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SUPERIOR RESOURCES LIMITED Capital/Financing Update 2021
65848_rns_2021-04-26_b7476afb-9386-4a3e-aeca-515b695a56d1.pdf
Capital/Financing Update
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Scoping Study delivers robust case for development of Steam Engine Gold Deposit
ASX
Announcement
HIGHLIGHTS:
- Scoping Study indicates robust financial and technical case for a near-term, low CAPEX, open pit mining and toll treatment operation, based on mining 65% of the current total Mineral Resource to recover 70,000 ounces Au
- Current total Mineral Resource comprises: 1.73 million tonnes at 2.2 g/t Au for 122,000 ounces, including:
- o Measured & Indicated: 850,000 tonnes @ 2.5 g/t Au (approx. 67,000 ounces)
- o Inferred: 880,000 tonnes @ 1.9 g/t Au (approx. 55,000 ounces)
- Study identified key areas for further optimisation and expansion potential to enhance project economics, including comprehensive metallurgical test program and detailed characterisation of high grade zones where conservative top-cuts have been applied within the Mineral Resource
- Positive results support immediate commencement of Feasibility Study
- Aggressive drilling program continuing to target Resource expansion at current lodes, including maiden drilling program at the new Dinner Creek Lode
- Gold lodes open to the north and at depth (Steam Engine Lode) and open in all directions at Eastern Ridge Lode
Superior Resources Limited (ASX:SPQ) (Superior, the Company) is pleased to announce the results of a Scoping Study conducted on the Company's 100%-owned Steam Engine Gold Deposit (Project) located approximately 210 kilometres west of Townsville, Queensland. The study highlights an opportunity to develop the Project as a low CAPEX, financially and technically robust open pit mining and toll treatment operation.
The Scoping Study is based on the March 2021 revised Mineral Resource estimate of 1.73 million tonnes at 2.2 g/t Au for 122,000 ounces of gold1 , which incorporated the results of the 2020 Resource definition drilling programs. An open cut mining and toll treatment operation was selected for the base case scenario for the study. Pit optimisation and mine planning exercises result in pit shells which are scheduled to mine 1.1 million tonnes at 2.31 g/t Au to recover 70,000 ounces. This is equivalent to approximately 65% of the current Mineral Resource. A stand-alone gold mining and processing scenario was also examined, which highlighted a significant opportunity for substantially improved project economics in the event that the Mineral Resource is expanded.
Base-case economic modelling indicates that the Project will deliver robust financial metrics over a 21-month period of mining with a post-tax LOM cash flow of A$24.2M at an assumed gold price of A$2,200 per ounce.
As a result of the positive Scoping Study, a Feasibility Study will be commenced immediately, along with further metallurgical test work and drilling programs aimed at expanding the current Mineral Resource, including a maiden drilling program at the Dinner Creek Lode.
1 Refer ASX Announcement dated 22 March 2021
Superior's Managing Director, Peter Hwang commented:
"We are very pleased with the outcome of the Scoping Study, which is a significant step forward for the Steam Engine Gold Deposit and the Company's strategy for the greater Greenvale Project.
"The study has demonstrated the economic robustness of the Project and highlights a low-cost start-up opportunity to generate early cash flow. The upside potential is substantial and presents a compelling case to commence a Feasibility Study and the regulatory approvals processes to enable the commencement of mining.
"The exploration potential at Steam Engine is significant. As we progress through the Feasibility phase during 2021, we will also be endeavouring to expand the total gold Resources through aggressive drilling. Leading this program will be the maiden and hopefully, follow-up drilling programs at the new Dinner Creek Zone.
"We are now confident that Steam Engine is poised to be an operation capable of underpinning a greater Greenvale Project copper, gold and potentially, nickel development strategy. This comes as we embark on the Company's 2021 exploration campaign to execute potentially transformative drilling programs at our Tier 1 potential copper and subject to funding, our nickel sulphide targets. We believe that the substantial mineral endowment at Greenvale, predominantly represented by copper and nickel, together with Steam Engine, represents serious potential to support a centralised stand-alone processing operation.
"The implementation of our Greenvale Strategy in 2021 will be key to unlocking the value potential presented by the Greenvale Project."
Cautionary Statement
Scoping Study - General: The Scoping Study referred to in this announcement is a preliminary technical and economic study of the potential viability of developing the Steam Engine Gold Deposit Project (Project) as a mining and thirdparty toll-treatment operation. Preliminary investigations for developing the Project as a stand-alone mining and processing operation were also investigated on a similar technical and economic basis. The Scoping Study is based on low level technical and economic assessments that are not sufficient to support the estimation of Ore Reserves. Further evaluation work and appropriate studies are required before Superior Resources Limited (Superior) will be in a position to estimate any Ore Reserves or to provide any assurance of an economic development case.
Material Assumptions: The Scoping Study is based on the material assumptions outlined within this announcement. These include assumptions about the availability of funding. While Superior considers all of the material assumptions to be based on reasonable grounds, there is no certainty that those assumptions will prove to be correct or that the range of outcomes indicated by the Scoping Study will be achieved.
Funding Requirements: To achieve the range of outcomes indicated in the Scoping Study, total funding in the order of A$10 million will likely be required for CAPEX and operating losses until profits are generated. Investors should note that there is no certainty that Superior will be able to raise that amount of funding when needed. It is also possible that such funding may only be available on terms that may be dilutive to, or otherwise affect the value of Superior's existing shares. Although the availability of funding is affected by many factors including general market factors, Superior has concluded that it has a reasonable basis to assume the ability of funding during the timeframes contemplated by the Scoping Study.
Production Target: The Scoping Study investigates and reports on forecasted financial information based on the mining of a Mineral Resource comprising approximately 27% Inferred Resources. There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the proposed Production Target itself will be realised. Superior has concluded that it has reasonable grounds for disclosing the forecasted financial information and Production Targets, given that approximately 73% of the production ounces are derived from Mineral Resources classified within the Measured and Indicated categories and that at least the first half of the scheduled production will be sourced from Measured and Indicated Resources.
Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping Study.
Scoping Study Key Financial Outcomes
The Scoping Study has demonstrated robust financial metrics for the Steam Engine Gold Project (Project) based on an open pit mining and third-party toll treatment processing operation as the base case proposal.
The proposed operation is based on optimised pits for the mining of 1.1 million tonnes at 2.31 g/t Au to recover 70,000 ounces of gold, with 73% of the Life of Mine (LOM) Production Target in Measured and Indicated categories. This represents approximately 65% of the current Mineral Resource, which comprises Measured, Indicated and Inferred Resources totalling 1.73 million tonnes at 2.2 g/t Au for 122,000 ounces of gold2 .
The Scoping Study was completed to an overall ±30% accuracy and based on assumptions as set out in Table 1 and Appendix 1. The study was managed and conducted by the following highly experienced independent consultants based in Queensland and Western Australia:
- Metcor Pty Ltd (Study Manager, Processing, Cost Estimation, Financial Modelling); and
- Ragnarok Mining Pty Ltd (Pit Optimisation, Mine Scheduling).
Table 1. Steam Engine Gold Deposit – Key Outcomes – Base Case Assumptions
| Parameter | Value |
|---|---|
| Financial Summary | |
| Overall Cash Flow (post-tax) | A$24.2M |
| NPV7%(post-tax) | A$21.2M |
| Internal Rate of Return (IRR) (post-tax) | 242% |
| All-in Sustaining Costs (AISC)1 | A$1,673 /oz |
| Payback Period | 11 months |
| Gold Price Assumption | A$2,200 /oz |
| Funding | |
| CAPEX (Pre-Production and Closure) | A$5.1M |
| Funding Required2 | A$10.0M |
| Return on Capital (post-tax) | 475% |
| Physical Outputs | |
| Life of Mine (LOM) (Construction to Closure) | ~2.5 years |
| Total Ore | 1.131 Mt |
| Ore Grade | 2.31 g/t |
| Overall Gold Recovery | 84% |
| Gold Produced and Sold | 70,000 oz |
1 AISC calculated in accordance with the 2018 World Gold Council Updated Guidance Note.
2 Includes pre-production CAPEX plus operating losses until profits are generated.
2 Total Mineral Resource estimate completed during March 2021; refer ASX Announcement dated 22 March 2021
Upside Scenario (@ A$2,500/oz gold price)
On the basis of a generally positive outlook for the price of gold over the near to intermediate term, the Scoping Study also considered an upside scenario based on a gold price of A$2,500 (US$1,900 @ 0.76 AUD/USD). The impact on the Project economics is significant with the post-tax overall cash flow increasing by 69% to A$41.0M (Table 2).
| Table 2. Key Outcomes – Upside Scenario compared to Base Case Scenario | ||||
|---|---|---|---|---|
| -- | -- | -- | -- | ------------------------------------------------------------------------ |
| Parameter | Base Case @ A$2,200 /oz | Upside Case @ A$2,500 /oz |
|---|---|---|
| Financial Summary | ||
| Overall Cash Flow (post-tax) | A$24.2M | A$41.0M |
| NPV7%(post-tax) | A$21.2M | A$35.9M |
| Internal Rate of Return (IRR) (post-tax) | 242% | 410% |
| All-in Sustaining Costs (AISC)1 | A$1,673 /oz | A$1,725 /oz |
| Payback Period | 11 months | 9 months |
| Funding | ||
| CAPEX (Pre-Production and Closure) | A$5.1M | A$5.1M |
| Funding Required2 | A$10.0M | A$9.0M |
| Return on Capital (post-tax) | 475% | 806% |
| Physical Outputs | ||
| Life of Mine (LOM) (Construction to Closure) | ~2.5 years | ~2.9 years |
| Total Ore | 1.131 Mt | 1.305 Mt |
| Ore Grade | 2.31 g/t | 2.24 g/t |
| Overall Gold Recovery | 84% | 84% |
| Gold Produced and Sold | 70,000 oz | 79,000 oz |
1 AISC calculated in accordance with the 2018 World Gold Council Updated Guidance Note.
2 Includes pre-production CAPEX plus operating losses until profits are generated.
Breakeven Points
Breakeven points for each of the key variables above have been determined – this is the level at which the pretax cash flow reduces to zero when all other parameters remain at base case levels (Table 3).
| Table 3. Breakeven Analysis | ||
|---|---|---|
| -- | ----------------------------- | -- |
| Parameter | Breakeven Value |
|---|---|
| Gold Price | A$1,709(US$1,299 @ 0.76 AUD/USD) |
| Gold Grade | 1.79 g/t |
| Gold Recovery – Steam Engine Lode Ore | 60% |
Sensitivity Analysis
The Project economics were subjected to a sensitivity analysis on the basis of a +/-15% change in key parameters (Figure 1). Changes in the Australian dollar gold price and average gold grade result in the largest impact to project economics, with haulage unit costs, being the next most significant factor, having about 30% of the gold price and grade impacts.
Figure 1. Pre-Tax Cash Flow sensitivity analysis showing the effects on the A$32.7M Pre-Tax Cash Flow (Base Case) using ± 15% variability in select parameters.
Mineral Resources
The Scoping Study is based on the March 2021 Mineral Resource Estimate3 conducted by a Competent Person employee of the Company, which stands at:
- 1.73 million tonnes at 2.2 g/t Au for 122,000 ounces, including:
- o Measured & Indicated: 850,000 tonnes @ 2.5 g/t Au (approx. 67,000 ounces); and
- o Inferred: 880,000 tonnes @ 1.9 g/t Au (approx. 55,000 ounces).
Pit optimisation and mine planning exercises identified an optimal pit design that results in the mining of approximately 1.1 million tonnes at 2.31 g/t Au to recover 70,000 ounces (Figures 2 and 3). This represents approximately 65% of the current Mineral Resource.
Of the Mineral Resources contained within the optimised pit shells, approximately 73% of the production ounces are derived from Mineral Resources classified within the Measured and Indicated categories (Figure 3) and that at least the first half of the scheduled production will be sourced from Measured and Indicated Resources.
3 Refer ASX Announcement dated 22 March 2021
Figure 2. Steam Engine and Eastern Ridge block models showing base case optimised pit shells and gold grade categories.
Figure 3. Steam Engine and Eastern Ridge block models showing base case optimised pit shells and Measured, Indicated and Inferred ore confidence categories.
Site Layout
A proposed site layout with the required site infrastructure in place was designed for the purpose of the Scoping Study (Figure 4).
Figure 4. Steam Engine Project conceptual site layout.
