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Challenger Gold Project

Summary

WPG Resources Ltd (WPG) acquired Challenger Gold Operations Pty Ltd (CGO) from Kingsgate Consolidated Limited (Kingsgate) in March 2016.  The mine was operated under a 50/50 Joint Venture with Diversified Minerals Pty Ltd, an associated company of the PYBAR group of companies, with WPG as the Manager until August 2016, when WPG completed the acquisition of DMPL’s 50% interest in the Challenger mining and exploration joint ventures.  WPG holds 100% of Challenger, production and attributable gold contained in Challenger’s resources and reserves.  WPG has also doubled its exposure to the exploration upside potential of the Western Gawler Craton Joint Venture.

CGO is the current holder of the mineral lease (ML) 6103, and miscellaneous purpose leases (MPL) 63, 65 and 66 on which the Challenger Mine is located. CGO is also the holder of ML 6457, which lies alongside ML 6103 to the north-east.  ML 6457 covers the down plunge extension of the Challenger gold lodes into an area known as “Challenger Deeps”.

The Challenger mine has been in operation under various owners since April 2002 and to date has produced 1.1 million ounces of gold.  It is located 730 km northwest of Adelaide, 150 km southwest of Coober Pedy and 130 km northwest of WPG’s Tarcoola gold project.  Site infrastructure, covering approximately 300 ha of a mineral lease area of 13.2 km2, is located on the Mobella Pastoral Station, within the Woomera Prohibited Area and consists of underground development and services, a crushing and processing Carbon-in-Pulp (CIP) plant, accommodation village and airstrip.

The CIP plant has the capacity to process up to 90 tph, although nominally processes at 75 tph (650,000 tonnes per annum of ore).

The mine site functions as a committed environmental exponent within the South Australia mining industry, utilising innovative landform designs, a progressive rehabilitation strategy, on-going rehabilitation research and environmental monitoring to ensure regulatory compliance during all stages of the Challenger operation.

On 15 March 2016, WPG finalised the acquisition of the Challenger gold mine and associated South Australian exploration assets.  The mine was placed on temporary suspension and a revised restart mine plan was developed. Site operations at the Challenger gold mine recommenced in late May 2016 with crushing and milling of low grade stockpiled ore followed by underground mining activities on schedule and under budget.  The first gold was poured on 31 May 2016.

Challenger 20

General Description of Mine

Challenger was a virgin gold discovery made by a Joint Venture between Resolute Resources and Dominion Gold Operations Pty Ltd in 1995.  Dominion carried out a bankable feasibility study, and proceeded with construction in September 2001.  The Challenger pit mining commenced in mid-2002 and plant and infrastructure was completed during the September 2002 quarter with the first shipment of gold bullion completed on 24 October 2002.

Underground development commenced in February 2004 and full-scale underground production began mid-2005.  The pouring of the one millionth ounce of gold at Challenger was celebrated in November 2014.

In 2013 a revised mine plan was developed, with a focus on the Challenger West underground orebody and appointment of a new mining contractor.  The Challenger West orebody remains the focus of near-term mining operations.

Production over the past five financial years is tabulated below.

CHALLENGER

30-06-15

30-06-14

30-06-13

30-06-12

30-06-11

Development Metres (m)

6,611

6,033

6,802

6,217

6,412

Tonnes Ore Processed (t)

514,722

506,031

556,631

644,629

683,913

Head Grade (g/t)

5.01

4.78

3.91

4.55

4.74

Recovery (%)

96.7

96.1

94.6

92.5

92.3

Gold Produced & Shipped (oz)

80,151

74,954

66,216

87,389

96,645

Silver Produced (oz)

1,626

2,677

3,466

4,971

6,765

 

Existing infrastructure includes the Challenger Open Pit, Challenger West Open Pit, SEZ Open Pit, underground mine, crusher circuit, processing plant, process water pond, airstrip, production borefield, Integrated Waste Landform (IWL) Tailings Storage Facility, RO plant, underground and open pit mining contractor workshops, hazardous goods storage facility, magazine, Power Station 1 & 2, vent rise, fuel farm, bioremediation facility, evaporation ponds, exploration and main camps, site laboratory, administrative buildings, airstrip, Emergency Response Team (ERT) training area and laydown areas.

Location

Challenger is situated in an isolated section in the northwest Gawler Craton, not in close proximity to any established community on the Mobella Pastoral Station, situated approximately 250 km north of Ceduna and 730 km northwest of Adelaide, South Australia.

Challenger is accessed via the unsealed Commonwealth Hill Station Road, and is 162 km west of the Stuart Highway.  Employees and contractors fly in and out of site from Adelaide.

Challenger site

Figure 1: Challenger gold mine

Project Ownership and Operation

There is no recorded history or evidence of previous gold mining activity in the area.  The nearest gold mining activity at the commencement of Challenger’s operations was at Tarcoola situated 130 km to the southeast of the project.

The deposit was initially discovered by Dominion in 1995 and delineated with a detailed drilling programme in 1998.  In 2011, Dominion was acquired by Kingsgate Consolidated Limited.  In late October 2015 Kingsgate executed an option agreement to sell CGO to WPG Resources and the PYBAR Group, with the transaction being completed in March 2016.

