of block model interpolation, the block size in relation to the | of the variogram. A minimum of 8 and a maximum of 30 samples were used. | ||
| average sample spacing and the search employed. | The search stayed the same for the second pass but was increased by a factor of | ||
| Any assumptions behind modelling of selective mining units. | 2 for the third and final pass. The minimum number of samples was reduced to | ||
| Any assumptions about correlation between variables. Description of how the geological interpretation was used to control the resource estimates. |
6 for the second and third pass. A nearest neighbour approach was used to fill blocks which did not fill in the first three passes. This situation applied to 1% of the mineralised blocks. |
||
| Discussion of basis for using or not using grade cutting or capping. The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available. |
No deleterious elements have been identified. No selective mining units have been assumed. Top-cuts were applied to reduce the variability of the data and to remove the outliers. |
||
| The estimated block model grades were visually validated against the input | |||
| drillhole data and comparisons were carried out against the drillhole data and | |||
| by northing, easting and elevation slices. Global comparison between the input | |||
| data and the block grades for each variable is considered acceptable (±10%). | |||
| This is a maiden Mineral Resource so no comparison was carried out. | |||
| Moisture | Whether the tonnages are estimated on a dry basis or with natural | Tonnages were estimated on a dry in situ basis. No moisture values were | |
| moisture, and the method of determination of the moisture content. | reviewed. | ||
| Cut-off | The basis of the adopted cut-off grade(s) or quality parameters applied. | The Mineral Resource has been reported at a 0.5 g/t gold cut-off and has been | |
| parameters | based on assumptions about economic cut-off grades for open pit mining from | ||
| current mining operations in the region. The resource estimate has not been | |||
| constrained byapit shell. | |||
| Mining factors | Assumptions made regarding possible mining methods, minimum mining | It has been assumed that the deposit could potentially be mined using open pit | |
| or assumptions | dimensions and internal (or, if applicable, external) mining dilution. It is | methods. | |
| always necessary aspart of theprocess of determining reasonable | |||
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| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| prospects for eventual economic extraction to consider potential mining | No assumptions have been made to date regarding minimum mining widths or | |
| methods, but the assumptions made regarding mining methods and | dilution. | |
| parameters when estimating Mineral Resources may not always be | ||
| rigorous. Where this is the case, this should be reported with an explanation | ||
| of the basis of the mining assumptions made. | ||
| Metallurgical | The basis for assumptions or predictions regarding metallurgical | No assumptions have been made regarding metallurgy. |
| factors or | amenability. It is always necessary as part of the process of determining | Mining of this style of gold deposit is common in the area. The metallurgy, |
| assumptions | reasonable prospects for eventual economic extraction to consider potential | processing and waste management of these deposits is typically simple and well- |
| metallurgical methods, but the assumptions regarding metallurgical | understood. | |
| treatment processes and parameters made when reporting Mineral | Results of preliminary historical metallurgical test work conducted by Hodges in | |
| Resources may not always be rigorous. Where this is the case, this should be | 2016 suggests ~90% recovery. This figure is expected to improve with further |
|
| reported with an explanation of the basis of the metallurgical assumptions | targeted testwork. | |
| made. | ||
| Environmental | Assumptions made regarding possible waste and process residue disposal | No assumptions regarding possible waste and process residue disposal options |
| factors or | options. It is always necessary as part of the process of determining | have been made. It is assumed that such disposal will not present a significant |
| assumptions | reasonable prospects for eventual economic extraction to consider the | hurdle to exploitation of the deposit and that any disposal and potential |
| potential environmental impacts of the mining and processing operation. | environmental impacts would be correctly managed as required under the | |
| While at this stage the determination of potential environmental impacts, | regulatory permitting conditions. | |
| particularly for a greenfields project, may not always be well advanced, the | ||
| status of early consideration of these potential environmental impacts | ||
| should be reported. Where these aspects have not been considered this | ||
| should be reported with an explanation of the environmental assumptions | ||
| made. |
Section 4 Estimation and Reporting of Ore Reserves
(Criteria listed in section 1, and where relevant in sections 2 and 3, also apply to this section.)