Next Steps
On the basis of the positive outcomes from the Scoping Study, the following future work categories will immediately commence:
- Feasibility Study on the basis of an open pit mining and third party toll treatment operation, although the scope may change depending on the results of further exploration drilling at the Project;
- Resource Expansion drilling programs Maiden exploration drilling programs at the Dinner Creek Lode and Resource extension drilling programs at the Steam Engine and Eastern Ridge Lodes (Figure 5);
- Further metallurgical testwork and studies aimed at improving gold recovery;
- Detailed analysis of alternative operational pathways, including standalone processing operations and high grade mining scenarios;
- Regulatory approvals processes, including native title, environmental and cultural heritage;
- Mining lease application; and
- Commercial negotiations regarding third party toll treatment and road haulage.
In particular, the Company's priority objective is to fast-track drilling programs aimed at expanding the existing Mineral Resource. Indications from the Scoping Study are that a standalone treatment and processing operation will return an economic outcome similar to the base case proposal. Assuming the key parameters continue to apply, a modest increase in total Mineral Resources is likely to provide significant justification for a standalone operation, which would then substantially improve the Project economics and returns.
Figure 5. Steam Engine Gold Deposit lodes (in red and yellow) on satellite imagery. The May 2020 Mineral Resource wireframes (in light green) and gold soil geochemistry are also shown.
About Superior Resources
Superior Resources Limited (ASX:SPQ) is an Australian public company exploring for large lead-zinc-silver, copper, gold and nickel-copper-cobalt deposits in northern Queensland which have the potential to return maximum value growth for shareholders. The Company has a dominant exploration position within the Carpentaria Zinc Province, one of the world's richest mineral producing regions and is focused on multiple Tier-1 equivalent exploration targets.
Reporting of Mineral Resources: Information contained in this report that relates to Mineral Resources is based on information compiled by Mr Kevin Richter, an employee of Superior Resources Limited, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Richter has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to 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 Richter consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
Reliance on previously reported information: In respect of references contained in this report to previously reported Exploration Results or Mineral Resources, Superior confirms that it is not aware of any new information or data that materially affects the information, results or conclusions contained in the original reported document. In respect of previously reported Mineral Resource estimates, all originally reported material assumptions and technical parameters underpinning the estimates continue to apply and have not been materially changed or qualified. The form and context in which the relevant Competent Person's findings are presented have not been materially modified from the original document.
Forward looking statements: This document may contain forward looking statements. Forward looking statements are often, but not always, identified by the use of words such as "seek", "indicate", "target", "anticipate", "forecast", "believe", "plan", "estimate", "expect" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. Indications of, and interpretations on, future expected exploration results or technical outcomes, production, earnings, financial position and performance are also forward-looking statements. The forward-looking statements in this presentation are based on current interpretations, expectations, estimates, assumptions, forecasts and projections about Superior, Superior's projects and assets and the industry in which it operates as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made. The forward-looking statements are subject to technical, business, economic, competitive, political and social uncertainties and contingencies and may involve known and unknown risks and uncertainties. The forward-looking statements may prove to be incorrect. Many known and unknown factors could cause actual events or results to differ materially from the estimated or anticipated events or results expressed or implied by any forward-looking statements. All forward-looking statements made in this presentation are qualified by the foregoing cautionary statements.
Disclaimer: Superior and its related bodies corporate, any of their directors, officers, employees, agents or contractors do not make any representation or warranty (either express or implied) as to the accuracy, correctness, completeness, adequacy, reliability or likelihood of fulfilment of any forward-looking statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by law. Superior and its related bodies corporate and each of their respective directors, officers, employees, agents and contractors disclaims, to the maximum extent permitted by law, all liability and responsibility for any direct or indirect loss or damage which may be suffered by any person (including because of fault or negligence or otherwise) through use or reliance on anything contained in or omitted from this presentation. Other than as required by law and the ASX Listing Rules, Superior disclaims any duty to update forward looking statements to reflect new developments.
For more information:
Peter Hwang Managing Director Tel: +61 7 3847 2887 www.superiorresources.com.au [email protected]
APPENDIX 1
STEAM ENGINE GOLD PROJECT SCOPING STUDY
CONTEXT OF STUDY SUMMARY
The evaluation of the Steam Engine Project is at a Scoping level and covers all aspects of developing and operating open pit mines to extract gold bearing ore from the Steam Engine project area, transporting the ore to a suitable processing facility and toll treating the ore through that facility. The study uses the updated Mineral Resource as reported by Superior Resources on 22nd March 2021 incorporating the recently completed Stage 1 and Stage 2 drilling programs completed in 2020.
Throughout this report, units of measure are typically metric, and all currency references are in Australian dollars.
This Summary Study report is a summarised version of the full scoping study for inclusion by SPQ in an ASX announcement. The full study contains more discussion on many aspects of the project particularly in options that have been assessed and risks and opportunities identified. The full scoping study has been provided to Superior Resources Limited for internal use.
This Summary Report and the full Scoping Study Report were prepared by Metcor Pty Ltd at the request of Superior Resources Limited. The statements, technical information and recommendations contained herein are believed to be accurate at the time of writing and all reasonable care has been taken to ensure this, some information in this report has been provided by others and therefore Metcor Pty Ltd can not completely warrant or guarantee the accuracy of the information contained herein.
The user is cautioned that the underlying assumptions and inputs may change over time and the report and any recommendations made should be viewed and used in this context. The user should ensure that the assumptions and inputs remain valid.
Metcor Pty Ltd expressly disclaims any and all liability to the fullest extent possible from any use of this report by any third party for whatever purpose.
1 PROJECT LOCATION / BACKGROUND
The Steam Engine Project, the basis for this scoping study, lies around 30 kilometres west of the township of Greenvale, which in turn is around 220 km from Townsville. The Steam Engine deposit is one of a number of prospects within the broader Greenvale Project tenements held by Superior Resources Limited (SPQ), an ASX-listed junior Queensland focussed base metals, battery metals and gold explorer based in Brisbane. Steam Engine lies within Exploration Permit for Minerals (EPM) 26165 "Cockie South".
Figure 1: Location of Steam Engine Deposit
Previous exploration on and around the project site has been predominantly for Volcanogenic Massive Sulphides (VMS) style deposits which typically contain a range of base metals and gold. In recent years, some work has been completed on porphyry copper targets along with some limited exploration work targeting other massive sulphide targets in the area.
Prior exploration on the project has been undertaken by a number of companies since the first tenement was granted in 1959 before Superior Resources Limited took over ownership in 2016 and since then have undertaken drilling programs during 2017 and 2020 to better delineate the resource, improve the confidence in the resource and extend the resource at the edges and at depth.
2 GEOLOGY
2.1 GEOLOGICAL CONTEXT
The Greenvale Project lies within a belt of metamorphosed volcanic and sedimentary rocks of probable Cambro-Ordovician age. The units are broadly equivalent, but slightly younger than metavolcanic and metasedimentary rocks in the Balcooma area (Balcooma Metavolcanic Group) and volcanic and sedimentary rocks south of Charters Towers (Mount Windsor Volcanics).
Figure 2: Greenvale Project - Regional Geology
The area west of Greenvale township, the Lucky Creek Domain contains metamorphosed primitive mantle derived intrusives, volcanics and related sediments with low levels of uranium, thorium and lead. It is likely that some of the serpentinised ultramafic rocks of the Greenvale area are part of a sea floor volcanic / sedimentary package rather than injected or intruded rocks. The available limited lead isotope data for the Lucky Creek Domain reflects this difference and in fact shows that the Lucky Creek Domain is probably a distant northern extension of the central New South Wales Ordovician porphyry copper belt.
2.2 STEAM ENGINE DEPOSIT
A number of gold bearing lodes occur in the area, of which the Steam Engine lode is the most notable. The Steam Engine lode has a known surface strike length of approximately 600 metres and is open along strike to the north and down dip. The Eastern Ridge lode is located some 500 metres eastwards of the Steam Engine lode. The Eastern Ridge lode has a surface strike length of approximately 1,400 metres and is open in all directions.
The gold bearing lode zones are located within a shear zone and show strong continuity and a persistent dip to the west, the Steam Engine lode typically dips around 50° to 60° to the west. The Eastern Ridge lode typically dips at around 40° to 50° to the west.
The lodes are typically interpreted as being of the mesothermal vein type. The lodes are essentially mineralised shear zones comprised of pyrite-quartz-muscovite-carbonate schist within amphibolite, metasediment and / or metatonalite. A small area of gold mineralisation occurs between and south of these two lodes and this is referred to as the Southern Zone. The interpreted geology along with the location of drill holes is shown in Figure 3.
Figure 3: Steam Engine Interpreted Geology
Total drilling carried out on the Steam Engine and Eastern Ridge lode zones as at April 2021 has included 196 holes for 13,164 metres of drilling. This total includes recent as well as historical reverse circulation and diamond core drill holes but excludes RAB holes. Of this the Steam Engine lode has had 17 diamond core holes and 117 reverse circulation holes for a total of 10,082 metres of drilling; and the Eastern Ridge lode has had 3 diamond core holes and 59 reverse circulation holes for a total of 3,082 metres of drilling.
Detailed cross sections through the Steam Engine lodes are shown in the full Scoping Study.
2.3 MINERAL RESOURCE
The 2020 drilling programs have served to validate both the prior drilling assays and the location of the mineralised areas. All of the drilling assays and data up to the completion of the Stage 2 program along with the drill hole geology, surface geology and geological interpretations have been used to make sectional interpretations of all zones of mineralisation displaying good continuity, which included the main
Steam Engine mineralisation, a portion of the Steam Engine footwall zone, and a portion of the Eastern Ridge mineralisation.
The Stage 1 drilling from 2020 allowed the Steam Engine lode to be extended further to the north due to additional drilling in this area and the greater detail at the Eastern Ridge lode allowed a fault zone to be interpreted. The Stage 2 drilling was a combination of exploration aimed at increasing the mineral resource and further infill drilling aimed at increasing measured and indicated resources. This drilling contained two intersections each containing a very high gold assay metre interval (1m at 135 g/t from hole SRC076 and 1m at 184 g/t from hole SRC077) suggesting the existence of one or more high grade gold shoots.
The sectional interpretations have then been used to form three-dimensional wireframe models of the gold mineralisation and finally block models have been developed to estimate the gold resources by respective classifications. The Stage 1 and Stage 2 drilling from 2020 have improved the confidence in the resource significantly, the increased density of drilling data available has reduced the uncertainty in the 3D interpretation and allowed material to be moved from inferred to indicated and some material to now be classified as measured.
A total indicated and inferred resource of 1.7 million tonnes at 2.2 g/t gold with 122 kozs of gold was estimated, increasing from the 1.3 million tonnes at 2.3 g/t gold with 94 kozs of gold reported in May 2020. This resource is predominantly based around the Steam Engine lode zone. This updated Mineral Resource estimate is based on the data available and the block model as at March 2021 and was reported officially on the 22nd March 2021. This Mineral Resource tonnage and grade is the basis for this scoping study.
| Classification | Cut Off Grade –g/t | Tonnes | Gold Grade –g/t | Gold Metal -oz | |
|---|---|---|---|---|---|
| Steam Engine – | Main Zone | ||||
| Measured | 0.5 | 240,000 | 2.6 | 20,000 | |
| Indicated | 0.5 | 405,000 | 2.7 | 35,000 | |
| Inferred | 0.5 | 620,000 | 2.0 | 40,000 | |
| Sub Total | 1,265,000 | 2.3 | 95,000 | ||
| Steam Engine – | Footwall Zone | ||||
| Indicated | 0.5 | 60,000 | 1.8 | 3,000 | |
| Inferred | 0.5 | 110,000 | 1.6 | 6,000 | |
| Sub Total | 170,000 | 1.6 | 9,000 | ||
| Eastern Ridge | |||||
| Indicated | 0.5 | 145,000 | 2.0 | 9,000 | |
| Inferred | 0.5 | 150,0001.9 | 9,000 | ||
| Sub Total | 295,000 | 1.9 | 18,000 | ||
| Overall Deposit | |||||
| Measured | 240,000 | 2.6 | 20,000 | ||
| Indicated | 610,000 | 2.4 | 47,000 | ||
| Inferred | 880,000 | 1.9 | 55,000 | ||
| Total | 1,730,000 | 2.2 | 122,000 |
Table 1: Steam Engine Classification of Mineral Resource as Reported in March 2021
The wire frame for the Steam Engine lode is shown in Figure 4 as a three-dimensional view looking to the north west, while that for Eastern Ridge is shown in Figure 5 looking to the south west.
Figure 4: Steam Engine Wire Frame Looking North West
Figure 5: Eastern Ridge Wireframe Looking South West
The block model for the potential ore in the Steam Engine zone is shown in Figure 6 as a three dimensional view looking from above and to the north. Figure 7 shows the Steam Engine and Eastern Ridge block models with the zone resource classification, the measured and indicated areas are nearer to surface while the inferred areas are generally at the periphery of the known resource and at depth.
