Herald Resources reports Indonesian mining activities
Monday, July 26 2004 - 01:51 AM WIB
1. DAIRI ZINC/LEAD PROJECT
Herald 80%
PT Aneka Tambang (?Antam?) 20%
BANKABLE FEASIBILITY STUDY (BFS)
Work on the BFS into the development of a 1Mt/year operation at the high grade Anjing Hitam Deposit continued full-scale during the quarter and is projected to be completed by the end of the September quarter. The status of progress in the various activities and independent consultant studies is summarised below.
Drilling
Up to end June a total of 10816m had been drilled in 64 holes in the Anjing Hitam program, including geotechnical holes.
Essentially the deposit has been drilled out at 50m along strike x 50m down dip at this stage. Deeper drilling is still being carried out at the SE extremity and several more holes remain to be completed at the NW extension. The program should be completed by early August.
A normal fault (termed the Jaluk Fault) which first became apparent on the 9800N section, has now been interpreted to extend longitudinally at about 5100E along the extent of the deposit, with a vertical throw averaging perhaps 10m east block down.
The NW extension drilling thus far to 10150N has demonstrated that a thick section of Main Mineral Horizon (MMH) continues through from 10100N. A 24.8m intercept (close to true thickness) of MMH was obtained in SOP140D but most was oxidised with only the lower 2.1m intact sulphide ? 2.1m @ 7.5% Zn, 7.7% Pb. Of the massive gossan above, the lower 6.1m assayed 20.7% Pb ? the lead occuring largely as cerrusite (PbCO3). The downdip hole, SOP141D, intersected 7.8m@ 17.6% Zn, 12.1% Pb as intact sulphide. This intercept may be of UMH. Drilling will continue to the north although topography suggests that there may only be limited remnant sulphide after 10200N.
Since the end of June SOP154D, completed on line 10050N, has made an MMH interception of 41.4m representing possibly > 30m true thickness (all sulphide).
Resource Estimation
Consultant geologists CSA Australia Pty Ltd, have carried out site study and geological interpretation of the drilling in conjunction with Resource Evaluations Pty Ltd (Reseval) who have also carried out due diligence into site practices, laboratory techniques and database validation. The two consultant groups have compiled the geological model and the block model has been computed by Reseval using kriging and checked by inverse distance squared methods.
The bounding geological surfaces of the MMH are used and a 5% zinc equivalent cutoff for marginal mineralisation, where 1% Pb = 0.8% Zn (based on projected long term metal prices of US$1050/t for zinc and US$650/t for lead and differential ?typical? smelter payments and charges). No allowance has been made for silver which largely reports in lead concentrates but is yet to be demonstrated to consistently exceed the pay threshold of 50g/t in concentrates.
Final reporting is yet to be received but the summary tabulation, as presented, is given below.
The MMH is concentrated upon and lesser allowance is made for what is termed the UMH (designated ?minor? in the tabulation), although this will be investigated from underground during development. The total Measured plus Indicated resource is:
7.0Mt @ 16.2% Zn, 9.9% Pb, 13g/t Ag or 24.1% Zn equivalent
A revision will be made on completion of the drilling.
Mining
Australian Mining Consultants have presented their conceptual mining scheme and are presently utilizing the resource block model to produce the mining plan and schedule. A main and an upper decline are envisaged with a system of open stoping in the footwall and drift and fill in the hanging wall.
Metallurgical Testwork
The major part of the extensive benchscale flotation and comminution testwork was completed during the quarter. Most of the comminution testwork has been done either at or subcontracted by AMMTEC, while Orway Mineral Consultants were engaged to model and design the optimal circuit. The circuit chosen for the relatively soft massive sulphide ore is essentially a single stage crusher / SAG mill / ball mill combination to produce a primary grind of 40 microns, while flotation rougher concentrates will be reground to 18 microns in vertical detritor mills.
AMMTEC Ltd?s Burnie Research Laboratory, have been carrying out a substantial program of flotation testwork, both on the 4 main mineral types and a main composite representing a likely production blend. Typical sequencing and conditioning for lead-zinc flotation has been used, except for cyanide, removed on environmental grounds, and supplanted by a carbon dispersant in conjunction with prefloat of carbonaceous material found in the wallrocks.
Recoveries from locked cycle tests on the main composite, using the carbon dispersant/prefloat were:
zinc ? 85.2% recovery into a 55.4% Zn concentrate
lead - 81.3% recovery into a 60.5% Pb concentrate
There are no significant concentrations of penalty elements present and iron content is around an acceptable 5%.
AMMTEC is about to conduct bulk flotation testwork of a 500kg composite sample to confirm the results and produce concentrate samples for distribution to smelters, tailings for cemented paste fill work and for tailings rheology testwork. Initial cemented paste fill work has demonstrated that relatively quick curing for high strength can be achieved by using a proportion of ground sleelworks slag with cement.
Concentrator, Pasteplant and Infrastructure Design
Ausenco Ltd have been appointed to carry out this component.