| Criteria | JORC Code explanation | Commentary | |
|---|---|---|---|
| Mineral | Description of the Mineral Resource estimate used as a basis for the | The Mineral Resource estimate has an effective date of January 2018. The | |
| Resource | conversion to an Ore Reserve. | resource estimate was based on a 0.5g/t Au cut-off and the estimate was not | |
| estimate for | Clear statement as to whether the Mineral Resources are reported | constrained within a pit shell. Mineral Resources are reported inclusive of Ore | |
| additional to, or inclusive of, the Ore Reserves. | Reserves. | ||
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| Criteria | JORC Code explanation | Commentary | |
|---|---|---|---|
| conversion to | |||
| Ore Reserves | |||
| Site visits | Comment on any site visits undertaken by the Competent Person and the | A site visit to Red Dog has not been undertaken by the Competent person. The | |
| outcome of those visits. | Competent person has extensive knowledge of the area gained from mining | ||
| If no site visits have been undertaken indicate why this is the case. | the nearby Fortitude deposit. | ||
| Study status | The type and level of study undertaken to enable Mineral Resources to be | Feasibility level studies have been completed. Conversion of Mineral Resources | |
| converted to Ore Reserves. | to Ore Reserves has been accounted for in material classification. | ||
| The Code requires that a study to at least Pre-Feasibility Study level has | |||
| been undertaken to convert Mineral Resources to Ore Reserves. Such studies | |||
| will have been carried out and will have determined a mine plan that is | |||
| technically achievable and economically viable, and that material Modifying | |||
| Factors have been considered. | |||
| Cut-off | The basis of the cut-off grade(s) or quality parameters applied. | Ore Reserve cut-off parameters are based on positive cash flows. The mining cut- | |
| parameters | off grade is calculated to be 1.5g/t Au, and is based on expected costs and | ||
| revenues. | |||
| Mining factors | The method and assumptions used as reported in the Pre-Feasibility or | The conversion of Mineral Resource to Ore Reserve was by optimisation | |
| or assumptions | Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. | parameters using costs from nearby operations followed by detailed design for | |
| either by application of appropriate factors by optimisation or by | final pit design and subsequent Ore Reserve estimation. | ||
| preliminary or detailed design). The choice, nature and appropriateness of the selected mining method(s) |
The deposit will be mined by conventional open pit methods using 100 - 120t excavators and 100t trucks. |
||
| and other mining parameters including associated design issues such as pre- | |||
| strip, access, etc. | Geotechnical parameters were completed by O’Bryan and Associates based on | ||
| The assumptions made regarding geotechnical parameters (eg pit slopes, | lithologies and weathering profiles from drilling. | ||
| stope sizes, etc), grade control and pre-production drilling. | Ore Reserves are reported with a 15% mining dilution factor and a 95% mining | ||
| The major assumptions made and Mineral Resource model used for pit and stope optimisation (if appropriate). |
recovery factor. | ||
| The mining dilution factors used. | A minimum width of 2.5m was used as a mining bench. | ||
| The mining recovery factors used. | Inferred resources make up <1% of the resource and are immaterial to | ||
| Any minimum mining widths used. | sensitivities. | ||
