Bullabulling Gold Project – Resource Drilling and Work Update
Highlights
- Auzex continues to develop Bullabulling despite distractions of a hostile and unsolicited take-over attempt from GGG Resources plc.
- 105 new drill holes totalling 15,575m completed during February and March 2011, bringing overall drilling total to 30,854m in 227 drill holes since commencement.
- Results from the drilling program continue to confirm and expand the current resource model and include new high grade intersections.
- Approximately 22% of reported mineralised sections are outside the current resource model.
- Highlights include 1m at 23.80 g/t Au from 34m, 3m at 9.33 g/t Au from 158m, 2m at 8.41 g/t Au from 94m, 1m at 11.75 g/t Au from 128m, 1m at 12.05 g/t Au from 62m, 3m at 6.77 g/t Au from 155m, 7m at 24.46 g/t Au from 36m,including 1m at 164 g/t Au from 38m, 5m at 7.59 g/t Au from 78m, 6m at 7.35 g/t Au from 90m and 2m at 13.29 g/t Au from 29m.
- A Program of Works has been submitted by Auzex as mine manager to the WA Department of Mines to allow a total of 194,000m to be drilled in the coming year or as required.
- The Board continues to unanimously recommend shareholders TAKE NO ACTION and DO NOT ACCEPT the proposed take over offer from GGG Resources plc.
Resource drilling program update
The Bullabulling Gold Project RC resource drilling program was extended through February and March to expand the drilling program by 37,500m to infill new zones of mineralisation identified. The additional work was proposed by Auzex and approved by its joint venture partner, GGG Resources plc (“GGG”) at the January 2011 Joint Venture meeting. Activities continued to focus on infill resource drilling, reviewing QAQC results, review of drill spacing requirements to upgrade the new resource estimate, preliminary resource modelling and metallurgical test work. Detailed drill planning has also been undertaken to expand the resource base and more importantly convert the large amount of Inferred resources to Indicated resources. Results from the drilling to date continue to increase our confidence in the quality of the historic data and accuracy of the current resource estimate. The majority of holes continue to return intersections similar to those predicted by the resource model and about a quarter are intersecting new mineralisation not currently taken account of by the resource model.
Objective of current resources drilling program - to establish maiden reserve
A key aim of the current resource drilling program is to compare results from historic drilling with the aim of improving the confidence in the historical assays to allow the current Inferred resource to be reclassified to Indicated and possibly Measured categories, and in turn enable initial JORC compliant reserves to be established for the project. The current reported JORC compliant mineral resource is 41,517,000 tonnes at 1.48 g/t Au for 1.98 million ounces of gold at a 0.7 g/t Au cut off to an assumed economic mining depth of 315m RL, approximately 120m below surface.
Drilling work
Total drilling production to date is 30,854m from 227 holes since the program commenced, including pre-collars for the metallurgical holes. Since the last announcement where results were reported to 1 February 2011, there has been 15,575m drilled in 105 holes to 1 April 2011 (Table 1 of the ASX announcement). Drilling during the period focussed on in-fill drilling new mineralisation found at Titan and Bacchus East, and testing of historical mineralisation south and north of Phoenix, Bacchus South and reconnaissance drilling at Bonecrusher, which is located at the northern end of the Bullabulling mineralised trend (Figure 1 of the ASX announcement).
Drilling results
Drilling results continue to improve the confidence in the current resource model and consequently the historic data that were used to estimate the resource model. Importantly a number of new zones of mineralisation continue to be intersected outside the resource model both below and along strike from known mineralisation (Table 2). New intersections not reported previously include 1m at 23.80 g/t Au from 34m in BJ0118, 47m at 0.74 g/t Au from 39m in BJ0120, 7m at 1.68 g/t Au from 73m in BJ0120, 9m at 1.67 g/t Au from 0m in BJ0134, 3m at 9.33 g/t Au from 158m in BJ0136, 34m at 0.65 g/t Au from 138m in BJ0143, 6m at 1.52 g/t Au from 108m in BJ0144, 3m at 3.57 g/t Au from 77m in BJ0153, 2m at 8.41 g/t Au from 94m in BJ0154, 1m at 11.75 g/t Au from 128m in BJ0159, 1m at 12.05 g/t Au from 62m in BJ0160, 4m at 2.98 g/t Au from 172m in BJ0160, 1m at 8.02 g/t Au from 134m in BJ0164, 2m at 7.62 g/t Au from 47m in BJ0165, 5m at 1.79 g/t Au from 130m in BJ0165, 4m at 2.97 g/t Au from 146m in BJ0166, 3m at 6.77 g/t Au from 155m in BJ0172, 2m at 5.03 g/t Au from 115m in BJ0176, 1m at 8.31 g/t Au from 44m in BJ0179, 7m at 24.46 g/t Au from 36m, including 1m at 164 g/t Au from 38 m, in BJ0180, 1m at 8.10 g/t Au from 76m in BJ0180, 1m at 7.08 g/t Au from 47m in BJ0184, 2m at 8.69 g/t Au from 80m in BJ0184, 4m at 1.81 g/t Au from 69m in BJ0187, 6m at 2.47 g/t Au from 72m in BJ0189, 5m at 1.90 g/t Au from 44m in BJ0190, 2m at 5.54 g/t Au from 75m in BJ0201, 3m at 3.80 g/t Au from 90m in BJ0201, 3m at 6.12 g/t Au from 98m in BJ0202, 3m at 12.42 g/t Au from 106m in BJ0203, 6m at 1.67 g/t Au from 113m in BJ0203, 7m at 2.08 g/t Au from 76m in BJ0206, 5m at 7.59 g/t Au from 78m in BJ0207, 6m at 7.35 g/t Au from 90m in BJ0208, 2m at 13.29 g/t Au from 29m in BJ0210 and 3m at 3.17 g/t Au from 112m in BJ0214.
