GOLDWoolgar Gold Project, Queensland
Strategic Minerals Corporation N.L. (100%)
Background
The Woolgar gold field is located 120 kilometres north of Richmond in north Queensland (Figure 1). Strategic's Woolgar project tenements cover an area of 700 square kilometres and all mining titles and exploration permits are 100% owned and managed by Strategic.
The regional area is one with a high gold endowment. Multi-million ounce gold deposits have been developed at Kidston (4.1m oz Au), Charters Towers (7.1m oz Au), Mt Leyshon (3.2m oz Au) and Pajingo - Vera Nancy (3.2m oz Au).
High grade epithermal gold veins were first recognised by Strategic at Woolgar in 2002, in the Sandy Creek area, expanding the potential of the field to host a major gold deposit. The epithermal veins at Woolgar are believed to have many geological similarities to those at Pajingo, one of Australia's largest and most profitable gold mines. The majority of the high grade material at Pajingo occurs at deeper levels and was discovered by intensive deep drilling of geological targets.
The geological similarities with Pajingo, and other epithermal deposits, demonstrate a great opportunity for gold discoveries through continued drilling of the extensive Sandy Creek vein system, both near surface and at depth. Some 18km of veined structures are exposed at surface, and the gold mineralized veins have been demonstrated to extend beneath surrounding younger cover rock sequences.
At the Woolgar project, the company has established a large near surface global gold resource, which it believes has the potential to be expanded to 1M ounces of gold. To date, a resource of approximately 453,000 ounces gold (estimated at 0.8 to 1.0 g/t gold cut-off grades) has been established by the Company. A larger lower grade resource has also been defined at lower cut-off grades of 0.4 to 0.5g/t gold. the global resource is estimated at 693,000 ounces of gold (Table 1). This estimate does not include unpublished new discoveries.
The global resource estimate consists of several deposits, with the Lost World deposit being the largest.
During the December 2007 quarter the Company commenced resource modelling of the most recent gold discovery at Camp vein and the extensions to known mineralized positions at the Grand Central West vein and Lost World veins, to be included in the global resource estimate on completion of the modelling.
The Camp vein has similar geometry, grade and strike extent to the high grade Explorer vein which contains an estimated 59,000 ounces of gold.
Low grade silver credits occur throughout the Sandy Creek epithermal veins with the gold mineralistion, but are not quantified to date.
Recent drilling results clearly demonstrate potential to expand the near surface gold resource base to a target of 1 million ounces. Current work programs are directed toward continued expansion of the near surface gold resource base, and development of open pit mining operations to take advantage of current high gold price.. A portion of the cash flow from any surface operations will be assigned to deep resource drilling for large high grade Pajingo type targets.
The near surface resources are amenable to open pit mining. Mining leases have been granted over the deposits, cultural heritage surveys have been completed and a 1 million cubic metre dam for supply of water has been constructed in preparation for mining.
Soapspar Gold Deposit
A pre-feasibility study for a heap leach style development of the Soapspar deposit is currently being undertaken as a result of the strong outcomes of an initial study of the viability of mining at Soapspar, by independent consultants.
The Soapspar gold deposit is located 8 kilometres to the north of the main epithermal gold resources at Sandy Creek. The initial study indicated positive economics for development of a low cost open pit mine and heap leach processing operation at Soapspar. Recent pre-feasibility work has included completion of a new resource estimate which resulted in a significant resource upgrade to 95,200 ounces gold; and, extensive additional metallurgical test work.
Geology and Resources
The total global resource for the Woolgar project including measured, indicated and inferred categories at either a 0.8 or 1.0 g/t cut off is 10,431,000 tonnes at 1.35 g/t gold, approximately 453,000 ounces gold, Table 1. The majority of these resources occur near surface (0 - 100m depth) within open pittable mining depths.