| The manner in which Inferred Mineral Resources are utilised in mining studies and the sensitivity of the outcome to their inclusion. The infrastructure requirements of the selected mining methods. |
Required infrastructure is industry standard for a small open pit and will include offices, workshops, ROM pads and Waste dumps. No ore processing facilities will be constructed. |
||
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| Criteria | JORC Code explanation | Commentary | |
|---|---|---|---|
| Metallurgical | The metallurgical process proposed and the appropriateness of that process | Ore will be treated though a customer plant. Metallurgical testwork using | |
| factors or | to the style of mineralisation. | parameters of the plant was carried out by an accredited laboratory and | |
| assumptions | Whether the metallurgical process is well-tested technology or novel in | supervised by an independent consultant metallurgist. | |
| nature. The nature, amount and representativeness of metallurgical test work undertaken, the nature of the metallurgical domaining applied and the |
Testwork comprising various composite samples taken over the entirely of the deposit has been completed using testwork procedures of the customer plant. |
||
| corresponding metallurgical recovery factors applied. | The customer mill operates with known technology. | ||
| Any assumptions or allowances made for deleterious elements. | Composite samples were domained on both grade and rock type and are | ||
| The existence of any bulk sample or pilot scale test work and the degree to | considered appropriate to the deposit. | ||
| which such samples are considered representative of the orebody as a | |||
| whole. | No bulk or pilot study testwork was completed due to the small size of the | ||
| For minerals that are defined by a specification, has the ore reserve | deposit. | ||
| estimation been based on the appropriate mineralogy to meet the | Ore Reserves are reported inclusive of mill recoveries. | ||
| specifications? | |||
| Environmental | The status of studies of potential environmental impacts of the mining and | Environmental studies on the Red Dog deposit have been completed and include | |
| processing operation. Details of waste rock characterisation and the | flora, terrestrial and sub terrestrial fauna, groundwater and surface water | ||
| consideration of potential sites, status of design options considered and, | impacts. A native vegetation clearing permit (NVCP) has been received from | ||
| where applicable, the status of approvals for process residue storage and | DMIRS. Studies and testwork on waste rock have been completed and no acid | ||
| waste dumps should be reported. | generating material is noted. Waste rock designs have been completed is | ||
| accordance with independent recommendations. The Mining Proposal and Mine | |||
| Closure Plan have been approved byDMIRS. | |||
| Infrastructure | The existence of appropriate infrastructure: availability of land for plant | No infrastructure currently exists on site. The deposit is approximately 1km from | |
| development, power, water, transportation (particularly for bulk | Saracen’s Haul road and roads to the mill are in existence though need some | ||
| commodities), labour, accommodation; or the ease with which the | upgrade. Accommodation is available at Red October camp and labour is | ||
| infrastructure can be provided, or accessed. | expected to be found within the current WA contractor pool. No impediments | ||
| to miningvia infrastructure constraints are envisaged. | |||
