Growth main priority for Silver Lake Resources

Resources Corner

by Wally Graham, Resources Roadhouse

Silver Lake Resources (ASX:SLR) current main focus is its Mount Monger operation located 50 kilometres south east of the historic gold mining centre of Kalgoorlie.
“Mount Monger has got us to where we are today,” Silver Lake director of exploration and geology Chris Banasik told The Inside Story.
“Since we listed in 2007, we have only gone to the market twice to raise funds; once for an exploration kick-up in 2009 and then last year to fund our new Murchison project.
“Apart from that we have managed to pay our own way, which is a good thing as we have maintained control of the company and minimised dilutionour shareholders.”
Silver Lake commenced mining operations at Mount Monger in 2007 from the Daisy Milano underground mine.
It now minesthree other underground sources in Daisy East, Rosemary and Haoma as well as numerous open pit mines at Wombola.
Ore from Mount Monger is processed at the Lakewood gold processing facility, which recently underwent a 700,000 tonne per annum expansion.
A new 1.6 megawatt ball mill was commissioned on low grade feed at reduced throughput rates to allow the new mill componentry to be run in and to stabilise the CIL circuit to required operating parameters.
The mill was operated at 700,000tpa design rates in February, March and April 2012, however Silver Lake has completed Stage 2 of the upgrade to the point where the mill can be operated at 900,000tpa.
Combined milled production for ore produced from Mount Monger mines for the March quarter this year totalled 134,507 tonnes at 4.3grams per tonne gold for 17,284 recovered ounces.
Once fully completed, the facility will be capable of producing at a rate of one million tonnes per annum.
Work still to be undertakenincludes completion of the crusher upgrade, construction of a ROM bin andinstallation of a new tailings storage facility later in 2012.
“The mill expansion was always going to be a two-stage operation,” Banasik explained.
“Until late last year the Lakewood mill was good for around 400,000 to 500,000 tonnes per year.
“The expansion we completed in January takes us to around 750,000 to 800,000 tonnes per year.
“The last phase, which willenable milling of one million tonnes per year, will happen gradually and be finalised by the end of 2013.”
The Lakewood facility affords Silver Lake the flexibility to adjust its production rate should it discover more open pittable deposits in the area, which it says it is confident of doing.
Should the company’s production profile change in the alternate direction the mill has been designed to ensure it does not go hungry.
“If we don’t achieve one million tonnes per year we can turn the mill down,” Banasik said.
“That means we will not have to utilise the full circuit and will remain just as efficient on a dollar per tonne basis.
“The last thing we wanted to do was spend a lot of money on a mill we would be constantly trying to fill.”
Silver Lake recently announced an interim resource upgrade at Mount Monger to 6.8 million tonnes at 7.8 grams per tonne gold for 1.7 million ounces.
This included a 100 per cent increase in the resource at Haoma to 465,000 ounces with more than 1.3Moz of resource now accessible from existinginfrastructure.
“By this time next year we will have already poured gold from our second operation we are developing in the Murchison region of Western Australia,” Banasik said.
“By then we expect to be underground and open pit mining at that second operation and our new mill will have been reconstructed and rebuilt.”
The Murchison project is similar to Mount Monger with a number of minesources servicing a central processing facility.
The company announced an interim resource upgrade at Murchison, which now totals 20.6 million tonnes at 2.8g/t gold for 1.9 million ounces.
The upgrade included an increase toMeasured and Indicated Resources to 880,000 ounces as well as a 48 per cent increase in resource at the Tuckabianna underground deposits of Tuckabianna West and Caustons to 460,000 ounces.
Silver Lake is currently undertaking infill and extensional drilling targeting strike and depth extensions to the planned underground mines at Caustons, Tuckabianna West and Comet.
The Comet project consists four ore deposits and has a current JORC Resource of 4.7 million tonnes at 2.90g/t gold for 440,700 ounces.
Comet also includes the Pinnacles deposit, located approximately 100m west of the main Comet deposit.
Pinnacles will become the first of 14 open pit mines in the Murchison with mining expected to commence in the September 2012 quarter to prepare mill feed.
Production at the Murchison project is anticipated to commence in the March 2013 quarter ramping up to 100,000 ounces perannum in 2014.
Approvals for a Project Management Plan, Mining Proposal and Works Approval have already been received from regulatory authorities and construction of a 250 man camp located in the town of Cue is almost complete.
Relocation of company owned milling infrastructure has also commenced with the final design for the gold mill allowing for a potential copper circuit.
A copper circuit may just come in handy after the company received assay results from a ninehole diamond drill program confirmedHollandairedeposit as a high-gradecopper deposit.
Results included:
-         9.3m at 15.4 per cent copper, 2g/t gold and 29g/t silver from 61m, including 1m at 45.5 per cent copper, 2.8g/t gold and 51g/t silver and 0.8m at 41.2 per cent copper, 5.5g/t gold and 62g/t silver.
“It is unreasonable to expect the first nine holes you drill in an area to be as good as the first nine holes we drilled,” Banasik said.
“However, we are excited by the copper we have found at Cue, but we really don’t know what it is yet.
“It could be anything; but it is early days yet.
“It has been a very interesting start – there havebeen some very good grades returned and we are getting encouragement from some other places as well.”
Silver Lake is finalising the purchase of the Kundip gold project and the Trilogy polymetallic project from Phillips River, located near Ravensthorpe in the south of WA.
Silver Lake has also purchased Phillips River’s Munglinup project.
This project consists of five exploration tenements covering over 1,600square kilometres located in the Albany Fraser belt, one of Australia’s most significant gold belts and host to the 5Moz Tropicana deposit.
“We should be able to conclude the Phillips River transaction within the next few months,” Banasik said.
“We will then be producing at Mount Monger, and by next year be producing at Murchison as well as conducting exploration and evaluation down at Ravensthorpe.
“The real thing about Silver Lake for the next 12 to 18 months is to watch how this entire growth profile emerges.”
Silver Lake Resources (SLR)

Paul Chapman, Les Davis, Chris Banasik, Peter Johnston, Brian Kennedy, David Griffiths
Directors                                       11.6%
Sprott Asset Management             6.9%
Goodman & Company                    6.6%
220.3 million
$674 million (at 7 June 2012)