Figure 6: Steam Engine Block Models
Figure 7: Steam Engine and Eastern Ridge Block Model with Resource Classification
2.4 POTENTIAL OF DEPOSIT
In its current state, the Steam Engine gold prospect can be described as still somewhat under-explored in terms of its extents and the potential for high-grade gold shoots. Previous work has concentrated on limited exploration areas, targeted largely around the Steam Engine lode itself, along with limited drilling on the Eastern Ridge lode zone. Only recent work has specifically targeted the potential for high-grade ore shoot zones within this mesothermal gold lode system.
Although less drilling information is currently available for Eastern Ridge, it displays a similar pattern of the higher-grade portions as for Steam Engine, reinforcing the concept that the two are most likely linked at depth. The concept of a northwest plunge is further reinforced by the thickest portion of the drilling intersection at the Eastern Ridge lode lying in a south easterly direction from the highest grade portions at Steam Engine. Targeting for an Eastern Ridge lode flexure would then best be targeted along this line also.
Interpretation from the previous drilling indicates that the mineralisation encountered is from the top of a larger ore system. The significantly low levels of silver, lead and zinc for this ore type suggest that the lode mineralisation has only just been exposed at the Steam Engine lode and even less so at the Eastern Ridge lode. The Eastern Ridge lode is more extensive with over 1,400 metres of exposed strike length and at a shallower dip than the Steam Engine lode. This reinforces the assumption that the two lode systems are linked at depth and that the splaying of the lode at a steeper angle at Steam Engine has allowed leakage of material from further down in the vein system to reach the surface sooner than at Eastern Ridge.
The deposit model at the Steam Engine prospect is of an extensive mesothermal gold lode system that has the potential to contain significant high-grade gold shoots that may extend to very significant depths. As a more sheared structure is in evidence here than at many similar lode gold deposits, the Steam Engine prospect includes the added benefit of greater average widths.
2.5 FURTHER DRILLING PROGRAMS
The updated March 2021 Mineral Resource has been modelled on only about one third of at least 2.5 kilometres of strike length of outcropping lode and only modelled to relatively shallow depths. Further drilling on the lodes still has potential to extend the resource as well as further improve the confidence and classification category. Targeting of high grade shoots may see more evidence emerge.
The existence of a new lode system, Dinner Creek, further to the south east has recently been identified. Drilling of this lode is planned to determine if it can add to the total resource.
3 MINING
3.1 PIT DESIGN
Pit Optimisation work has been undertaken on the Steam Engine Project from April 2020 through until March 2021, with the latest optimisation results and mining schedules as used in this study being aligned with the March 2021 reported Mineral Resource.
The block model covers the three known systems; Steam Engine Main, Steam Engine Footwall and Eastern Ridge. The Steam Engine Main and Steam Engine Footwall zones were targeted from the same pit while the Eastern Ridge zone had a standalone pit. Block sizes in the model were 5 x 5 x 5 metres.
Three gold prices were used to show the sensitivity of the pit to the price, these were A$ 2,000, A$ 2,200 and A$ 2,500 per ounce. The steam engine pit is taken in three stages, which in plan view are shown in the figure below.
Figure 8: Steam Engine Pit – Plan View of Pit Stages
The final pit shape at the three metal prices studied is shown in plan, 3D and long section view in the three figures below, where the red outline is the A$2,000 final shell, the blue outline is the A$2,200 final shell and the brown outline is the A$2,500 final shell.
Figure 9: Steam Engine Final Pits at Different Gold Prices – Plan View
Figure 10: Steam Engine Final Pits at Different Gold Prices – 3D View
Figure 11: Steam Engine Final Pits at Different Gold Prices – Long Section
The Eastern Ridge deposit is mined by three more distinct pits, again the revenue shells for the three price scenarios are shown in the three images below.
Figure 12: Eastern Ridge Final Pits at Different Gold Prices – Plan View
Figure 13: Eastern Ridge Final Pits at Different Gold Prices – 3D View
Figure 14: Eastern Ridge Final Pits at Different Gold Prices – Long Section
There is a significant step out in the Eastern Ridge pit going to A$2,500 gold price as the area between the first and second pits becomes economic and is mined. There may be potential to develop underground
from the ultimate pits, however this has not been assessed in this scoping study due to a lack of deep drilling data.
3.2 PRODUCTION SCHEDULE
A high level production schedule was generated using the revenue factor 1.00 shells for the A$2,200 price scenario. The mining rates are based on a fleet of 90 t capacity rigid body mining trucks (similar to a Caterpillar 777) paired with an excavator similar to a Komatsu PC1250 in tight areas or a Hitachi EX2500 in more open benches. It is assumed for the purposes of the scoping study that mining would be undertaken by a contractor due to the relatively short duration of mining.
The schedule was developed in monthly periods, a summary of this by quarter is shown below. The schedule prioritises the Steam Engine pits due to their higher grade, mining as three phases to accelerate access to the high grade ore. Once Steam Engine is completed the smaller Eastern Ridge pits are mined. Alternates were examined varying the sequencing of the pits and even overlapping production from the pits (which would require additional mining equipment) with little overall impact on the project economics, hence the base pit schedule has been selected for simplicity.
| Parameter | Unit | Totals | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Quarter 5 | Quarter 6 | Quarter 7 |
|---|---|---|---|---|---|---|---|---|---|
| Steam Engine | |||||||||
| Waste Mined | kt | 12,607 | 2,160 | 2,123 | 2,182 | 2,295 | 2,242 | 1,605 | |
| Ore Mined | kt | 953 | 177 | 218 | 141 | 46 | 98 | 273 | |
| Ore Grade | g / t | 2.36 | 2.71 | 2.33 | 2.96 | 1.70 | 1.69 | 2.19 | |
| Ounces Mined | oz | 72,195 | 15,421 | 16,355 | 13,408 | 2,486 | 5,351 | 19,175 | |
| Total Tonnes | Kt | 13,560 | 2,338 | 2,341 | 2,323 | 2,341 | 2,341 | 1,877 | |
| Eastern Ridge | |||||||||
| Waste Mined | kt | 1,921 | 0 | 0 | 0 | 0 | 0 | 402 | 1,519 |
| Ore Mined | kt | 179 | 0 | 0 | 0 | 0 | 0 | 27 | 151 |
| Ore Grade | g / t | 2.06 | 0 | 0 | 0 | 0 | 0 | 2.17 | 2.04 |
| Ounces Mined | oz | 11,812 | 0 | 0 | 0 | 0 | 0 | 1,882 | 9,930 |
| Total Tonnes | kt | 2,100 | 0 | 0 | 0 | 0 | 0 | 429 | 1,671 |
| Total | |||||||||
| Waste Mined | kt | 14,529 | 2,160 | 2,123 | 2,182 | 2,295 | 2,242 | 2,007 | 1,519 |
| Ore Mined | kt | 1,131 | 177 | 218 | 141 | 46 | 98 | 300 | 151 |
| Ore Grade | g / t | 2.31 | 2.71 | 2.33 | 2.96 | 1.70 | 1.69 | 2.19 | 2.04 |
| Ounces Mined | oz | 84,008 | 15,421 | 16,355 | 13,408 | 2,486 | 5,351 | 21,057 | 9,930 |
| Total Tonnes | kt | 15,660 | 2,338 | 2,341 | 2,323 | 2,341 | 2,341 | 2,306 | 1,671 |
Table 2: Mining Production Schedule for the A$ 2,200 / oz Pit Shells
This mining schedule shows total ore mined of 1,131 kt at an average gold grade of 2.31 g/t. The average strip ratio of both the Eastern Ridge pit and the Steam Engine pit is 12.8.
4 PROCESSING
4.1 METALLURGICAL TESTWORK
Leach testwork has been undertaken in October and November 2020 to confirm the amenability of the ore to conventional CIP / CIL leaching. Six sample composites were generated from drill holes from the early 2020 drilling program, these samples were of ore grade and considered representative of the resource as declared in May 2020. Two samples of each of the three main ore zones were collected. The details of the samples are shown in Table 3.
| Zone | DrillHole | DepthM | Intervalm | Sample ID | GoldAssayg/t | Cu Assayppm | As Assayppm | Fe Assay% | S Assay% |
|---|---|---|---|---|---|---|---|---|---|
| Steam Engine | SRC019 | 27 – 33 | 6 | 5223041 | 3.6 | 58 | 12,800 | 7.5 | 3.6 |
| Steam Engine | SRC035 | 24 – 30 | 6 | 5223044 | 2.2 | 162 | 3,900 | 10.3 | 3.2 |
| Steam EngineFootwall | SRC031 | 22 – 26 | 4 | 5223042 | 1.4 | 199 | 4,600 | 8.2 | 2.3 |
| Steam EngineFootwall | SRC032 | 40 – 43 | 3 | 5223043 | 2.5 | 149 | 8,200 | 10.2 | 3.1 |
| Eastern Ridge | SRC039 | 19 - 25 | 6 | 5223045 | 0.9 | 70 | 230 | 5.5 | 0.6 |
| Eastern Ridge | SRC043 | 11 – 19 | 8 | 5223046 | 3.6 | 101 | 1,100 | 5.6 | 0.1 |
Table 3: Samples for Metallurgical Testwork
An immediate observation is that the sulphur assays in the Eastern Ridge samples are significantly lower than those in the Steam Engine samples, the iron assays are also lower. This indicates that more sulphide minerals are present in the Steam Engine lode than Eastern Ridge.
The leach test conditions were as follows:
| | Grind size (P80) | 75 microns |
|---|---|---|
| | Sodium Cyanide Dosage | 1.5 kg/t |
| | Density | 40 % solids |
| | pH | 10 – 10.5 |
| | Dissolved Oxygen | 15 – 20 ppm |
These conditions are typical of CIP / CIL leach circuits. The leach tests were run for 48 hours with a sample taken after 24 hours to assist in understanding the leach kinetics.
The results obtained are as follows. The samples were assayed by ALS for gold, this differs from the sample assay from the drilling program shown above. The head assay was then also back calculated from the leach residue and the leach solution assays to provide a check on the validity of the test results, all of these check calculations were as expected.
Table 4: Metallurgical Testwork Results
| ZoneSample ID | Gold Head Grade g/t | Gold Extraction % | Gold Tail | Reagents kg/t | ||||
|---|---|---|---|---|---|---|---|---|
| Assayed | Calculated | 24 hours | 48 hours | Grade g/t | NaCN | Lime | ||
| Steam Engine | 5223041 | 3.8 | 3.9 | 63 | 67 | 1.3 | 0.67 | 0.70 |
| Steam Engine | 5223044 | 2.5 | 2.9 | 84 | 82 | 0.52 | 0.70 | 0.79 |
| Steam EngineFootwall | 5223042 | 1.3 | 1.8 | 70 | 80 | 0.36 | 0.63 | 0.64 |
| Steam EngineFootwall | 5223043 | 3.0 | 2.8 | 72 | 73 | 0.76 | 0.63 | 0.56 |
| Eastern Ridge | 5223045 | 1.0 | 1.3 | 97 | 97 | 0.04 | 0.48 | 0.82 |
| Eastern Ridge | 5223046 | 2.9 | 3.1 | 96 | 98 | 0.08 | 0.52 | 1.3 |
(Note that the calculated extraction for sample 5223044 drops from 24 to 48 hours, this is due to the 48 hour solution assay being lower than the 24 hour assay – 1.56 g/t versus 1.59 g/t – this is just a slight discrepancy in assaying and it can only be concluded that no additional gold was extracted from 24 to 48 hours and the reported extraction should be the same).
The results for the Eastern Ridge samples (5223045 and 5223046) were excellent with 97 and 98 percent of the gold being extracted respectively, and with virtually all of this extracted after 24 hours. The results for the Steam Engine lode were not as good with the average grade samples (5223044, 5223042 and 5223043) seeing total gold extraction of 84, 80 and 73 percent respectively. The highest grade sample showed lower gold extraction at 67 percent. From Table 3 it can be seen that this sample also had the highest sulphur grade indicating that in some areas of the Steam Engine lode, some of the gold may be present with sulphide minerals, most likely pyrite and arsenopyrite. The potential association with arsenopyrite is supported by the relatively high arsenic assay of this sample. The relationships with gold grade and gold recovery versus arsenic content are shown in Figure 15. Note that for the gold grade relationship, only the four Steam Engine samples are shown as the Eastern Ridge samples showed a different pattern. It can be seen that there is a relatively strong association with each. In the Steam Engine deposit, the gold grade tends to increase with increasing arsenic content and in all samples the gold recovery decreases with increasing arsenic content.
Figure 15: Association of Gold Grade and Gold Recovery versus Arsenic Grade
Recent petrographic observation of similar samples confirms the conclusions that a portion of the gold in the Steam Engine deposit is associated with arsenopyrite. This is usually described as some of the gold being in solid solution – within the crystal lattice – of the arsenopyrite and therefore refractory in nature and not fully amenable to recovery by traditional cyanide leaching. Options to increase recovery on refractory ores are to utilise a process that breaks down the pyrite and arsenopyrite further, by ultra fine grinding or by roasting or pressure oxidising the ore.