| Costs | The derivation of, or assumptions made, regarding projected capital costs in | Capital and operating costs have been derived using tendered quotes for the Red | |
| the study. | Dog mine. | ||
| The methodology used to estimate operating costs. | No allowance has been made for deleterious elements. | ||
| Allowances made for the content of deleterious elements. | |||
| The source of exchange rates used in the study. | An exchange rate of 0.76AUD to USD has been used where applicable | ||
| Derivation of transportation charges. | Treatment and refining charges are based on negotiated charges and payments. | ||
| The basis for forecasting or source of treatment and refining charges, penalties for failure to meet specification, etc. |
Royalties are payable to the Government and the previous tenement holder. | ||
| The allowances madefor royaltiespayable, both Government andprivate. | |||
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| Criteria | JORC Code explanation | Commentary | |
|---|---|---|---|
| Revenue factors | The derivation of, or assumptions made regarding revenue factors including |
Ore production grades are determined by an optimized pit shell which has then | |
| head grade, metal or commodity price(s) exchange rates, transportation | been designed in detail for a final pit design. The model includes all mining, | ||
| and treatment charges, penalties, net smelter returns, etc. | haulage and processing charges. The model has been based on indicative and | ||
| The derivation of assumptions made of metal or commodity price(s), for the | anticipated costs and revenue negotiations with the ore processing facility. | ||
| principal metals, minerals and co-products. | |||
| Market | The demand, supply and stock situation for the particular commodity, | The market for gold appears robust. Red Dog has a short mine life with mining | |
| assessment | consumption trends and factors likely to affect supply and demand into the | expected to commence in the near term. No long term forecasting was used in | |
| future. | estimations. | ||
| A customer and competitor analysis along with the identification of likely | |||
| market windows for the product. | |||
| Price and volume forecasts and the basis for these forecasts. | |||
| For industrial minerals the customer specification, testing and acceptance | |||
| requirements prior to a supply contract. | |||
| Economic | The inputs to the economic analysis to produce the net present value (NPV) | All operating and capital costs were included in the financial model. Capital items | |
| in the study, the source and confidence of these economic inputs including | were treated as operating due to the short mine life. | ||
| estimated inflation, discount rate, etc. NPV ranges and sensitivity to variations in the significant assumptions and |
Costs are considered robust as they are based on a current operation. | ||
| inputs. | Sensitivity analysis has shown the project is robust and relatively insensitive to | ||
| changes in price, operating costs and pit designs. | |||
| Social | The status of agreements with key stakeholders and matters leading to | The company has undertaken consultation with local pastoralists, government | |
| social licence to operate. | organizations and mining operations. Access agreements, where required are in | ||
| place. | |||
| Other | To the extent relevant, the impact of the following on the project and/or on | No impediments to mining are noted. | |
| the estimation and classification of the Ore Reserves: Any identified material naturally occurring risks. |
All regulatory approvals for mining are in place. | ||