The global resource figure does not include estimates for the most recent gold discovery at Camp vein and newly drilled extensions to known mineralized positions at Grand Central West and Lost World which are currently being modelled for inclusion in the global gold resource estimate in due course. The Camp vein has similar geometry, grade and strike extent to the high grade Explorer vein which contains an estimated 59,000 ounces of gold.
An overall larger lower grade resource has also been defined. At lower cut-off grades of 0.4 to 0.5g/t gold, the resource is estimated at 693,000 ounces of gold (Table 1). This estimate does not take into account recent discoveries.
Low grade silver credits occur throughout the Sandy Creek epithermal veins with the gold mineralization, but are not quantified to date.
The gold deposits within the Woolgar Project tenements occur in two distinct areas, the Sandy Creek area and the historical Woolgar Goldfield (Figure 2). Mineralized veins or fault zones in both areas are hosted within Proterozoic basement rocks exposed as 'windows' through younger relatively flat lying sedimentary cover rocks.
The majority of the resources, approx. 350,000 ounces gold, (Table 1) are hosted by the Sandy Creek low sulphidation epithermal vein system in several mineralized shoots (Figure 3). This vein system has a very large footprint, with approximately 18 kilometres of veining exposed at surface and clear evidence of the veins extending further beneath surrounding younger Jurassic sandstone cover rocks.
Additional gold deposits are located to the north and northwest of the Sandy Creek area within the historical Woolgar Goldfield which has seen periods of mining from the late 1800's through to the 1970's. Numerous small gold workings are distributed over 20 kilometres on or adjacent to the major Woolgar fault zone. The Woolgar fault is a major fault splay off the Gilberton fault zone, which is spatially associated with numerous gold occurrences including the major Kidston gold deposit. The largest drilled resource position within the Woolgar Goldfield of approx. 95,000 ounces gold (Table 1) is the Soapspar deposit.
Table 1. Summary Table of Woolgar Project Resources
Figure 2. Woolgar project schematic geology & gold deposit locations.
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Figure 3. Sandy Creek area schematic geology & gold deposit locations.
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2006 - 2007 Exploration Overview
Exploration programs in 2006 and 2007 conducted by Oxiana Pty Ltd under farm-in agreement were designed to facilitate an early assessment of the gold potential of the 'deeps' of the Sandy Creek epithermal veins. Oxiana spent $2.6 million on the project over a two year period, without earning equity in the project.
The work program conducted by Oxiana has significantly advanced Strategic's objective of seeing the development of the near surface resources at Woolgar and providing invaluable data for ongoing exploration of the 'Deeps' of the Sandy creek epithermal veins. Oxiana conducted extensive mapping, geophysical surveys, soil sampling and combined RC and diamond drilling. A total 67 RC holes and 13 diamond holes were drilled.
The Oxiana drilling in the Sandy Creek area, has incrementally expanded the shallow resource positions at Hillview, Camp vein, Shanghai and Lost World (yet to be included in the project gold resource inventory); and has highlighted several new targets at shallow and moderate depths, which are yet to be drilled (eg. Figure 3).
The 13 deeper diamond holes drilled by Oxiana were conducted in two stages. This drilling has only tested a very small portion of the exposed veins at depth.
Stage 1 - Six holes were drilled by Oxiana in 2006. These holes were drilled on 100 metre centres, systematically stepping out to test for extensions to the main Lost World structure [the largest and most extensively mineralised structure exposed at surface]. The best drill result from this drilling was 9.4m @ 5.21g/t gold, from hole LWD0025 from 149.6m down hole.
Shallower RC holes were also drilled on several structures as part of Stage 1 in 2006. The best RC drill intersection was recorded from the Lost World structure, 7m @ 5.0 g/t gold, in hole LWRC0249 from 140m down hole.