At this stage, no testwork has been done to investigate options to improve the gold recovery in the higher arsenic content Steam Engine samples. It stands to reason that recoveries could be improved above the results seen in these sighter tests, however if the gold not recovered is indeed refractory then the opportunity for significant recovery gains using gravity or cyanide leaching may be limited.
4.2 RECOVERY ESTIMATES
On the basis of the relatively limited testwork to date, the recovery predictions for Steam Engine ore and Eastern Ridge ore respectively (used in subsequent financial evaluation) are 82 and 95 percent, recognising that there may be scope for some improvement in gold recovery in further testwork on the Steam Engine ore and through blending and targeting of low arsenopyrite material.
4.3 ORE HAULAGE
The ore would be hauled from the Steam Engine project site to a suitable processing plant for toll treatment. It is envisaged that a haulage contractor would be utilised for this work. The production schedule indicates that the average ore production rate from the project is around 50,000 tonnes per month and this value has been chosen as the capacity required in the haulage fleet. The largest capacity trucks that could be used on the route chosen would be selected, it has been assumed that these would be Type 2 road trains with ore capacity of around 75 tonnes. A cycle time of 8 hours has also been assumed based on the likely haulage distance to a suitable plant which indicates that the total haulage fleet required by the contractor would be 10 trucks and their associated trailers.
4.4 TOLL TREATMENT
A number of potential toll treatment plants exist in Queensland that could accept ore from the Steam Engine project. General criteria for selection of a suitable plant is:
- Gold processing plants utilising traditional CIP / CIL to leach gold;
- A flowsheet that includes gravity gold recovery equipment would be an advantage;
- Capacity to treat up to 50,000 tonnes per month of additional ore;
- Gold grade of usual ore lower than the gold grade of the Steam Engine ore to provide incentive to preferentially treat Steam Engine ore; and
- Within trucking distance of the project and with suitable existing road linkage.
4.5 TAILINGS MANAGEMENT
Tailings management would be the responsibility of the toll treatment plant, and the costs to manage and store tailings produced from the Steam Engine ore would be included in the processing charges.
5 INFRASTRUCTURE AND FACILITIES
A proposed site layout with the required site infrastructure in place is provided has been developed and is shown in Figure 16. Details of traffic management, water management, communications, power supply, safety and emergency facilities, environmental monitoring and closure plans are included in the full Scoping Study document.
Figure 16: Steam Engine Project Site Layout
6 PROJECT APPROVALS
Details of the project approvals processes and the current status for the required mining lease application, landholder compensation agreement access, native title approval, environmental authority application and cultural heritage clearances are included in the full scoping study.
7 CAPITAL COSTS
A capital cost estimate to develop the project until the point of ore production has been completed at an accuracy level of ± 30 %, generally in line with or better than an AACE Class 5 Estimate Category (Guidelines developed by the Association for the Advancement of Cost Engineering).
The capital costs have been developed line by line based on estimates obtained for this or prior projects. Freight cost is estimated as either a cost per tonne for break bulk goods, a cost per 20' or 40' container or a percentage of the purchase cost for miscellaneous items (such as spares).
The following items are excluded from the cost estimate:
- Sunk costs and costs associated with this and prior studies;
- Cost of pre-feasibility and feasibility studies and associated testwork; and
- Costs for gaining project approvals, these are sunk costs at the time of commencing the project development.
7.1 GROWTH AND CONTINGENCY
Growth and contingency have been applied in line with guidelines for studies of this nature. As this project is at scoping level with a relatively short construction and ramp up duration the cost estimate includes a contingency allowance of 25 %.
7.2 SITE ESTABLISHMENT COSTS
Many of the site establishment costs will likely be the responsibility of the mining contractor and will be included and itemised in the mining contract as mobilisation expenses. These may include:
- Hardstand, laydown and park-up areas;
- Workshop and tyre change facilities;
- Warehousing for mining parts;
- Office, change house and amenities;
- Fuel storage and refuelling facilities;
- Explosives magazine;
- Power supply and water storage;
- Site roads; and
- Environmental control systems.
To allow a more accurate capital cost estimate to be developed – for the purposes of this scoping study all of these items have been costed separately as if they were owner supplied rather than part of a larger and nebulous mobilisation charge. This allows greater transparency in the project costs at this early stage. Future negotiations with the preferred contractor will then define and allocate who is responsible for provision of these and other items and how these will be funded.
7.3 DESIGN CRITERIA AND KEY ASSUMPTIONS
The design criteria and key assumptions used in the development of the capital cost estimate for this scoping study are detailed in Table 5.
Table 5: Capital Cost Key Assumptions
| Assumption | Unit | Value | Source |
|---|---|---|---|
| Physical Assumptions | |||
| Depth of Topsoil Stripping | m | 0.15 | Based on soil type |
| Perimeter of Mining Area | m | 10,000 | Estimate |
| Length of Access Road to Construct | m | 5,000 | Estimate |
| Surface Area of Steam Engine Pit | m2 | 135,000 | Calculation |
| Surface Area of Steam Engine Waste Dump | m2 | 360,000 | Calculation |
| Surface Area of Eastern Ridge Pit | m2 | 67,500 | Calculation |
| Surface Area of Eastern Ridge Waste Dump | m2 | 90,000 | Calculation |
7.4 CAPITAL COST SUMMARY
The cost estimate summary by discipline is shown in Table 6. The same estimate is summarised by cost area in
| Steam Engine Project Scoping Study | ||||||
|---|---|---|---|---|---|---|
| Table 7. Detail of the capital cost estimate is included in Appendix One of the full Scoping Study.Table 6: Capital Cost Estimate Summarised by Discipline | ||||||
| Discipline | MaterialsA$ | Labour CostA$ | GrowthA$ | FreightA$ | TotalA$ | |
| Direct Costs | Civil works | 66,600 | 341,045 | 81,529 | 1,460 | 490,634 |
| Earthworks | 19,000 | 1,064,431 | 216,686 | 400 | 1,300,517 | |
| Mechanical Equipment | 600,000 | 44,000 | 128,800 | 10,600 | 783,400 | |
| Electrical Installations | 133,500 | 20,740 | 30,848 | 378 | 185,466 | |
| Piping | 92,200 | 95,370 | 37,514 | 2,510 | 227,594 | |
| Buildings | 165,000 | 41,600 | 41,320 | 68,200 | 316,120 | |
| Total Direct Costs | 1,076,300 | 1,607,186 | 536,697 | 83,548 | 3,303,731 | |
| Indirect Costs | Project Management | 0 | 30,000 | 6,000 | 0 | 36,000 |
| Owners Costs | 264,028 | 313,667 | 110,672 | 500 | 688,867 | |
| Spares | 31,008 | 0 | 6,202 | 0 | 37,210 | |
| Total Indirect Costs | 295,036 | 343,667 | 122,874 | 500 | 762,077 | |
| Sub Total Direct and Indirect Costs | 1,371,336 | 1,950,853 | 659,571 | 84,048 | 4,065,808 | |
| 1,016,452 | ||||||
| Contingency @ 25 % |
| Area | MaterialsA$ | Labour CostA$ | GrowthA$ | FreightA$ | TotalA$ |
|---|---|---|---|---|---|
| 100 - Site Preparation | 35,000 | 260,365 | 59,073 | 1,000 | 355,438 |
| 110 - Site Preparation | 16,000 | 103,500 | 23,900 | 600 | 144,000 |
| 120 - Access Roads | 0 | 40,000 | 8,000 | 0 | 48,000 |
| 130 - Water Management | 19,000 | 116,865 | 27,173 | 400 | 163,438 |
| 200 - Mining | 72,000 | 363,971 | 87,194 | 2,000 | 525,165 |
| 210 - Mine Development | 72,000 | 167,620 | 47,924 | 2,000 | 289,544 |
| 220 - Waste Dump Construction | 0 | 185,678 | 37,136 | 0 | 222,814 |
| 230 - Drainage | 0 | 10,673 | 2,135 | 0 | 12,807 |
| 300 - Infrastructure | 779,300 | 185,130 | 192,886 | 79,948 | 1,237,264 |
| 310 - Offices | 96,700 | 18,040 | 22,948 | 36,200 | 173,888 |
| 320 - Workshop | 86,300 | 55,280 | 28,316 | 24,440 | 194,336 |
| 330 - Warehouse | 11,900 | 3,810 | 3,142 | 8,210 | 27,062 |
| 340 - Explosives Magazine | 100,400 | 20,340 | 24,148 | 20 | 144,908 |
| 350 - Power Generation | 21,800 | 17,680 | 7,896 | 240 | 47,616 |
| 360 - Power Reticulation | 2,000 | 2,040 | 808 | 16 | 4,864 |
| 370 - Infrastructure General | 460,200 | 67,940 | 105,628 | 10,822 | 644,590 |
| 400 - Owner's Costs | 485,036 | 1,141,387 | 320,418 | 1,100 | 1,947,941 |
| 430 - Contractor Management | 0 | 430,000 | 86,000 | 0 | 516,000 |
| 440 - Owner's Overheads | 354,028 | 225,000 | 115,806 | 1,100 | 695,934 |
| 450 - Capital and Insurance Spares | 31,008 | 0 | 6,202 | 0 | 37,210 |
| 460 - Provision for Closure | 100,000 | 486,387 | 112,411 | 0 | 698,797 |
| Contingency @ 25 % | 1,016,452 | ||||
| Total | 1,371,336 | 1,950,853 | 659,571 | 84,048 | 5,082,260 |
Table 7: Capital Cost Estimate Summarised by Area with Sub Area Detail
The timing of the expenditure has been classified as either during project development and start-up (A$ 4,058,764) or during closure (A$ 1,023,497) for appropriate treatment in subsequent financial evaluations.
8 OPERATING COSTS
The total operating costs over the life of the project have been estimated, with ± 30 % accuracy. All costs are in Australian dollars.
8.1 KEY OPERATING COST ASSUMPTIONS
The key operating cost assumptions are shown in the full scoping study.
The pits are of suitable size for reasonable capacity mining equipment to operate which will assist in keeping the unit costs low. The haulage is via sealed road along the entire route. The haulage distance selected is based on the distances of the potential toll treatment facilities.
The processing costs are based on experience of operating costs of plants similar to those that may be able to undertake the toll treatment, with an allowance for the margin received by the plant owner. Owners costs and corporate overheads are estimated based on the project size.
The mining costs are on the basis of dry tonnes, as are the processing costs, while the haulage tonnes are on the basis of wet tonnes as this is how the payments would be calculated.
8.2 PERSONNEL
The mining contractor will be responsible for the recruitment, training and transportation of their own workforce. It is likely that all contract employees will be locally based or will drive in and drive out using Greenvale as their base.
Superior Resources will have a number of site personnel to supervise the project and the major contracts as well as perform mining engineering and grade control functions. Probable manning levels are shown in the full Scoping Study. Provision for severance for all positions is included in the capital cost estimate during the closure phase.
8.3 OFFSITE COSTS
The offsite costs of doré transport, refining and royalties have been calculated based on the following assumptions. Actual offsite cost terms will be defined by the contracts in place between the toll treatment plant and the refiner.
9 FINANCIAL EVALUATION
The capital and operating cost estimates have been combined with the mining schedule to develop a full production, cost and revenue model for the project. This model takes into consideration all of the estimates and assumptions detailed in the prior sections to develop a physicals schedule for the mining, stockpiling, haulage and processing of ore as well as detail of all on and off site costs and revenue streams for the project. The full model output for the base case is included in Appendix 2 in the full Scoping Study.
9.1 KEY ASSUMPTIONS
Key assumptions that have been used in the development of the model for the project are detailed in Table 8.
| Assumption | Unit | Value | Source | |||||
|---|---|---|---|---|---|---|---|---|
| Economic Assumptions | ||||||||
| Gold Price | A$ / oz | 2,200 | Superior | |||||
| Discount Rate | % | 7 | Superior | |||||
| Corporate Tax Rate | % | 30 | ATO | |||||
| Physical Assumptions | ||||||||
| Grind P80 | microns | 75 | Estimate | |||||
| Leach Residence Time | hours | 24 | Estimate | |||||
| Gold Recovery from Steam Engine Ore | % | 82 | Testwork | |||||
| Gold Recovery from Eastern Ridge Ore | % | 95 | Testwork | |||||
| DoréGold Grade | % | 97.5 | Estimate | |||||
| Project Assumptions | ||||||||
| Maximum Haulage and Processing Rates | t / month | 50,000 | Modelled |
Table 8: Financial Evaluation Key Assumptions
9.2 PHYSICAL OUTPUTS OF EVALUATION
The physical outputs of the mining and production schedule are summarised in Table 9.
| Parameter | Unit | Value |
|---|---|---|
| Total Ore | kt | 1,131 |
| Ore Gold Grade | g/t | 2.31 |
| Overall Gold Recovery | % | 84 |
| Gold Produced and Sold | koz | 70 |
Table 9: Base Case Physical Outputs
Figure 17 shows the ore production profile by month – tonnes mined, hauled and processed and also the gold production (on the secondary axis). The shape of the ore mining profile reflects the mining of the
Steam Engine deposit as three separate phases or cutbacks. This allows early access to high gold grade material and hence brings gold production forward in the production profile. The haulage profile is offset based on ore stockpiling on site while the processing and gold production profiles are further offset with stockpiling at the processing plant. Haulage and therefore processing are constrained by the amount of ore mined and the capacity of the haulage fleet.