| The status of material legal agreements and marketing arrangements. | |||
| The status of governmental agreements and approvals critical to the | |||
| viability of the project, such as mineral tenement status, and government | |||
| and statutory approvals. There must be reasonable grounds to expect that | |||
| all necessary Government approvals will be received within the timeframes | |||
| anticipated in the Pre-Feasibility or Feasibility study. Highlight and discuss | |||
| the materiality of any unresolved matter that is dependent on a third party | |||
| on which extraction of the reserve is contingent. | |||
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| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Classification | The basis for the classification of the Ore Reserves into varying confidence | Indicated Resources were classified as Probable Reserves after consideration of |
| categories. | the appropriate modifying factors. | |
| Whether the result appropriately reflects the Competent Person’s view of the deposit. |
Results reflect the view of the competent person. | |
| The proportion of Probable Ore Reserves that have been derived from | No measured mineral resources were estimated. | |
| Measured Mineral Resources (if any). | A minor amount (10oz) of inferred material is included in the Mine Plan. This | |
| amount does not materially affect financials. | ||
| Audits or | The results of any audits or reviews of Ore Reserve estimates. | Audits or reviews have been conducted internally with experienced Matsa |
| reviews | personnel. Metallurgical results have also been reviewed by SDGM. | |
| Discussion of | Where appropriate a statement of the relative accuracy and confidence | The accuracy of estimates in this Ore Reserve are mostly determined by the |
| relative | level in the Ore Reserve estimate using an approach or procedure deemed | order of accuracy of the Mineral Resource, metallurgical input, and cost inputs. |
| accuracy/ confidence |
appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of |
Some risk factors include: |
| the reserve within stated confidence limits, or, if such an approach is not | Local and global bias within the Mineral Resource | |
| deemed appropriate, a qualitative discussion of the factors which could | Geotechnical risks associated with unforeseen risks | |
| affect the relative accuracy and confidence of the estimate. | Variation in recovery between metallurgical testwork and the customer mill | |
| The statement should specify whether it relates to global or local estimates, | Gold and Fuel price variation | |
| and, if local, state the relevant tonnages, which should be relevant to | Final costs returned once mining is underway/completed. | |
| technical and economic evaluation. Documentation should include | ||
| assumptions made and the procedures used. | ||
| Accuracy and confidence discussions should extend to specific discussions of | ||
| any applied Modifying Factors that may have a material impact on Ore | ||
| Reserve viability, or for which there are remaining areas of uncertainty at | ||
| the current study stage. | ||
| It is recognised that this may not be possible or appropriate in all | ||
| circumstances. These statements of relative accuracy and confidence of the | ||
| estimate should be compared withproduction data, where available. |
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Appendix 2: Matsa Resources Limited – Red Dog Project
Drill hole collar information and intervals > 0.5g/t Au (summary)
| Hole_ID | East Local |
North Local |
RL | m Depth |
