Kingsrose updates Indonesian gold/silver project
Monday, January 31 2011 - 08:47 AM WIB
WAY LINGGO PROJECT (85% KRM)
The Way Linggo Project is located in southern Sumatra, Indonesia. Tenure is held by a 4th generation Contract of Work (?COW?) covering an area of 10,540 hectares. It covers highly prospective tertiary volcanic stratigraphy that is host to a number of significant gold and copper-gold deposits associated with a major arc-parallel fault, known regionally as the Trans-Sumatra Fault Zone.
The Way Linggo ore system is a cluster of low-sulphidation epithermal fissures and veins exhibiting numerous epithermal vein textures within a zone of intense argillic alteration resulting from recent fluid up-flow. The main veins in the current mining area vary in width form 0.lm to 12m with an average of approximately 4.5m, stand sub-vertically and from mine development data, carry grades between 10-20g/t Au and 150-250g/t Ag on average over full mining widths.
Mining commenced at Way Linggo in late 2009. The process plant commenced commissioning in August 2010 and remains in a ramp-up phase to full capacity. The target is steady-state production of 45,000 oz gold per annum at US$150/oz cash operating cost (after silver by-product credits).
Mining
Significant advancement was made during the quarter with establishment of services including the internal shaft to the third level being completed. In general the mine activity favoured development over production given plant daily throughput was less than anticipated due to de-bottlenecking.
Mine development focussed on ore driving on the 3-level and the continued sublevel development on the 2 and 1 levels. Level 3 development to the south along strike now totals 108m. It is evident that the grade has been increasing in this direction with 103m @ 7.3 g/t Au and 82 g/t Ag, from weighted average of development face grades being recorded.
Sub-level development above Level 2 and the advancement south of Level 3 were the dominant activities during the quarter with approximately 49% of the ore broken coming from development with the balance coming from production areas.
Mine production for the quarter totalled 14,077 tonnes at 10.8 g/t Au and 138 g/t Ag. The mine production grade for the quarter was slightly lower than normal due to simultaneously developing the extremities of the ore body in a number of locations. This development work was timed to coincide with commissioning phase of the process plant, which was operating at around 60% of design capacity, and the availability of the high-grade stockpile on the surface. At the end of the quarter the surface stockpile stood at 23,341 tonnes at 12.8 g/t Au and 165 g/t Ag.
The mined grade in the March 2011 quarter is expected to average between 14 ? 16 g/t Au based on current planning.
Processing
Gold produced in the December quarter reached 6,918 ounces with production increasing from 1,316 ounces in October to 3,361 ounces of gold in December. This was a function of a 25% increase in tonnes milled and a 29% rise in the reconciled gold head grade.
Mill throughput for the quarter totalled 13,948 tonnes at an average grade of 17.9 g/t Au and 214 g/t Ag and gold recoveries averaged 89.8%.
Good progress was made on remedying minor plant bottlenecks and in reducing unscheduled maintenance events with the major achievement being the introduction into the circuit of the clarifier hopper and a larger filter press circulation pump which added an additional 5% to mill availability.
Further work was completed on alternative solutions for managing the material handling issues caused by the wet and sticky ores and the conclusion was reached that retro-fitting a SAG mill into the circuit was the best long-term and cost-effective solution. A specialist metallurgical engineering group was engaged to undertake a detailed feasibility study (DFS) and a second-hand SAG mill was located (and subsequently purchased in January 2011). The final outcomes of the DFS are still pending but early indications are that the installation will cost approximately US$1.5 million and will be commissioned by end-May 2011.
It is expected that gold production for the March quarter should reach 10,000 ounces.
Gold & silver sales
Gold sales of US$6.8 million were generated for the quarter from the sale of 5,015 gold ounces at an average price of US$1,361/ounce.
Silver sales (silver sold is treated as a by-product credit) totalled US$1.46 million with 54,399 ounces sold at an average price of US$26.88/ounce.
All gold sales are unhedged.
As part of a prepaid silver forward transaction entered into with Credit Suisse International (?CSi?) in December 201G, 480,120 ounces of silver are deliverable to CS1 over 24 months commencing 31 March 2011. This represents approximately 37% of silver production over that period.
Exploration Activities
Exploration activities continued with reconnaissance work on four key targets:
? Talang Kecap
? Mitra Jaya
? Talang Toha
? Talang Santo
At Talang Toha, located near the north boundary of the Contract of Work (COW), seven outcropping quartz veins within an 11 metre wide zone have been found, ranging in width from 0.5 to 1.5 metres with the best vein showing grades of 7.16 g/t Au and 3.86 g/t Ag and an adjacent 0.5m @ 1.36 g/t Au and 2.03 g/t Ag.
At Talang Santo, multiple vein outcrops were discovered with three distinct vein/stock-work zones identified up to Sm in width. The best of these contain 1.Om @ 3.99 g/t Au and 27.7 g/t Ag. Selective samples of banded stock-work from these outcrops have also returned grades of up to 5cm @ 7.73 g/t Au. Both locations have been mapped, sampled in detail and brought up to drill readiness. Two drill rigs, one for each location, have already been mobilised and at the time of writing the first rig has commenced drilling at Talang Toha.
New prospect definition and evaluation was also continued during the quarter using BLEG, rock chip, rock float and soil sampling. This, combined with airborne geophysics data, detailed structural models and follow up ground mapping and trenching, is proving efficient and successful at identifying and evaluating new prospects within the 10,540 Hectare COW.
The drill programme has been considerably advanced during this quarter by increasing the number of surface drill rigs on site from 1 to 5 with another rig arriving on site in January. Drilling of the B-vein extension has extended the known strike of the main mine vein to over 700m to the north as well as confirming the existence of two parallel veins to the east of the B-vein in this area. All three veins have considerable widths of 1.4-2.5m and consist of quartz-calcite with encouraging results coming from some of the banded quartz intervals with up to 0.35m @ 3.21 g/t Au and 50 g/t Ag DDH-142.
Drilling at Talang Kecap has delineated a large area of strong silica-clay alteration that contains banded quartz vein zones with up to 2.55m @ 7.17 g/t Au and 14.5 g/t Ag, from DDH-134. This prospect is proving to be structurally complex and further structural analysis and drill testing is being conducted in order to identify the main zone of veining.
Level 3 Stope Block 1 was advanced during the quarter with its average grade also increasing over that encountered during the level development directly below it. The stope now has a strike of 57m @ 8.94 g/t Au and 158 g/t Ag, from weighted average production stoping samples.
A drill chamber drive on Level 3 heading 60m to the west in preparation for underground drilling is well advanced. This drilling will focus on resource extension below the current defined JORC Resource, which is still open at depth. The drilling will also test the possible existence of a parallel deep vein to the east of the current Resource, which was identified by a single intercept in the original drilling of the orebody and which contained an intercept of 1m @ 2.1 g/t Au and 3,390 g/t Ag.
Other activities undertaken included:
? The commencement of an Alimak ventilation rise from Level 3 to Level 2
? Level 2 Long-hole stoping commenced during the quarter
? Level 2 West lode gallery stoping continued to advance
? Level 2 Vein-B sub-level development in preparation for long hole stoping continued to be advanced
? Level 1 Sub-level 1 was completed with a strike of 122m and an average weighted face grade average of 20.4 g/t Au and 184 g/t Ag. (end of edited excerpt)