Stage 2 - Seven holes were drilled in 2007. The drilling strategy used was to provide bold step-outs to test for continuity of the mineralized structures identified at surface. Only, one hole was drilled into each of the major structures, which have exposed strike lengths in the order of 700 - 1500m. The deepest hole was 612m down hole depth. Zones of alteration with some quartz veining or fault zones were observed in most holes, at anticipated depths, confirming continuity of the mineralized structures at depth. The best gold mineralized drill intersections were recorded from the Hillview and the Hillview South structures, 13m @ 1.02g/t gold, from hole PHV1_2007 and 7m @ 1.11 g/t gold, from hole PLW2_2007 respectively. These structures have not been explored extensively below 50m depth.
Of particular interest from the Stage 2 diamond drilling was the one hole drilled at Explorer which intersected a second dolerite sill at depth. The potential for a second high grade ore shoot on the top of this dolerite surface is thought to be high; supported by pervasive anomalous Ag throughout the dolerite and confirmed strong continuity of the main Explorer vein which was intersected well above the contact target position.
In late October 2007, Oxiana elected not to exercise its option to proceed with the second stage of the Woolgar farm in agreement, which required a major monetary commitment to be spent over a short time frame, to enable them to earn initial equity in the project.
In notifying Strategic of their election not to proceed to the next stage, Oxiana commented that "in terms of what we needed to see from the initial $2 million program, and this became increasingly critical as Oxiana has grown, our target criteria has elevated in scale, and the decision (to proceed) would not allow for SMC's push for a development in the short-med term… We had to make a hard decision based on that context. This does not mean that we don't think Woolgar is capable of producing another million oz of gold." Oxiana is a significant shareholder in Strategic.
Exploration Targets
Within the Sandy Creek epithermal vein system, recent RC and diamond drilling has defined broad gold mineralized envelopes of >1g x m, at shallow and moderate depths, within several of the major veined structures, these zones are open and untested at depth and along strike [refer to example illustrations from the Lost World and Shanghai and Hillview structures, Figures 7-8]. Particularly significant is the potential to extend the major Lost World resource to the NW, where recent initial step-out drilling has confirmed gold mineralization beneath the Jurassic sandstone cover.
Within the historical Woolgar goldfield, extensive soil geochemical surveys, mapping and reconnaissance drilling conducted along the major Woolgar fault zone has established numerous targets for drilling, in addition to established targets on the historical Woolgar goldfield mine workings.
Strategic's immediate drilling strategy is to carry out further systematic step-out drilling on these and other similar targets, to expand the near surface resource position.
Figure 5. Explorer vein gold deposit schematic longitudinal section.
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Figure 6. Camp vein gold deposit schematic longitudinal section
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Figure 7. Lost World gold deposit schematic longitudinal section.
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Figure 8. Shanghai gold deposit schematic longitudinal section
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Soapspar Gold Deposit - Mining Assessment
The Soapspar gold deposit (Figure 9) is located 8 kilometre to the north of the main epithermal gold resources at Sandy Creek. In early 2006 a desktop study of the viability of mining at Soapspar was completed by independent consultants. The study indicated positive economics for development of a low cost open pit mine and heap leach processing operation at Soapspar.
A pre-feasibility study for a heap leach style development of Soapspar deposit is being undertaken as a result of the strong outcomes of the initial review. SRK Consulting Engineers and Scientists has been contracted in conjunction with Como Engineers to carry out the pre-feasibility work.
As part of this study, additional field programs were required including topographic surveys and quality control drilling, which were conducted in 2006 and 2007, to provide additional data required for the detailed resource and engineering studies.
A detailed JORC consistent resource model was completed in June 2007, to form the basis of the pre-feasibility study. The resource has been estimated with a view to open cut mining and heap leach processing with block sizes and estimation techniques as appropriate. The results are summarised in Table 1.
The new resource model demonstrates an approximate 120% increase in the estimated contained ounces within the Soapspar deposit (an estimated 95,000 ounces gold as opposed to the previously published estimate of 43,000 ounces gold).
Throughout 2007 additional metallurgical test work has also been conducted to establish crushing and leaching parameters for the mining study. This test work is continuing.