Dip | Azimuth | M From | M To | M Thick | Au_ppm |
|---|---|---|---|---|---|---|---|---|---|---|
| 17RDRC001 | 10580 | 10750 | 386 | 20 | -90 | |||||
| 17RDRC002 | 10620 | 10750 | 386 | 20 | -90 | |||||
| 17RDRC003 | 10660 | 10750 | 386 | 20 | -90 | |||||
| 17RDRC004 | 10580 | 10710 | 386 | 20 | -90 | |||||
| 17RDRC005 | 10620 | 10710 | 386 | 20 | -90 | |||||
| 17RDRC006 | 10660 | 10710 | 387 | 20 | -90 | |||||
| 17RDRC007 | 10700 | 10710 | 387 | 20 | -90 | 16 | 17 | 1 | 0.66 | |
| 17RDRC008 | 10740 | 10710 | 387 | 20 | -90 | |||||
| 17RDRC009 | 10580 | 10670 | 386 | 20 | -90 | |||||
| 17RDRC010 | 10620 | 10670 | 387 | 20 | -90 | |||||
| 17RDRC011 | 10660 | 10670 | 388 | 20 | -90 | 13 | 14 | 1 | 0.87 | |
| 17RDRC012 | 10700 | 10670 | 390 | 20 | -90 | 5 | 6 | 1 | 1.76 | |
| 17RDRC013 | 10740 | 10670 | 388 | 20 | -90 | 16 | 18 | 2 | 2.76 | |
| 17RDRC014 | 10620 | 10650 | 387 | 20 | -90 | 19 | 20 | 1 | 0.9 | |
| 17RDRC015 | 10660 | 10650 | 389 | 20 | -90 | 8 | 15 | 7 | 1.69 | |
| 17RDRC016 | 10680 | 10650 | 389 | 20 | -90 | 12 | 14 | 2 | 1.09 | |
| 17RDRC017 | 10700 | 10650 | 390 | 20 | -90 | 7 | 8 | 1 | 1.01 | |
| 17RDRC018 | 10720 | 10650 | 390 | 16 | -90 | 3 | 4 | 1 | 0.76 | |
| 17RDRC019 | 10740 | 10650 | 389 | 16 | -90 | |||||
| 17RDRC020 | 10620 | 10630 | 387 | 20 | -90 | |||||
| 17RDRC021 | 10640 | 10630 | 388 | 20 | -90 | 15 | 17 | 2 | 1.87 | |
| 17RDRC022 | 10660 | 10630 | 389 | 20 | -90 | 15 | 16 | 1 | 1.23 | |
| 17RDRC023 | 10680 | 10630 | 389 | 20 | -90 | 8 | 12 | 4 | 2.32 | |
| 17RDRC024 | 10700 | 10630 | 389 | 20 | -90 | 5 | 10 | 5 | 1.27 | |
| 17RDRC025 | 10720 | 10630 | 389 | 16 | -90 | 6 | 12 | 6 | 2.01 | |
| 17RDRC026 | 10740 | 10630 | 388 | 16 | -90 | 12 | 14 | 2 | 3.33 | |
| 17RDRC027 | 10800 | 10630 | 386 | 20 | -90 | |||||
| 17RDRC028 | 10620 | 10610 | 387 | 20 | -90 | |||||
| 17RDRC029 | 10640 | 10610 | 387 | 20 | -90 | 13 | 19 | 6 | 4.57 | |
| 17RDRC030 | 10660 | 10610 | 388 | 20 | -90 | 13 | 16 | 3 | 1.44 | |
| 17RDRC031 | 10680 | 10610 | 388 | 16 | -90 | 7 | 12 | 5 | 3.15 | |
| 17RDRC032 | 10700 | 10610 | 388 | 16 | -90 | 4 | 12 | 8 | 3.11 | |
| 17RDRC033 | 10720 | 10610 | 388 | 16 | -90 | 4 | 7 | 3 | 3.93 | |
| 17RDRC034 | 10740 | 10610 | 388 | 16 | -90 | 6 | 11 | 5 | 3.34 | |
| 17RDRC035 | 10620 | 10590 | 386 | 16 | -90 | 12 | 14 | 2 | 3.72 | |
| 17RDRC036 | 10640 | 10590 | 387 | 16 | -90 | 11 | 16 | 5 | 3.14 | |
| 17RDRC037 | 10660 | 10590 | 387 | 16 | -90 | 12 | 14 | 2 | 1.94 | |
| 17RDRC038 | 10680 | 10590 | 388 | 16 | -90 | 8 | 10 | 2 | 5.33 | |
| 17RDRC039 | 10700 | 10590 | 387 | 16 | -90 | 5 | 6 | 1 | 5.47 | |
| 17RDRC040 | 10720 | 10590 | 387 | 16 | -90 | 4 | 6 | 2 | 1.79 | |
| 17RDRC041 | 10740 | 10590 | 386 | 16 | -90 | 6 | 7 | 1 | 2.41 |
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| 17RDRC042 | 10760 | 10590 | 386 | 16 | -90 | 10 | 12 | 2 | 2.83 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 17RDRC043 | 10800 | 10590 | 385 | 20 | -90 | 17 | 20 | 3 | 1.21 | |
| 17RDRC044 | 10620 | 10570 | 386 | 16 | -90 | 10 | 12 | 2 | 2.98 | |
| 17RDRC045 | 10640 | 10570 | 386 | 16 | -90 | 11 | 16 | 5 | 3.79 | |
| 17RDRC046 | 10660 | 10570 | 386 | 16 | -90 | 9 | 13 | 4 | 3.68 | |
| 17RDRC047 | 10680 | 10570 | 386 | 16 | -90 | 5 | 10 | 5 | 1.53 | |
| 17RDRC048 | 10700 | 10570 | 386 | 16 | -90 | 3 | 6 | 3 | 5.43 | |
| 17RDRC049 | 10720 | 10570 | 386 | 16 | -90 | 3 | 6 | 3 | 3.45 | |
| 17RDRC050 | 10740 | 10570 | 385 | 16 | -90 | 7 | 9 | 2 | 2.5 | |
| 17RDRC051 | 10760 | 10570 | 385 | 16 | -90 | 11 | 14 | 3 | 1.32 | |
| 17RDRC052 | 10580 | 10550 | 385 | 20 | -90 | |||||
| 17RDRC053 | 10620 | 10550 | 386 | 16 | -90 | 5 | 6 | 1 | 1.4 | |