Figure 17: Base Case Production Profile
9.3 FINANCIAL OUTCOMES OF EVALUATION
The base case financial model is included as Appendix 2 of the full Scoping Study, key outcomes are detailed in the summary tables below.
| Parameter | Unit | Value |
|---|---|---|
| Pre Tax Overall Cash Flow | A$M | 32.7 |
| Payback Period | Months | 11 |
| Pre Tax NPV | A$M | 28.6 |
| Return on Capital | % | 643 |
| Funding Required | A$M | 10.0 |
| Return on Funding | % | 327 |
Table 10: Base Case Financial Summary – Pre Tax
The funding required is equal to the most negative value of the cumulative cash flow from the financial model, this amount of financial backing is required to meet all expenditure required until the cumulative
cash flow starts to become more positive. This funding may be from internal or external sources – the method of securing this funding is not assessed as part of this scoping study.
The same parameters shown on a post tax basis are detailed in Table 11. This assumes that Superior Resources have carried forward losses of A$ 4.25 million at the start of the project.
| Table 11: Base Case Financial Summary – Post Tax |
|---|
| -------------------------------------------------- |
| Parameter | Unit | Value |
|---|---|---|
| Post Tax Overall Cash Flow | A$M | 24.2 |
| Payback Period | Months | 11 |
| Post Tax NPV | A$M | 21.2 |
| Return on Capital | % | 475 |
| Funding Required | A$M | 10.0 |
| Return on Funding | % | 242 |
The post tax cash flow and cumulative cash flow month by month from the time of project approval are shown below. The cash flow profiles show the initial period of capital expenditure (months 1-4), the commencement of operations with increased costs (months 5-6) and then the commencement of gold production and revenue (month 7). In months 18-21 the amount of waste mining is high but the quantity of ore drops and the gold grade of the processed material is low, therefore cash losses are incurred in this period, exacerbated by the delay in payments for gold produced. The closure costs and final company tax payments are seen at the end of operations.
Figure 18: Post Tax Monthly Cash Flow
Figure 19 shows the cumulative post tax cash flow and highlights the funding requirement – the largest negative cumulative cash flow amount, the payback period and the final position.
Figure 19: Cumulative Post Tax Cash Flow
The project is robust with the assumptions used in the base case – delivering a post tax total cash flow of A$ 24.2 million, a post tax NPV of A$ 21.2 million and payback in 11 months from the onset of capital expenditure.
10 SENSITIVITIES
The project will be sensitive to a number of the assumptions used. A graph showing the relative magnitude of the sensitivity to key factors is shown in Figure 20, for each parameter the graph shows the pre tax cash flow for ± 15 % change in the parameter. Pre tax cash flow is used as the reported outcome as this is the cleanest output to examine, without impacts of timing, discounting and taxation. The base case pre tax cash flow is A$ 32.7 million. More detail of these sensitivities is shown in the full Scoping Study.
Figure 20: Sensitivity Summary
Of the parameters investigated, the largest impacts are the gold price and gold grade – which is to be expected. The haulage distance, haulage unit cost and mining unit cost all have about 30 % of the impact that gold price and grade do, processing cost has a lesser impact and the impact of capital cost, contractor overheads and site overheads is relatively minor.
Gold recovery is obviously another important variable, a separate table showing appropriate ranges of variation of recovery is shown below. With the smaller quantities of ore and gold from Eastern Ridge – the sensitivity of the overall project economics to Eastern Ridge gold recovery is only about one sixth of the impact of Steam Engine gold recovery. Steam Engine Gold Recovery 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 Pre Tax Cash Flow A$ M 22.2 23.7 25.2 26.7 28.2 29.7 31.2 32.7 34.2 35.7 37.2 38.7 40.2 41.7 43.2 Eastern Ridge Gold Recovery 88 89 90 91 92 93 94 95 96 97 98 98 98 98 98 Pre Tax Cash Flow A$ M 31.0 31.2 31.5 31.7 32.0 32.2 32.4 32.7 32.9 33.2 33.4 33.4 33.4 33.4 33.4
| Table 12: Sensitivity to Gold Recovery | |
|---|---|
| ---------------------------------------- | -- |
| Change in Parameter | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Any increase in the size of the resource tonnage has a significant effect on the project economics. The impact on pre tax cash flow is shown in Table 13 for successive increases of 50 kt of ore in each deposit.
Table 13: Sensitivity to Resource Size
| Steam Engine Project Scoping Study | ||
|---|---|---|
| Any increase in the size of the resource tonnage has a significant effect on the project economics. Theimpact on pre tax cash flow is shown in Table 13 for successive increases of 50 kt of ore in each deposit. | ||
| Change in Parameter | ||
| Eastern Ridge Resource Size - Ore kt | 179229279329379429479 | 529 |
| Pre Tax Cash Flow A$ M | 32.734.636.638.640.542.544.4 | 46.4 |
| Steam Engine Resource Size - Ore kt | 9531,0031,0531,1031,1531,2031,253 | 1,303 |
Increases in the size of the Steam Engine ore resource have similar impact to increases in the Eastern Ridge ore resource, due to similar grades and similar unit costs. Every additional 100 kt of ore that can be brought into either resource would improve project cash flow by around A$ 3.7 – 3.9 M pre tax. Pre Tax Cash Flow A$ M 32.7 34.6 36.4 38.3 39.9 41.5 43.1 44.7
10.1 UPSIDE SCENARIO A$ 2,500 PER OUNCE
The pit optimisations at A$ 2,500 per ounce gold price includes significantly more material than the base case scenario as shown in Table 14, with indicative scheduling showing that the ore tonnes would increase by around 15 % and the produced gold increasing by around 13 %. The impact on the project economics is significant as shown in Table 15 with the post tax overall cash flow increasing by 69 % to A$ 41.0 M and the post tax NPV increasing by 69 % to A$ 35.9 M.
Table 14: Physical Outputs of Base and Upside Cases
| Parameter | Unit | Base Case A$ 2,200 / oz | Upside Case A$ 2,500 / oz |
|---|---|---|---|
| Total Ore | kt | 1,131 | 1,305 |
| Ore Gold Grade | g/t | 2.31 | 2.24 |
| Overall Gold Recovery | % | 84 | 84 |
| Gold Produced and Sold | koz | 70 | 79 |
Table 15: Financial Summary of Base and Upside Cases
| Parameter | Unit | Base Case A$ 2,200 / oz | Upside Case A$ 2,500 / oz |
|---|---|---|---|
| Post Tax Overall Cash Flow | A$ M | 24.2 | 41.0 |
| Payback Period | Months | 11 | 9 |
| Post Tax NPV | A$ M | 21.2 | 35.9 |
| Return on Capital | % | 475 | 806 |
| Funding Required | A$ M | 10.0 | 9.0 |
| Return on Funding | % | 242 | 410 |
The cumulative post tax cash flow in this scenario would be improved considerably.
Figure 21: Cumulative Post Tax Cash Flow of Upside Case
10.2 CURRENT GOLD PRICE
The current spot gold price is around A$ 2,300 per ounce. This spot price lies between the base and upside cases, interpolating shows that at the current spot price the project post tax NPV would be around A$ 26.1 M.
10.3 BREAKEVEN POINTS
Breakeven points for each of the key variables above have been determined – this is the level at which the pre tax cash flow reduces to zero when all other parameters remain at base case levels. The breakeven points for key input cost and pricing assumptions are shown in the full scoping study.
| Table 16: Breakeven Levels | ||
|---|---|---|
| Parameter | Unit | Breakeven |
|---|---|---|
| Gold Price | A$ / oz | 1,709 |
| Gold Grade | g/t | 1.79 |
| Steam Engine Ore Gold Recovery | % | 60 |
The project is considered quite robust to most parameters.
11 ALTERNATE OPTIONS
A number of alternate strategies to that which forms the basis of the scoping study could be utilised for the project. Options discussed in the full Scoping Study include:
11.1 CONSTRUCT PURPOSE BUILT PROCESSING FACILITY
The basis of the scoping study is for haulage of ore to an existing processing plant for toll treatment. An alternative strategy could be to construct a dedicated facility on site for processing the Steam Engine and Eastern Ridge ores. While early evaluation indicates that there may be modest cost benefit in constructing a purpose built facility, there are also added risks and the project timeline and payback periods would be extended considerably. An advantage of this strategy is that the cut off grade would also drop which would see more of the deposit treated as ore, increasing the size of the pits, increasing gold production and bringing additional revenue.
If the plant that is built is able to be used for processing ore from other resources owned by Superior Resources then this synergy may add further significant value. Much of the capital cost for the plant is in the crushing and grinding circuits, in the Tailings Storage Facility and in providing power and water, so even if the other resources were copper sulphide deposits the plant could be modified at relatively low cost to include flotation for copper concentrate production.
The other scenario which may make the option of a constructed facility more attractive and compelling would be if the haulage distance or the haulage unit cost were to increase significantly from the assumptions used in this study, or if no other plants were interested in toll treating the Steam Engine ore.
At the scoping study stage it is considered that the total ore tonnage from the Steam Engine project alone is likely too low to support the construction of a dedicated plant, making the toll treatment strategy preferred. This option will be explored further as studies into Steam Engine progress and as the potential overall project pipeline for Superior Resources develops – a Superior Resources central processing hub may become economically viable with upside at Steam Engine or with the development of other deposits.
11.2 MINE STEAM ENGINE PIT ONLY
The Eastern Ridge pit contains around 16 % of the gold ounces. At a scoping level the option to mine the Steam Engine pit only was examined – while this would see these ounces removed from the project, there would also be some savings in capital costs and overheads through simplifying the operation to a single open pit only. However the post tax NPV reduced from A$ 21.2 M to around A$ 19.3 M so this option should not be pursued, mining Eastern Ridge as well still adds value.
12 PROJECT SCHEDULE
The indicative project schedule milestone dates which could be achieved are shown below.
| | Scoping Study Complete | Apr 2021 |
|---|---|---|
| | Mining Design Updates | May 2021 |
| | Pre-Feasibility Study Complete | Aug 2021 |
| | Tendering of Major Contracts Complete | Oct 2021 |
| | Feasibility Study Complete | Dec 2021 |
| | Project Approvals in Place | Jan 2021 |
| | Site Development Commences | Feb 2022 |
| | Mining of Ore Commences | Jun 2022 |
| | First Gold Production | Aug 2022 |
| | Gold Production Ceases | Aug 2024 |
There are no long lead time capital items with this project so the critical path for the project schedule is the timing of the approvals process. If good progress is made in this area and further studies remain positive, then the project could be producing gold within 18 months.
13 RISKS AND OPPORTUNITIES
A number of risks and opportunities exist with the Steam Engine Project, as would be the case with other projects of this type. If the outcomes of the financial evaluation fit with corporate objectives and the project is progressed, then these risks should be mitigated in the course of further studies and design and the opportunities should be assessed and adopted where appropriate. No risks are considered to be fatal flaws at the Scoping Study stage. A complete discussion of the risks and opportunities identified is included in the full Scoping Study report.
13.1 RISKS
Risks include:
- Schedule Delays;
- Geotechnical Issues; and
- Reduced Gold Recovery.
13.2 OPPORTUNITIES
Opportunities include:
- Increased Resource Size;
- Improved Timing of Cash Flow;
- Steeper Pit Slopes;
- Reduction in Capital; and
- Beneficiation of Marginal or All Ore.
13.3 ASPECTS THAT PRESENT BOTH RISKS AND OPPORTUNITIES
Several risks exist for which there is a directly converse opportunity, these include:
- Higher or Lower Gold Price;
- Higher or Lower Gold Grade; and
- Higher or Lower Operating Costs.
The impact of these is shown in the sensitivities and strategies to manage the risks and opportunities are discussed in the full Scoping Study.