All the new holes drilled have intersected mineralisation that is similar in grade and widths to the historic drilling (Table 2 of the ASX announcement). Of particular importance were the results from Bonecrusher which confirmed similar mineralisation 5km along strike from the main resource area. Bonecrusher has the potential to add to the resource base of the project as the footwall lodes found to the south have not been tested in this area. As in the previously announced holes, there are 4 intersections per hole relating to the multiple stacked lodes defined by the structural mapping. Approximately 66% of these intersections returned similar or better grades or widths of mineralisation to the resource model and 34% are worse or did not intersect mineralisation predicted by the resource model. Approximately 23% of the reported intersections have returned gold mineralisation outside the current resource model, as previously reported to 315 RL or approximately 120m below surface, which will add to the current resource base of the project.
An example of the reconciliation of the QAQC drilling with the current resource estimate is shown on the attached section (Figure 2 of the ASX announcement). All the drill holes on the section were drilled after the resource model and intersected mineralisation as predicted by the resource model in drill holes BJ0203, BJ0202, BJ0180 and BJ0179. The mineralisation in BJ0201 and BJ0177 is of a similar width and grade as predicted by the model but slightly offset. The high grade intersection in BJ0180 of 9m at 9.49 g/t Au including 1m at 164 g/t Au is a new intersection not predicted by the model.
Auzex proposed drilling program
A total of 194,158m of new drilling has been planned from 1,210 drill holes to an average depth of 160m to follow up on the QAQC drilling (Figure 3 of the ASX announcement). This drilling will infill resources to the north, south and at depth, and will also include exploration drilling to define the footwall and hanging-wall contacts of the mineralised trend. Exploration drilling is also planned at depth to test for repetitions of the stacked lodes at depth that may have better continuity of high grade mineralisation.
The Joint Venture committee will be required to sign off on the proposed further drilling program.
Resource Estimation
The geological consultants continued to work on the new resource and reserve estimate and have been continuously reviewing drilling results as they become available in relation to QAQC and drill spacing requirements. A review of the standards, blanks and duplicate samples to date has also been completed with no issues identified. Preliminary resource estimation has started to finalise the modelling techniques and geostatistical parameters to be used in the resource estimate upgrade. Also detailed process, mining and administration costs are being compiled in preparation for optimisation studies that will be carried out on the upgraded resource estimate to establish a maiden reserve for the project.
Metallurgy Test Work
Auzex’s consultant metallurgical engineers are currently reviewing the new metallurgical comminution, recovery and variability testwork data and have started modelling potential processing and plant capital costs, assuming a base case plant capacity of 5.0 mtpa. Preliminary crushing, mill and plant design work will also be carried out. This information will then be used to optimise plant throughput, and define operating and capital costs for the planned reserve estimation.
Future Work Plan
Work is continuing as planned with the following work expected to be completed in the coming months:
- Sign off on processing costs
- Finalise preliminary engineering design
- Receipt of all assay results from the resource drilling
- Development of a preliminary resource estimate
- Sign off on capital costs
- Resource estimation
- Approval of Program of Works for 194,000m of drilling by end of April
- Optimisation and reserve estimation
- Start of next phase of drilling either exploration or infill drilling driven by the results from the optimisation studies
- Appoint project manager and preparation of BFS
Commentary on drilling results and progress
Commenting on the drilling results and progress generally, Auzex Managing Director John Lawton said: “The results continue to confirm a large bulk tonnage low grade deposit with high grade sections. My team is doing a fantastic job in developing Bullabulling at pace and has developed a fast track program for the remainder of the year.
We note that, despite its loud criticism of Auzex, GGG's Third Supplementary Prospectus released on 1 April 2011 contained no new ideas on how to progress the Project and we now await its Bidder's Statement for any constructive suggestions that it might contain.
In the meantime, we will continue our program at Bullabulling despite the distractions presented by the unsolicited and hostile proposed takeover offer by GGG Resources.”
GGG proposed take-over of Auzex
The Board continues to unanimously recommend that shareholders TAKE NO ACTION and DO NOT ACCEPT the proposed offer.
The Board remains confident that the only solution for both Auzex and GGG shareholders is an Australian domiciled and ASX listed entity driven by the same Board and management team that identified Bullabulling and developed it into the potential world class asset that it is today. The Board and management team have significant experience in identifying, developing and operating gold mines in the Australasian region and is much better placed to continue the excellent work achieved to date at Bullabulling. As outlined in Figure 3 we have a well designed and technically sound development strategy for the development of Bullabulling which is far superior to any alternative strategy that GGG is proposing.
For further information please check our website (www.auzex.com) or contact John Lawton (Managing Director) or Greg Partington (Operations Director) on +617 3333 2722 and +6144800987 respectively.
Bullabulling Overview
The Bullabulling Gold project (Bullabulling) is a large tonnage, low grade deposit with high grade shoots, associated with the regional Bullabulling shear zone which extends over tens of kilometres. The mineralised structure is 500m wide, consisting of multiple west dipping low grade stacked zones with narrower higher grade gold mineralisation. Bullabulling is located in Coolgardie approximately 65km south-west of Kalgoorlie, Western Australia. Bullabulling was previously mined by Resolute for 431k oz Au in the 90’s. The current program focuses on approximately 2.3km of the 6km portion known as the Bullabulling Trend where previous operations were concentrated. The focus for the Bullabulling joint venture with GGG Resources plc is to establish an initial reserve exceeding one million ounces gold to commence production in 2013.
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