| 17RDRC054 | 10640 | 10550 | 386 | 16 | -90 | 13 | 15 | 2 | 1.63 | |
| 17RDRC055 | 10660 | 10550 | 386 | 16 | -90 | 9 | 11 | 2 | 3.48 | |
| 17RDRC056 | 10680 | 10550 | 386 | 16 | -90 | 7 | 8 | 1 | 5.11 | |
| 17RDRC057 | 10700 | 10550 | 385 | 16 | -90 | 4 | 7 | 3 | 2.22 | |
| 17RDRC058 | 10720 | 10550 | 385 | 16 | -90 | 6 | 8 | 2 | 4.26 | |
| 17RDRC059 | 10740 | 10550 | 385 | 16 | -90 | 8 | 12 | 4 | 1.11 | |
| 17RDRC060 | 10760 | 10550 | 385 | 16 | -90 | 14 | 15 | 1 | 2.76 | |
| 17RDRC061 | 10800 | 10550 | 385 | 20 | -90 | 17 | 18 | 1 | 0.78 | |
| 17RDRC062 | 10620 | 10530 | 386 | 20 | -90 | 12 | 13 | 1 | 0.75 | |
| 17RDRC063 | 10640 | 10530 | 386 | 20 | -90 | 6 | 9 | 3 | 2.72 | |
| 17RDRC064 | 10660 | 10530 | 385 | 20 | -90 | 6 | 11 | 5 | 2.9 | |
| 17RDRC065 | 10680 | 10530 | 385 | 16 | -90 | 7 | 9 | 2 | 2.75 | |
| 17RDRC066 | 10700 | 10530 | 385 | 16 | -90 | 2 | 6 | 4 | 3.11 | |
| 17RDRC067 | 10720 | 10530 | 385 | 16 | -90 | 4 | 6 | 2 | 5.84 | |
| 17RDRC068 | 10740 | 10530 | 385 | 20 | -90 | 10 | 12 | 2 | 3.75 | |
| 17RDRC069 | 10760 | 10530 | 385 | 20 | -90 | 14 | 19 | 5 | 2.3 | |
| 17RDRC070 | 10580 | 10510 | 384 | 20 | -90 | 3 | 4 | 1 | 0.74 | |
| 17RDRC071 | 10620 | 10510 | 385 | 20 | -90 | 10 | 11 | 1 | 0.6 | |
| 17RDRC072 | 10640 | 10510 | 385 | 20 | -90 | 11 | 19 | 8 | 2.56 | |
| 17RDRC073 | 10660 | 10510 | 385 | 20 | -90 | 5 | 16 | 11 | 2.87 | |
| 17RDRC074 | 10680 | 10510 | 385 | 20 | -90 | 15 | 16 | 1 | 0.94 | |
| 17RDRC075 | 10700 | 10510 | 385 | 12 | -90 | 2 | 5 | 3 | 0.92 | |
| 17RDRC076 | 10720 | 10510 | 385 | 12 | -90 | 4 | 5 | 1 | 1.44 | |
| 17RDRC077 | 10740 | 10510 | 385 | 12 | -90 | 6 | 12 | 6 | 155.11 | |
| 17RDRC078 | 10760 | 10510 | 384 | 12 | -90 | |||||
| 17RDRC079 | 10800 | 10510 | 385 | 20 | -90 | |||||
| 17RDRC080 | 10640 | 10490 | 384 | 20 | -90 | 0 | 2 | 2 | 1.21 | |
| 17RDRC081 | 10660 | 10490 | 384 | 20 | -90 | 8 | 18 | 10 | 2.56 | |
| 17RDRC082 | 10680 | 10490 | 384 | 20 | -90 | 2 | 16 | 14 | 2.3 | |
| 17RDRC083 | 10700 | 10490 | 384 | 20 | -90 | 6 | 12 | 6 | 1.76 | |
| 17RDRC084 | 10720 | 10490 | 384 | 12 | -90 | 4 | 8 | 4 | 1.29 | |
| 17RDRC085 | 10740 | 10490 | 384 | 12 | -90 | 11 | 12 | 1 | 0.6 | |
| 17RDRC086 | 10760 | 10490 | 384 | 15 | -90 | 12 | 15 | 3 | 1.54 | |
| 17RDRC087 | 10640 | 10470 | 384 | 36 | -90 | 23 | 30 | 7 | 3.3 |
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| 17RDRC088 | 10660 | 10470 | 384 | 36 | -90 | 3 | 4 | 1 | 0.51 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 17RDRC089 | 10680 | 10470 | 384 | 36 | -90 | 13 | 23 | 10 | 1.25 | |
| 17RDRC090 | 10700 | 10470 | 384 | 36 | -90 | 10 | 19 | 9 | 0.98 | |
| 17RDRC091 | 10720 | 10470 | 384 | 36 | -90 | 8 | 13 | 5 | 2.69 | |
| 17RDRC092 | 10740 | 10470 | 384 | 36 | -90 | 15 | 17 | 2 | 3.43 | |
| 17RDRC093 | 10760 | 10470 | 384 | 36 | -90 | 19 | 21 | 2 | 0.72 | |
| 17RDRC094 | 10640 | 10450 | 384 | 36 | -90 | 33 | 34 | 1 | 3.1 | |
| 17RDRC095 | 10660 | 10450 | 384 | 36 | -90 | 22 | 24 | 2 | 4.48 | |
| 17RDRC096 | 10680 | 10450 | 384 | 36 | -90 | 25 | 27 | 2 | 1.96 | |
| 17RDRC097 | 10700 | 10450 | 384 | 36 | -90 | 20 | 24 | 4 | 2.35 | |
| 17RDRC098 | 10720 | 10450 | 384 | 36 | -90 | 4 | 6 | 2 | 0.77 | |
| 17RDRC099 | 10740 | 10450 | 384 | 36 | -90 | 14 | 23 | 9 | 0.87 | |
| 17RDRC100 | 10660 | 10430 | 384 | 36 | -90 | 30 | 32 | 2 | 1.75 | |
| 17RDRC101 | 10700 | 10430 | 384 | 36 | -90 | |||||
| 17RDRC102 | 10740 | 10430 | 384 | 36 | -90 | 22 | 23 | 1 | 1.22 | |
| 17RDRC103 | 10720 | 10331 | 383 | 60 | -90 | 28 | 29 | 1 | 2.46 | |
| DDD001 | 10700 | 10515 | 385 | 200.5 | -71.5 | 0 | 2 | 8 | 6 | 1.68 |
| DDRC001 | 10696 | 10681 | 389 | 124 | -60 | 180 | 9 | 10 | 1 | 0.54 |