14 FUTURE WORK
If the project progresses, additional work will be required in a number of areas, typical of a project of this nature moving from scoping into feasibility. Key work packages will likely include:
- Additional drilling to increase the size of and confidence in the Mineral Resource Estimate;
- Further testwork to confirm the finding that gold recovery can decrease with arsenic content, and to target strategies to overcome this and return a recovery gain;
- Mapping of arsenic grades and mineralogy throughout the deposit to better understand the areas where a component of the gold present may be associated with arsenopyrite;
- Testwork to determine if beneficiation is viable and if there is sufficient upgrade to offset any gold losses;
- Geotechnical investigation to determine pit wall angles that are likely to be achieved and identify any potential geotechnical issues;
- Geochemical classification of waste to identify waste types that are potentially acid forming versus non acid forming and to help develop strategies for waste dump construction and management;
- Detailed pit design and waste dump design incorporating the additional drilling data being obtained and updates to the resource model and thus better defining pit sizes, strip ratios and ramp locations;
- Studies into the optimal mining production rates and sequences, haulage rates and processing rates. These studies should include modelling and evaluation of strategies to accelerate gold production through earlier mining of high grade zones and through preserving and prioritising high grade ore parcels through downstream haulage and processing;
- Further evaluation of the option to construct a dedicated processing facility at or near Steam Engine for this project and potentially to also process ore from other deposits owned by Superior Resources, either gold or base metals;
- Reporting of Ore Reserve. Once the resource model is updated and designs progress, and if project economics remain favourable, then an Ore Reserve can be developed and published, this will better inform the production schedules and increase confidence in project outcomes;
- Sterilisation drilling. This will allow the site layout to be finalised, confirming locations of waste rock dumps and topsoil stockpiles as well as the general site facilities and infrastructure; and
- Hydrology assessment to quantify the groundwater inflow and to better understand site water management and the need, if any, for a supplementary water bore.
15 RECOMMENDATIONS
It is recommended that studies into the Steam Engine deposit continue, as financial evaluation shows the project to have a positive NPV with current assumptions used. There are several opportunities to significantly improve the NPV further and make the project more robust, these should be pursued during future study stages.
APPENDIX 2
JORC Code, 2012 Edition – Table 1
Section 1 Sampling Techniques and Data
(Criteria in this section apply to all succeeding sections.)
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Samplingtechniques | •Nature and quality of sampling (e.g.cut channels, randomchips, or specific specialised industry standard measurementtools appropriate to the minerals under investigation, such asdown hole gamma sondes, or handheld XRF instruments, etc.).These examples should not be taken as limiting thebroadmeaning of sampling.•Include reference to measures taken to ensure samplerepresentivity and the appropriate calibration of anymeasurement tools or systems used.•Aspects of the determination of mineralisation that areMaterial to the Public Report.•In cases where 'industry standard' work has been done thiswould be relatively simple (e.g. 'reverse circulation drilling wasused to obtain 1 m samples from which 3 kg was pulverised toproduce a 30 g charge for fire assay'). In other cases moreexplanation may be required, such as where there is coarsegold that has inherent sampling problems. Unusualcommodities or mineralisation types (e.g. submarine nodules)may warrant disclosure of detailed information. | Current Sampling•RC drill samples are collected as drilled via a riffle splitter attached to the drill rigcyclone and collected as 1m riffle split samples. Approximately 1-3kg of sample wascollected over each 1m interval used for assaying.•Diamond core drill samples are collected by quartering of the NQ core from Diamonddrilling. Approximately 1 to 1.5 kg of sample was collected over each one metreinterval used for assaying.•The drill bit sizes used in the drilling were consistent in size and are consideredappropriate to indicate the degree and extent of mineralisation.•Sample intervals that lack metalliferous anomalism are not reported and are notconsidered to be material.•1m representative samples of intervals with visible mineralisation and those in theareas of interest based on previous drilling were assayed for gold at SGS laboratories inTownsville.•1m representative samples of intervals with visible mineralisation were assayed forgold at SGSlaboratories in Townsville.•1m samples at 0.5 g/t Au and above were also submitted for multi-element assayingusing a four acid digest.•Assaying for gold was via fire assay of a 50 gram charge.•Sample preparation at SGSlaboratories in Townsville for all samples is considered tobeof industry standard procedure. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Historical Sampling•Information relating to historical results relies on data contained in reports submittedto the Queensland Department of Natural Resources and Mines as part of theCompany Report System attaching to the grant of Exploration Permits. | ||
| •The sampling techniques, where reported, used standard industry approaches. Theseinclude: 1. splitting off a sample of material delivered to the top of the hole during RCdrilling to produce a sample for assay accompanied by geological logging of thesample. 2. Halving of drill core from diamond drilling to produce an assay sampleaccompanied by geological logging of the core. | ||
| •Assaying of samples was completed by commercial laboratory methods that wereappropriate at the time the samples were collected. Sample intervals of 4m werecommonly used for initial determination of the presence of gold by a geochemicalmethod followed by more detailed sampling of mineralised intervals at usually 1mintervals using a more precise method. | ||
| •Whilst it is not possible to determine the reliability of historical assay results, no issuesarose during compilation and interpretation of the results that would suggest that theassay results were not reasonable. Additional to this, the recent sampling and assayingcompletedin 2020 by Superior shows that the various previous drilling phases havegiven consistently similar results when compared to those of the recent (2020)sampling. | ||
| Drillingtechniques | •Drill type (e.g.core, reverse circulation, open-hole hammer,rotary air blast, auger, Bangka, sonic, etc.) and details (e.g.core diameter, triple or standard tube, depth of diamond tails,face-sampling bit or other type, whether core is oriented and ifso, by what method, etc.). | Current Drilling•Drilling from surface was performed using standard RC and diamond core drillingtechniquesas applicable to the hole drilled. |
| •RC Drilling was conducted by AED (Associated Exploration Drillers) using a UDR 650drilling rig and 5.5 inch drill bit. Additional to the on-board air compressor of thedrilling rig, additional compressed air was available as necessary via a separate boostertruck. Sampling was by the use of a face-sampling hammer bit. | ||
| •Diamond drilling was conducted by AED (Associated Exploration Drillers) using a UDR650 drilling rig and NQ drill rods and wireline to retrieve the core. Drill core wasoriented to allow structural measurements. The deeper drill holes were first precollared using the RC Drilling method outlined above. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| •All holes were surveyed using a Reflex Gyro north-seeking gyroscopic instrument toobtain accurate down-hole directional data. | ||
| Historical Drilling•Reverse Circulation (RC) and Diamond Drilling (DD) are the only drill types relied on inthis report. Historical Percussion and RAB holes have only been used in terms ofconstraining the extent of the Mineral Resource, when applicableand not for anyestimation purposes (Note: Where recent drilling is available this is used instead ofhistorical open hole percussion and/or RAB holes in determining the extents of themineralisation). | ||
| Drill samplerecovery | •Method of recording and assessing core and chip samplerecoveries and results assessed.•Measures taken to maximise sample recovery and ensure | Current Drilling•Sample recovery was performed and monitored by Terra Search contractor andSuperior'srepresentatives. |
| representative nature of the samples.•Whether a relationship exists between sample recovery andgrade and whether sample bias may have occurred due topreferential loss/gain of fine/coarse material. | •The volume of sample collected for assay is considered to be representativeof each1m interval. | |
| •RC drill rod string delivered the sample to the rig-mounted cyclone which is sealed atthe completion of each 1m interval. The riffle splitter is cleaned with compressed air atthe end of each 1m interval and at the completion of eachdrill hole. | ||
| •For Diamond core drilling a wireline was used to retrieve core samples that are thenplaced in core trays. | ||
| Historical Drilling•Recoveries for RC drill holes were not recorded. | ||
| •Recoveries for diamond drill core samples were recorded for most holes drilled atSteam Engine. These recoveries were usually of the order of 100% indicating thatrecoveries should not be an issue if the results are used for estimating resources. | ||
| •No relationship is evident between sample recovery and grade. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Logging | •Whether core and chip samples have been geologically andgeotechnically logged to a level of detail to supportappropriate Mineral Resource estimation, mining studies andmetallurgical studies. | Current Drilling•Geological logging was conducted during the drilling of each hole by a Terra Searchgeologist having sufficient qualification and experience for the mineralisation styleexpected and observed at each hole. |
| •Whether logging is qualitative or quantitative in nature. Core(or costean, channel, etc.) photography.•The total length and percentage of the relevant intersectionslogged. | •All holes were logged in their entirety at 1m intervals for the Reverse Circulation (RC)drill holes. A spear was used to produce representative samples for the logging of RCholes. | |
| •Intact entire Diamond drill hole core was use for the logging of Diamond core, the corewas used to record RQD, as well as structural information and geological logging. | ||
| •All logging data is digitally compiled and validated before entry into the Superiordatabase. | ||
| •The level of logging detail is considered appropriate for resource drilling. | ||
| •The RC chip trays and Diamond Core trays were all photographed. | ||
| Historical Drilling•Geological logging of most of the drill holes is available in the Company Report System.Logs for holes drilled at fill-in 25m sections have not been located at this stage. Theavailable logging are of a good standard. No geotechnical logs have been reported andit is assumed that these were not done. Diamond drill hole logs usually includestructural data that has been compiled in digital form. | ||
| •The logging is generally of a qualitative nature. No core or chip photography isavailable in the reports. | ||
| •For the logs available logging of all material has been completed. | ||
| Sub-samplingtechniquesand samplepreparation | •If core, whether cut or sawn and whether quarter, half or allcore taken.•If non-core, whether riffled, tube sampled, rotary split, etc.and whether sampled wet or dry. | Current Sampling•The sample collection methodology is considered appropriate for RC and DiamondCore drilling and was conducted in accordance with best industry practice. |
| •For all sample types, the nature, quality and appropriatenessof the sample preparation technique.•Quality control procedures adopted for all sub-sampling | •RC drill hole samples are split with a riffle splitter at 1m intervals as drilled. Split 1metre samples are regarded as reliable and representative. Approximately 1-3kg ofsample was collected over each 1m interval. Samples were collected as dry samples. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| stages to maximise representivity of samples.•Measures taken to ensure that the sampling is representativeof the in situ material collected,including for instance results | Duplicate samples are taken and assayed in each batch processed for assaying.•Diamond Core drill hole samples were collected from quartered core over 1 metre | |
| for field duplicate/second-half sampling.• | Whether sample sizes are appropriate to the grain size of thematerial being sampled. | intervals. Approximately 1 to 1.5 kg of sample was collected over each one metreinterval used for assaying. Quartered NQ Core samples are regarded as reliable andrepresentative. Samples were collected as dry samples. |
| •The sample sizes are considered appropriate to the style of mineralisation beingassessed. | ||
| Historical Sampling•The diamond drill core samples were collected from halved core. | ||
| •Details of the approach taken for sampling of RC drill holes are not available but it isexpected to be of industry standard for the time. | ||
| Quality ofassay data andlaboratorytests | •The nature, quality and appropriateness of the assaying andlaboratory procedures used and whether the technique isconsidered partial or total.•For geophysical tools, spectrometers, handheld XRFinstruments, etc., the parameters used in determining theanalysis including instrument make and model, reading times,calibrations factors applied and their derivation, etc.•Nature of quality control procedures adopted (e.g. standards,blanks, duplicates, external laboratory checks) and whether | Current Assaying•All samples were submitted to SGS laboratories in Townsville for gold. Gold assays ator above 0.5 g/t were additionally assayed for a full suite of 38 additional elementsusing a four acid digest.•Samples were crushed, pulverised to ensure a minimum of 85% pulp material passingthrough 75 microns, then analysed for gold by fire assay method GO_FA50V10 using a50-gram sample.•Multi-element analyses were conducted on assays of 0.5 g/t gold or above using a four |
| acceptable levels of accuracy (i.e. lack of bias) and precisionhave been established. | acid digestion followed by an ICP-AES finish using method GO_ICP41Q100 for thefollowing 38 elements: Ag, Al, As, Ba, Be, Bi, Ca, Cd, Ce, Co, Cr, Cu, Fe, K, La, Li, Mg, Mn,Mo, Na, Ni, P, Pb, S, Sb, Sc, Se, Sn, Sr, Te, Th, Ti, U, V, W, Y, Zn, Zr. | |
| •Certified gold, multi-element standards and blanks were included in the samplessubmitted to the laboratory for QAQC. Laboratory assay results for these qualitycontrol samples are within 5% of accepted values. | ||
| •Additionally, SGS used a series of its own standards, blanks, and duplicates for the QCof the elements assayed. | ||
| Historical Assaying•Sampling and assaying techniques used during various phases of the previous drilling |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| were done by commercial laboratories using industry standard procedures used at thetime of drilling. | ||
| •Assay data reviewed with the historical reports include some duplicate assaying. It isunknown in detail what other quality control procedures were adopted. | ||
| •The recent sampling and assaying completedin 2020 by Superior shows that thevarious historical drilling phases show consistent results when compared to those fromthe recent drilling. | ||