Transportation Studies
CEIS Pty Ltd and PT Petrosea have been conducting road and port surveys in the region. It was decided to fast-track studies into a slurry pipeline for the concentrates from the site to the west coast port of Singkil Baru at a distance of 80-90km. The scheme provides significant operating cost benefits over the trucking alternatives considered in the pre-feasibility study, albeit at a higher initial capital cost. Any extension of mine life would further increase operating cost savings. There is also a major sociological and logistical benefit in not having to truck ~1000t/day of concentrate.
Several berthing sites are being investigated around Singkil and a bathymetric survey has been conducted but not yet reported.
Marketing Studies
The Company has appointed Max Brunsdon, who formerly held senior positions with Western Metals Ltd and BHP, to propose strategies for engaging smelters and metals traders to the best advantage of the Project. A number of meetings have been held with Japanese, Korean, Thai, Chinese and European parties during the quarter.
EXPLORATION
Sinar Pagi
A program of detailed mapping, trenching and diamond drilling was carried out at Sinar Pagi, about 20km NNW of Anjing Hitam and on an unrelated structure. Attention was first drawn to this locality after infill stream sediment sampling in 1999, which led to the discovery of some high grade lead-silver mineralised float boulders. A Heliborne EM survey later that year pointed to a strong conductor in the locality. Follow up in 2003 led to delineation of a soil anomaly and a possible source of the galena (lead) rich boulders.
The results of the 2 effective trenches dug in the in the March quarter on the steep hillside are shown below. In the June quarter 3 diamond drill holes were bored and are shown on the attached cross sections. The drilling confirms that the mineralised zone is a sub-horizontal structure 20-30m thick and essentially stratabound in a dolostone unit at the contact with overlying siltstones and underlain by shale. It is marked by massive, vuggy quartz breccia with some intact galena in trench 1 and hole SPA01D but largely oxidised with some zones of massive gossan containing secondary lead minerals.
Unfortunately the drilling rig was incapable of drilling to the desired depths and also oxidation is deeper than expected. Core recovery was reduced in zones of soft gossan and sugary quartz breccia and it is impossible to know whether this has reduced or enhanced original grades. Even so there are some significant intercepts including 9.1m @ 11% Pb, 129g/t Ag in SPA01D and 15.4m @ 8.5% Pb, 64g/t Ag in SPA3D. Trenches yielded up to 6m @23% Pb, 179g/t Ag although the trenches cut the lode at an acute angle.
Given the sub-horizontal attitude of the lode, attention is drawn to the SW side of the ridge where the lode should surface again. There are in fact several lead anomalous stream sediment samples to >500ppm Pb and a previously discovered large galena-sphalerite bearing quartz breccia boulder on the SW flank of the ridge. More detailed stream reconnaissance, gridding, mapping and soil sampling is to be carried out in this area, prior to decision on ground geophysics and further drilling.
While very high grade mineralisation as previously observed in boulders is likely restricted to pods and lenses, there is considered to be a substantial bulk tonnage potential of lower grade lead-silver in the thick quartz breccia lode.
Lae Jehe ? it is intended to carry out down-hole EM surveying of the 2003 holes SOP159D & 160D to build on the original survey, the modelling of which resulted in very close agreement with the positions of significant of the main sedex zone in these holes. The intercepts were made near the top of the strong Lae Jehe deeps conductor which presently is the most likely near term addition to the Sopokomil resources inventory. Inferred resources estimated last year totalled 8.2Mt @ 7.7% Zn, 4.1% Pb, using a zinc equivalent cutoff of 5%.
A limited program of deep drilling is proposed for later in the year based on the upgraded DHEM model.
2. MELUAK GOLD PROJECT
Herald 26% via Corona Gold Ltd
ACTIVITIES
No activity took place during the quarter pending cessation of the State of Military Emergency in Aceh Province (NAD). This was lifted in May and replaced with a State of Civil Emergency, presently still in force.
While the Meluak district in Gayo Lues Regency, in the mountainous centre of the province is geographically and politically removed from the centre of the GAM separatist movement, and essentially free from trouble, groups of GAM separatists have been known to transit the area. It is intended to return, however, in late July and ascertain whether the district is safe enough to resume activities.
If so, it is likely that an initial program of diamond drilling at Merpunge ? Siongal Ongal will be conducted.
The target at Meluak is high sulphidation, epithermal gold-silver deposits in zones of massive silicification in Tertiary to recent volcanics adjacent to a major splay of the Sumatran Fault Zone.
3. BELITUNG TIN PROJECT
Herald beneficial interest 100%
PT Tambang Timah (Timah) net smelter royalty for tin & co-products
ACTIVITIES
Herald has been in consultation with PT Tambang Timah about resuming its activities at the Batu Besi and Manggar Tinfields prospects on Belitung Island, Indonesia. The activities have been on hold for 2 years during a period of depressed tin prices, however, at current levels, there is more scope to investigate alternative processing methods. The fundamentals for tin appear to be favourable, with diminishing resources in traditional alluvial producing areas and a significant increase in consumption.
Herald had previously delineated an inferred resource of 3.2Mt @ 0.95% Sn, containing 30,400t tin metal at the Batu Besi prospect but was unable to demonstrate an economic extraction method at the then price regime of ~USD 4000/t.
It is proposed to extend the existing Memorandum of Understanding to a Formal Agreement. (end of release)