| DDRC004 | 10697 | 10632 | 389 | 100 | -60 | 180 | 7 | 11 | 4 | 1.78 |
| DDRC007 | 10696 | 10683 | 389 | 100 | -60 | 90 | 17 | 18 | 1 | 0.55 |
| DDRC008 | 10645 | 10684 | 387 | 100 | -60 | 90 | 17 | 18 | 1 | 1.17 |
| DDRC011 | 10697 | 10657 | 390 | 110 | -90 | 7 | 8 | 1 | 2.13 | |
| DDRC012 | 10698 | 10606 | 388 | 120 | -90 | 4 | 8 | 4 | 2.82 | |
| DDRC013 | 10647 | 10631 | 388 | 120 | -90 | 13 | 16 | 3 | 0.72 | |
| DDRC015 | 10750 | 10631 | 388 | 100 | -90 | 30 | 31 | 1 | 0.69 | |
| DDRC016 | 10699 | 10554 | 386 | 77 | -90 | 6 | 8 | 2 | 1.56 | |
| DDRC21 | 10732 | 10489 | 384 | 24 | -90 | 8 | 9 | 1 | 0.85 | |
| DDRC22 | 10721 | 10488 | 384 | 26 | -90 | 4 | 6 | 2 | 15.78 | |
| DDRC23 | 10711 | 10488 | 384 | 26 | -90 | 7 | 8 | 1 | 1.83 | |
| DDRC24 | 10701 | 10488 | 384 | 26 | -90 | 2 | 3 | 1 | 1.17 | |
| DDRC25 | 10691 | 10489 | 385 | 26 | -90 | 2 | 17 | 15 | 2.25 | |
| DDRC26 | 10691 | 10500 | 385 | 17 | -90 | 2 | 12 | 10 | 1.36 | |
| DDRC27 | 10691 | 10509 | 385 | 17 | -90 | 1 | 5 | 4 | 2.07 | |
| DDRC28 | 10701 | 10509 | 385 | 20 | -90 | 1 | 7 | 6 | 0.99 | |
| DDRC29 | 10711 | 10509 | 385 | 14 | -90 | 2 | 6 | 4 | 21.61 | |
| DDRC30 | 10730 | 10508 | 385 | 17 | -90 | 6 | 7 | 1 | 1.09 | |
| DDRC31 | 10731 | 10498 | 384 | 14 | -90 | 7 | 8 | 1 | 1.02 | |
| DDRC32 | 10730 | 10518 | 385 | 14 | -90 | 3 | 8 | 5 | 13.73 | |
| DDRC33 | 10740 | 10527 | 385 | 18 | -90 | 10 | 13 | 3 | 1.75 | |
| RDRC35 | 10692 | 10479 | 384 | 34 | -90 | 4 | 20 | 16 | 1.41 | |
| RDRC36 | 10681 | 10481 | 384 | 37 | -90 | 9 | 24 | 15 | 1.71 | |
| RDRC37 | 10681 | 10489 | 384 | 31 | -90 | 4 | 5 | 1 | 0.81 | |
| RDRC38 | 10680 | 10498 | 385 | 20 | -90 | 3 | 16 | 13 | 2.36 | |
| RDRC39 | 10680 | 10508 | 385 | 18 | -90 | 11 | 12 | 1 | 1.56 | |
| RDRC40 | 10680 | 10519 | 385 | 16 | -90 | 4 | 6 | 2 | 2.21 | |
| RDRC41 | 10679 | 10529 | 385 | 16 | -90 | 6 | 10 | 4 | 2.67 |
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| RDRC42 | 10680 | 10539 | 386 | 16 | -90 | 7 | 9 | 2 | 1.51 | |
|---|---|---|---|---|---|---|---|---|---|---|
| RDRC43 | 10679 | 10550 | 386 | 16 | -90 | 7 | 9 | 2 | 2.12 | |
| RDRC44 | 10679 | 10559 | 386 | 16 | -90 | 8 | 10 | 2 | 5.53 | |
| RDRC45 | 10678 | 10570 | 386 | 16 | -90 | 4 | 5 | 1 | 0.99 | |
| RDRC46 | 10678 | 10580 | 387 | 16 | -90 | 8 | 12 | 4 | 2.95 | |
| RDRC47 | 10676 | 10589 | 387 | 16 | -90 | 9 | 12 | 3 | 2.44 | |
| RDRC48 | 10687 | 10589 | 388 | 13 | -90 | 7 | 9 | 2 | 3.06 | |
| RDRC49 | 10688 | 10579 | 387 | 13 | -90 | 8 | 9 | 1 | 6.97 | |
| RDRC50 | 10689 | 10569 | 386 | 13 | -90 | 7 | 9 | 2 | 9.35 | |
| RDRC51 | 10689 | 10558 | 386 | 13 | -90 | 7 | 9 | 2 | 3.94 | |
| RDRC52 | 10690 | 10549 | 386 | 13 | -90 | 7 | 8 | 1 | 3.77 | |
| RDRC53 | 10690 | 10539 | 386 | 13 | -90 | 7 | 9 | 2 | 4.17 | |
| RDRC54 | 10690 | 10529 | 385 | 13 | -90 | 0 | 1 | 1 | 0.62 | |
| RDRC55 | 10691 | 10519 | 385 | 13 | -90 | 3 | 8 | 5 | 1.79 | |
| RDRC56 | 10733 | 10517 | 385 | 13 | -60 | 270 | ||||
| RDRC57 | 10728 | 10520 | 385 | 13 | -60 | 90 | 7 | 8 | 1 | 1.77 |
| SDDRC17 | 10724 | 10611 | 388 | 114 | -60 | 270 | 6 | 8 | 2 | 2.82 |
| SDDRC19 | 10723 | 10569 | 386 | 124 | -60 | 270 | 6 | 8 | 2 | 3.55 |
| WSDDRC19 | 10682 | 10479 | 384 | 22 | -60 | 270 | 16 | 20 | 4 | 4.7 |
| WSDDRC20 | 10681 | 10428 | 383 | 32 | -60 | 270 |
Where a hole has more than one intercept, only the upper intercept is reported. Historical holes were used only if the collar could be reliably identified and collar co-ordinates recorded. All holes are RC drilled. Diamond Hole DDD001 is RC drilled for the upper 50m.
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