| Verification ofsampling andassaying | •The verification of significant intersections by eitherindependent or alternative company personnel.•The use of twinned holes.•Documentation of primary data, data entry procedures, data | Current Sampling•The reported significant intersections have been verified by Terra Search and Superiorgeologists against the representative drill chips and diamond drill core collected andthe drill logs. |
| verification, data storage (physical and electronic) protocols.•Discuss any adjustment to assay data. | •No holes were twinnedby Superior. | |
| •Logs were recorded by Terra Search field geologists on hard copy sampling sheetswhich were entered into spreadsheets for merging into a central database. | ||
| •Laboratory assay files were merged directly into the database. | ||
| •The data is routinely validated when loading into the database. | ||
| •No adjustments to assay data were undertaken. | ||
| Historical Sampling | ||
| •Close spaced recent drilling by Superior (2020) to historic drill holes confirms the orderof the drill gold intersections obtained by the historic drilling. | ||
| •To date, no dedicated twinned holes have been drilled by Superior on the historic drillholes, however very close spaced recent drill holes to the historic drilling has resultedin very similar results both in terms of widths and grades. | ||
| •Most of the historic drill hole data was captured and stored on paper. The compilationof that data in digital form has been completed by the Competent Person. | ||
| •No adjustments have been made to historical sample assay data as there was noapparent reason for such adjustment. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Location of•Accuracy and quality of surveys used to locate drill holesdata points(collar and down-hole surveys), trenches, mine workings andother locations used in Mineral Resource estimation.•Specification of the grid system used. | Current Drilling•Drill hole collars have been recorded in the field using hand held GPS with three metreor better accuracy. The locations have alsobeen further defined using DGPS to givesub one metre accuracy. | |
| •Quality and adequacy of topographic control. | •The drill hole spacing and drilling technique are appropriate to establish the degree ofgeological and grade continuity for the Mineral Resources estimation procedures thathave been applied. The gold mineralised system remains open and further infill, depthand strike extension drilling is required to confirm the full extent of the ore bodies. | |
| •The area is located within MGA Zone 55. | ||
| •A new level for the RL's has been defined as the MGA RL (previously the grid RL wasused) in preparation for the pre-feasibility. | ||
| •Topographic control is currently from DGPS pickup that has been merged with RLadjusted contours. This arrangement will be upgraded prior to pre-feasibility whenfurther definition of the topography is planned to use a LIDAR survey. This will becarried out for the pre-feasibility study. | ||
| Historical Drilling | ||
| •Noranda Australia (and subsidiaries) controlled exploration of the Steam Engine areausing a local grid. As the property advanced a surveyor was used to provide a moreaccurate local grid control with a local height datum being implemented. Their datahasbeen originally compiled using the local grid coordinates. | ||
| •Drill holes completed by Beacon Minerals Limited were reported using handheld GPScollar coordinates with a likely accuracy of about ± 5m. An accurate translation fromGPS coordinates to local grid coordinates has been used to convert the Beacon drillhole data to local coordinates. | ||
| •Many of the historical drill hole collars are still evident at the prospect. Superiorcompleted surveying of most of the previous drill hole collars using a DGPS system.The DGPS surveying validates the accuracy of Noranda's reported collar locations andprovided an additional level of location confidence to the historical drill hole data. | ||
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Data spacinganddistribution | •Data spacing for reporting of Exploration Results.•Whether the data spacing and distribution is sufficient toestablish the degree of geological and grade continuityappropriate for the Mineral Resource and Ore Reserveestimation procedure(s) and classifications applied.•Whether samplecompositing has been applied. | •Drill hole spacing is variable at the Steam Engine area, due to different stages of theresource evaluation at the project.•The drill hole spacing issufficient in the central portions of the Steam Engine Lode andthe Eastern Ridge Lode to allow estimation of Mineral Resources when all thenecessary information is compiled.•Most intersections reported in this report are weighted composites of smaller sample |
| intervals as is standard practice. | ||
| Orientation ofdata inrelation togeologicalstructure | •Whether the orientation of sampling achieves unbiasedsampling of possible structures and the extent to which this isknown, considering the deposit type.•If the relationship between the drilling orientation and theorientation of key mineralised structures is considered to haveintroduced a sampling bias, this should be assessed andreported if material. | •The orientation of the drill holes is generallyideal for reporting of the intersectionresults.•No orientation sample bias has been identified at this stage. |
| Samplesecurity | •The measures taken to ensure sample security. | •Sub-samples selected for assaying were collected in heavy-duty polyweave bags whichwere immediately sealed. |
| •These bags were delivered directly to the SGS assay laboratory in Townsville by TerraSearch and Superior's employees. | ||
| •Sample security measures within SGSlaboratories are considered adequate. | ||
| Audits orreviews | •The results of any audits or reviews of sampling techniquesand data. | •No audits or reviews of the sampling techniques and data have been undertaken todate. |
Section 2 Reporting of Exploration Results
(Criteria listed in the preceding section also apply to this section.)
| Criteria | JORC Code explanation | Commentary | ||
|---|---|---|---|---|
| Mineraltenement and | • | Type, reference name/number, location and ownershipincluding agreements or material issues with third parties such | • | The areas reported lie within Exploration Permit for Minerals 26165 and held 100% bySuperior. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| land tenurestatus | as joint ventures, partnerships, overriding royalties, native titleinterests, historical sites, wilderness or national park andenvironmental settings.•The security of the tenure held at the time of reporting alongwith any known impediments to obtaining a licence to operatein the area. | •Superior holds much of the surrounding area under granted exploration permits.•Superior has agreements or other appropriate arrangements in place with landholdersand native title parties with respect to work in the area.•No regulatory impediments affect the relevant tenements or the ability of Superior tooperate on the tenements. |
| Explorationdone by otherparties | •Acknowledgment and appraisal of exploration by otherparties. | •All historic drilling reported in this report has been completed and reported inaccordance with the current regulatory regime.•Compilation in digital form and interpretation of the results of that work in digital formhas been completed by theCompetent Person. |
| Geology | •Deposit type, geological setting and style of mineralisation. | •The Steam Engine and Eastern Ridge gold deposits are hosted within shear zones.•The gold mineralisation occurs within a number of north-northeast trending, westdipping pyritic quartz-muscovite-carbonate schist lodes within metamorphosedintermediate to basic intrusives and metasediments. Significant chlorite–epidote andsericite type alteration zones exist in the shear zones, with the mineralisationappearing to be mostly linked with heavily sericite altered sections of the host rock. |
| •The gold mineralisation phase itself consists of a mainly pyrite sulphide assemblage +/-minor arsenopryrite, pyrrhotite, and chalcopyrite (all fine grained). | ||
| •Several gold bearing lodes occur in the area, of which the Steam Engine Lode zone isthe most notable. The Eastern Ridge Lode zone is located some 500m eastof theSteam Engine Lode zone. The Southern Lode zone is located approximately 600mSouth West of the current Eastern Ridge mineral resource area and lies geologically inbetween the Steam Engine and Eastern Ridge lodes. | ||
| •The lodes are typically interpreted as being of the mesothermal lode type. Recentstudies undertaken by Superior Resource suggest the Steam Engine mesothermal goldmineralisation is most similar to orogenic style mineralisation. | ||
| •The important features of the Steam Engine and Eastern Ridge lodes are theircontinuity and a persistent dip to the west. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Drill holeInformation | •A summary of all information material to the understanding ofthe exploration results including a tabulation of the followinginformation for all Material drill holes:easting and northing of the drill hole collaroelevation or RL (Reduced Level) of the drill hole collarodip and azimuth of the holeodown hole length and interception depthohole length.o•If the exclusion of this information is justified on the basis thatthe information is not Material and this exclusion does notdetract from the understanding of the report, the CompetentPerson should clearly explain why this is the case. | •Drill Holes collar tables with significant intersections are included in previous ASXannouncements for the drill holes including the announcements dated19 February2021, 11 February 2021, 18 January 2021, 5 November 2020, 15 October 2020, 30September 2020, 14 September 2020 and 14 August 2017. |
| Dataaggregationmethods | •In reporting Exploration Results, weighting averagingtechniques, maximum and/or minimum grade truncations (e.g.cutting of high grades) and cut-off grades are usually Materialand should be stated.•Where aggregate intercepts incorporate short lengths of highgrade results and longer lengths of low grade results, theprocedure used for such aggregation should be stated andsome typical examples of such aggregations should be shownin detail.•The assumptions used for any reporting of metal equivalentvalues should be clearly stated. | •Exploration results are reported as a length weighted average of all the assays of thehole intersections.•No top cutting has been applied to the exploration results. However, the recentaddition of some ounce/tonne gold grades in some assays resulted in grade cutting ofvery high values for the purposes of the resource estimation. The 2020 Stage 2 drillingreturned two intersections, each containing a very high gold assay metre interval of135 g/t Au and 184 g/t Au (for further information see ASX report dated 18 January2021). These two very high gradeounce per tonne assays suggest a new high gradepopulation and are interpreted to indicate a high grade gold ore shoot. Top cuts of56% and 67% were applied to the very high grade intersections, resulting in areduction of the grades to 60 g/t Au for thepurpose of the Resourceestimation.Together with the surrounding assays and an inverse power of 3 in the block modellingthis top cut ensures that the effect of these two individual assays remain significantonly in the localised location and that theireffect it is not excessive. This top cut willagain be re-assessed once more drilling of the zone is carried out.•No metal equivalent values are reported. |
| Relationshipbetweenmineralisationwidths and | •These relationships are particularly important in the reportingof Exploration Results.•If the geometry of the mineralisation with respect to the drillhole angle is known, its nature should be reported.•If it is not known and only the down hole lengths are reported, | •For the Steam Engine lode zone an interpreted westerly dip of approximately 50 to 60°and drill holes which generally dip to the east at around 60° (or less) result in near truewidths at or above 0.87 times the intersection lengths as reported.•For the Eastern Ridge lode zone an interpreted westerly dip of approximately 45 to 55° |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| interceptlengths | there should be a clear statement to this effect (e.g. 'downhole length, true width not known'). | and drill holes that generally dip to the east at around 60° (or less) result in true widthsat or above 0.9 times the intersection lengths reported. |
| Diagrams• | Appropriate maps and sections (with scales) and tabulations ofintercepts should be included for any significant discoverybeing reported These should include, but not be limited to a | •Included.•Further relevant maps and sections are included in previous ASX announcements for |
| plan view of drill hole collar locations and appropriatesectional views. | the drill holes including the announcements dated19 February 2021, 11 February2021, 18 January 2021, 5 November 2020, 15 October 2020, 30 September 2020, 14September 2020 and 14 August 2017. | |
| Balancedreporting | •Where comprehensive reporting of all Exploration Results isnot practicable, representative reporting of both low and highgrades and/or widths should be practiced to avoid misleadingreporting of Exploration Results. | •Drill hole collar tables with significant intersections are included in previous ASXannouncements for the drill holes including the announcements dated19 February2021, 11 February 2021, 18 January 2021, 5 November 2020, 15 October 2020, 30September 2020, 14 September 2020 and 14 August 2017. |
| Othersubstantiveexplorationdata | •Other exploration data, if meaningful and material, should bereported including (but not limited to): geologicalobservations; geophysical survey results; geochemical surveyresults; bulk samples – size and method of treatment;metallurgical test results; bulk density, groundwater,geotechnical and rock characteristics; potential deleterious orcontaminating substances. | •Preliminary metallurgical leach testwork was undertaken in October and November2020 by ALS Laboratories to confirm the amenability of the ore to conventional CIP /CIL leaching. Six sample composites were generated from material which was of oregrade and considered representative of the ore to be mined, with two samples of eachof the three main ore zones. |
| •Grind size for the test work was P80 (80% passing size of 75 microns). | ||
| •The leach test conditions comprised sodium cyanide dosage of 1.5 kg/t, density of 40%solids, pH of 10 to 10.5, with dissolved oxygen at 15 to 20 ppm. | ||
| •Leach tests were run for 48 hours with a sample taken after 24 hours toassist inunderstanding the leach kinetics. | ||
| •The results for the Eastern Ridge samples (5223045 and 5223046) were excellent with97 and 98 percent of the gold being extracted respectively, and with virtually all of thisextracted after 24 hours. | ||
| •The results for the Steam Engine lode were lowerwith the average grade samples(5223044, 5223042 and 5223043) seeing total gold extraction of 84, 80 and 73 percentrespectively. | ||
| •At this stage, no testwork has been done to investigate options to improve the goldrecovery in the Steam Engine Lode samples. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Further work | •The nature and scale of planned further work (e.g. tests forlateral extensions or depth extensions or large-scale step-outdrilling).•Diagrams clearly highlighting the areas of possible extensions,including the main geological interpretations and futuredrilling areas, provided this information is not commerciallysensitive. | •Subsequent to this Mineral Resource estimate additional work programs will nowinclude:•Pit optimisation studies•Metallurgical studies•Geotechnical studies•Toll treatmentnegotiations•Preliminary mining and rehabilitation planning•Preliminary environmental studies |
Section 3 Estimation and Reporting of Mineral Resources
(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)
| JORC Code explanation | Commentary |
|---|---|
| •Measures taken to ensure that data has not been corruptedby, for example, transcription or keying errors, between itsinitial collection and its use for Mineral Resource estimationpurposes.•Data validation procedures used. | •This report is based on data compilations from recent Superior drilling (2020) anddrilling carried out as reported in previous resource estimations conductedbycompetent persons working for Superior. |
| •Data validation for the recent drilling has been carried out by the Competent Personby matching up the originalfield records with the digital information to ensure theinformation is correct. Data validation for the previous drilling was carried out by theinspection of the previous reports dating back to the earliest phases of drilling. | |
| •Data validation processeswere also carried out using mining software to make thedata ready for use. | |
| •Comment on any site visits undertaken by the CompetentPerson and the outcome of those visits.•If no site visits have been undertaken indicate why this is thecase. | •Site visits have been undertaken by a Competent Person to confirm the drill holelocations and to undertake geological and mineralisation interpretations, as well as forthe additional drilling carried out. |
| •Confidence in (or conversely, the uncertainty of) the geologicalinterpretation of the mineral deposit.•Nature of the data used and of any assumptions made.•The effect, if any, of alternative interpretations on Mineral | •In general, ahigher level of confidence exists for the Steam Engine Main Lode Zone,than for the Steam Engine Footwall Lode Zone (due to patchy grades) and for theEastern Ridge Lode Zone (due to less drilling).•The geological Interpretations are consistentwith the previous interpretation by |
| Resource estimation. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| •The use of geology in guiding and controlling Mineral Resourceestimation.•The factors affecting continuity both of grade and geology. | Noranda. | |
| •The data includes drill hole data and surface exposures, but there are no currentunderground ore exposures. | ||
| •No alternative interpretations are evident or have been considered. | ||
| •Lode geology is fundamental to the interpretations. | ||
| •The lack of underground exposures and the soil cover in the area may obscurecrosscutting faults, butsignificant displacement on these mineralisation zones is notapparent in the sectional data. | ||
| Dimensions | •The extent and variability of the Mineral Resource expressedas length (along strike or otherwise), plan width, and depthbelow surface to the upper and lower limits of the Mineral. | •These are apparent on the various sections included with this report. |
| Estimation•and modellingtechniques•••drainage characterisation).• | The nature and appropriateness of the estimation technique(s)applied and key assumptions, including treatment of extreme | •Further detail on the resource estimation process is included in the main body of thisannouncement. |
| grade values, domaining, interpolation parameters andmaximum distance of extrapolation from data points. If acomputer assisted estimation method was chosen include adescription of computer software and parameters used.The availability of check estimates, previous estimates and/ormine production records and whether the Mineral Resource | •Inverse distance block modelling was used for the resource estimations. Whenproperly constrained by wireframing, block modelling is a good method for theestimation of this kind of resource. An inverse power of 3 was used to more closelymap the grade distributions present in vein zones. An appropriate search radius wasused for individual lode zonesand the estimation method used. | |
| estimate takes appropriate account of such data.The assumptions made regarding recovery of by-products.Estimation of deleterious elements or other non-gradevariables of economic significance (eg sulphur for acid mineIn the case of block model interpolation, the block size in | •Check estimates were carried out using global estimates from the wireframes. Thesegave similar tonnages to the global block model estimates. While the wireframeestimate uses weighting of the intersectional grades it does not use any weighting inrelation to distance from those intersections. However, as a comparative method itshows that the tonnages are correct and even gave relatively close gold grade valuesto the block model. | |
| relation to the average sample spacing and the searchemployed.•Any assumptions behind modelling of selective mining units. | •Checks against previous resource estimations also showed similar tonnages and gradesover the portions of the Resource that have been previously estimated by Superior. | |
| ••control the resource estimates. | Any assumptions about correlation between variables. | •The estimate is for gold only. No by-products are considered likely. |
| Description of how the geological interpretation was used to | •Incomplete assay data from early drilling does not allow estimation of other elements.Some arsenic occurs within the gold mineralisation where it has been assayed. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| •Discussion of basis for using or not using grade cutting orcapping.•The process of validation, the checking process used, thecomparison of model data to drill hole data, and use ofreconciliation data if available. | •The 2020 Stage 2 drilling returned two intersections, each containing a very high goldassay metre interval of 135 g/t Au and 184 g/t Au (for further information see ASXreport dated 18 January 2021). These two very high grade ounce per tonne assayssuggest a new high grade population and are interpreted to indicate a high grade goldore shoot. Top cuts of 56% and 67% were applied to the very high grade intersections,resulting in a reduction of the grades to 60 g/t Au for the purpose of the Resourceestimation. Together with the surrounding assays and an inverse power of 3 in theblock modelling this top cut ensures that the effect of these two individual assaysremain significant only in the localised location and that their effect it is not excessive.This top cut will again be re-assessed once more drilling of the zoneis carried out. | |
| •Interpolation for Inferred Resources has allowed for up to approximately 100 metresalong strike between drill holes in some cases if it conforms to the current geologicalinterpretation. | ||
| •Extrapolation for Inferred Resources (outside of the drilling extents) has allowed for upto approximately 60 metres of extension, predominantly on dip, where holes eitherside along strike have indicated the continuation of the mineralisation. However,extension down dip was moderated by the width of the mineralisation, and if thatmineralisation was considered wide enough to be feasible for future extraction. | ||
| •No intersection data below 2m true thickness was used in the estimation. | ||
| •No correlation between variables. | ||
| •The lode geology was a fundamental element of the modelling and controlled themodelling process. | ||
| •Validation was carried out by checking each stage of the modelling process against theresource intersections and assay values. As mentioned above global wireframeestimates also gave close values tothe block modelling process. | ||
| Moisture | •Whether the tonnages are estimated on a dry basis or withnatural moisture, and the method of determination of themoisture content. | •In the absence of any specific gravity data, the tonnages were estimated on anassumed SG of 2.7. This appeared to be a reasonable value given the sulphide contentof the lodes. |
| Cut-offparameters | •The basis of the adopted cut-off grade(s) or quality parametersapplied. | •An arbitrary intersection cut-off grade of 1g/t was used based on a likely cut-off graderequired for a toll treatment gold operationin the area. |
| Criteria | JORC Code explanation | Commentary | |
|---|---|---|---|
| Mining factorsor | •Assumptions made regarding possible mining methods,minimum mining dimensions and internal (or, if applicable, | • | Open cut miningappears to be the most likely extraction method. The depth to whichthat might be possible is uncertain until further studies have been done. |
| assumptions | external) mining dilution. It is always necessary as part of theJORC Code explanation Commentary process of determiningreasonable prospects for eventual economic extraction to | • | Internal dilution zones within the mineralised downhole intervals were included in theestimates. |
| consider potential mining methods,but the assumptions maderegarding mining methods and parameters when estimatingMineral Resources may not always be rigorous. Where this isthe case, this should be reported with an explanation of thebasis of the mining assumptions made. | • | A minimum width of the mineralised zone (including waste as necessary) was used todevelop what are hoped to be mine practical widths down to a minimum of 3m insome cases (at the Eastern Ridge Lode zoneand at the extremities of the Steam EngineLode). | |
| • | Further mining dilution effects will need to be considered during the reserveestimation process. | ||
| Metallurgicalfactors orassumptions | •The basis for assumptions or predictions regardingmetallurgical amenability. It is always necessary as part of theprocess of determining reasonable prospects for eventualeconomic extraction to consider potential metallurgicalmethods, but the assumptions regarding metallurgicaltreatment processes and parameters made when reportingMineral Resources may not always be rigorous. Where this isthe case, this should be reported with an explanation of thebasis of the metallurgical assumptions made. | • | Preliminary metallurgical leach testwork was undertaken in October and November2020 by ALS Laboratories to confirm the amenability of the ore to conventional CIP /CIL leaching. Six sample composites were generated from material which was of oregrade and considered representative of the ore to be mined, with two samples of eachof the three main ore zones. |
| • | Grind size for the test work was P80 (80% passing size of 75 microns). | ||
| • | The leach test conditions comprised sodium cyanide dosage of 1.5 kg/t, density of 40%solids, pH of 10 to 10.5, with dissolved oxygen at 15 to 20 ppm. | ||
| • | Leach tests were run for 48 hourswith a sample taken after 24 hours to assist inunderstanding the leach kinetics. | ||
| • | The results for the Eastern Ridge samples (5223045 and 5223046) were excellent with97 and 98 percent of the gold being extracted respectively, and with virtually all of thisextracted after 24 hours. | ||
| • | The results for the Steam Engine lode were lowerwith the average grade samples(5223044, 5223042 and 5223043) seeing total gold extraction of 84, 80 and 73 percentrespectively. | ||
| • | At this stage, no testwork has been done to investigate options to improve the goldrecovery in the Steam Engine Lode samples. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Environmentalfactors orassumptions | •Assumptions made regarding possible waste and processresidue disposal options. It is always necessary as part of theprocess of determining reasonable prospects for eventualeconomic extraction to consider the potential environmentalimpacts of the miningand processing operation. While at thisstage the determination of potential environmental impacts,particularly for a greenfields project, may not always be welladvanced, the status of early consideration of these potentialenvironmental impacts should be reported. Where theseaspects have not been considered this should be reported withan explanation of the environmental assumptions made. | •These factors have yet to be studied and some preliminary assumptionsfor this areexpected to be adoptedin an upcoming scoping study. |
| Bulk density | •Whether assumed or determined. If assumed, the basis for theassumptions. If determined, the method used, whether wet ordry, the frequency of the measurements, the nature, size andrepresentativeness of the samples.•The bulk density for bulk material must have been measuredby methods that adequately account for void spaces (vugs,porosity, etc), moisture and differences between rock andalteration zones within the deposit.•Discuss assumptions for bulk density estimates used in theevaluation process of the different materials. | •At this stage the density for the resource has been assumed at an SG of 2.7, which isconsidered to be a close figure for this type of rock and mineralisation insitu.•Tests will need to be carried out in the next phase of drilling to determine moreaccurate estimates for the average density. |
| Classification | •The basis for the classification of the Mineral Resources intovarying confidence categories.•Whether appropriate account has been taken of all relevantfactors (ie relative confidence in tonnage/grade estimations,reliability of input data, confidence in continuity of geologyand metal values, quality, quantity and distribution of thedata).•Whether the result appropriately reflects the CompetentPerson's view of the deposit. | •Confidence levels for classification were based on similar classifications that have beenmade on similar deposits and by the degree of continuity of the lode zone, the densityof the existing drilling, and the apparent reliability of the historical data (having beenconfirmed by the recent 2020 drilling).•The additional infill drilling (in 2020) has led to an improved level of classification, inmany of the areas previously estimated. Further additional exploration drilling has alsoled to new Resources at the northern end of the Steam Engine Lode, but of generallylower grades and widths than for previous Steam Engine mineralisation. This has beenoffset by the location of some higher grade zones within infill drilling in some of thedeeper drill holes at the Steam Engine Lode.•The result appropriately reflects the Competent Person's current view of the deposit. |
| Criteria | JORC Code explanation | Commentary |
|---|---|---|
| Audits orreviews | •The results of any audits or reviews of Mineral Resourceestimates. | •No audits have been undertaken at this stage. |
| Discussion ofrelativeaccuracy/confidence | •Where appropriate a statement of the relative accuracy andconfidence level in the Mineral Resource estimate using anapproach or procedure deemed appropriate by the CompetentPerson. For example, the application of statistical orgeostatistical procedures to quantify the relative accuracy ofthe resource within stated confidence limits, or, if such anapproach is not deemed appropriate, a qualitative discussionof the factors that could affect the relative accuracy andconfidence of the estimate.•The statement should specify whether it relates to global orlocal estimates, and, if local, state the relevant tonnages,which should be relevant to technical and economicevaluation. Documentation should include assumptions madeand the procedures used.•These statements of relative accuracy and confidence of theestimate should be compared with production data, whereavailable. | •The factors that could affect the relative accuracy or confidence of the estimatesinclude all drilling data quality issues, data density, modelled grade continuity and theused resource model assumptions. All of these are adequately discussed in theinformation above.•This approach provides an estimate within any area of the lode that is locally based.•No comparisons with production data are possible. |