In August 2016, WPG completed the acquisition of its former joint venture partner’s 50% interest in the Challenger mining and exploration joint ventures.  WPG now holds 100% of Challenger, all production and attributable gold contained in Challenger’s resources and reserves.  WPG has also doubled its exposure to the exploration upside potential of the Western Gawler Craton Joint Venture.

Geological environment

The Challenger deposit is located within portions of Christie gneiss, a member of the Mulgathing Complex that forms part of the Gawler Craton, a large crystalline basement province consisting of late Archaean to Mesoproterozic rocks that became stabilised by around 1,450 Ma.  The deposit occurs within quartz-feldspar-biotite ± garnet-cordierite gneiss, a variation of Christie gneiss.

The host to gold mineralisation is a silica and feldspar rich greisenised pegmatite.  These veins are typically ptygmatically folded.  The deposit is typically shear hosted with the morphology of the mineralised envelope being lensoid in three dimensions and anastomosing in character.

Coarse visible gold of variable size and in association with sulphide mineralisation is a common feature of the higher grade ore zones.  Gold grains contain inclusions of arsenopyrite, pyritised pyrrhotite and native bismuth.

All lodes remain open at depth and historical drilling of the M1 lode has demonstrated the continuity of the orebody to at least 2.8 km down-plunge.  Both primary host rock and the quartz, feldspar, garnet veins associated with gold mineralisation are generally competent, necessitating minimal ground support.  Underground conditions are effectively dry with little groundwater inflow into the mine.

Resources

Mined materials comprise primary and oxidised gold (Au) bearing mineralised ore and non-gold bearing waste.  From the commencement of operations until 15 March 2016 a total of 6.7 million tonnes of ore had been processed.  The updated Challenger mineral resource estimate as at 30 April 2016 (WPG’s ASX announcement dated 19 May 2016 available to view at www.wpgresources.com.au) is included in the Table below.

Historically, Challenger has continued to expand its resources through further drilling and resource optimisation.

Challenger Mineral Resource Estimate

Category

Tonnage

(000 t)

Grade

(g/t Gold)

Contained ounces
(Gold 000 oz)

Measured

147

6.98

33.5

Indicated

527

10.80

183.5

Inferred

149

11.62

55

Sub Total

823

10.27

272

Surface stockpiles

Measured

122

1.30

5

Total

945

9.11

277

Reserves

WPG’s Ore Reserve estimate for Challenger as at 30 April 2016 (WPG’s ASX announcement dated 23 June 2016 available to view at www.wpgresources.com.au) is included in the Table below.

Challenger Ore Reserve Estimate

 

Category

Tonnage

(000 t)

Grade

(g/t Gold)

Total ounces
(Gold 000 oz)

 

Underground Ore Reserves

Challenger West

Proved

72.9

5.66

13.3

 

Probable

270.1

5.75

49.9

 

Total

343.0

5.73

63.2

 

M2 lode

Proved

28.8

5.91

5.5

 

Probable

58.1

4.52

8.4

 

Total

86.9

4.98

13.9

 

Aminus lode

Proved

1.2

3.69

0.1

 

Probable

-

-

-

 

Total

1.2

3.69

0.1

 

SEZ

Proved

-

-

-

 

Probable

4.8

6.75

1.0

 

Total

4.8

6.75

1.0

 

Total Underground Ore Reserves

All lodes

Proved

102.9

5.71

18.9

 

Probable

333.0

5.55

59.4

 

Total

435.9

5.59

78.3

 

Stockpile Ore Reserves

Stockpile

Proved

121.9

1.30

5.1

 

Probable

-

-

-

 

Total

121.9

1.30

5.1

 

Total Ore Reserves

Grand totals

Proved

224.8

3.32

24.0

 

Probable

333.0

5.55

59.4

 

Grand Total

557.8

4.65

83.4

Climate

Challenger is located in an arid climate with an average rainfall of 160 mm per year and average annual pan evaporation rates in excess of 3,700 mm.  There is no seasonal rainfall pattern, although a large proportion of the summer precipitation is a result of thunderstorm activity.

Description of the Operation

The main Challenger Pit is located on mineral lease ML 6103.  The ‘Jumbuck’ decline has been mined down to 129 metres relative level (mRL) or 1,064 vertical metres below surface.

The Challenger Open Pit footprint covers 9.6ha and was developed to a depth of 125 m below normal surface level and the SEZ Open Pit was excavated to a depth of 60 m.

A vent shaft was sunk (4.5 m diameter, 730 m depth) in February 2010.

Underground Mining

Development of underground mining operations commenced in February 2004.  A portal near the base of the existing Challenger Open Pit is used as an access point for the underground operations.

The underground mining method used at Challenger is uphole retreat, mined from sub-levels 20 m apart.  All stopes are accessed through drives (varying in size from 4.5 x 4.0 m to 5 m x orebody width) developed from the main 5.0 x 5.0 m Jumbuck decline (which increases in size at depth to 5.3 x 5.8 m to facilitate appropriate ventilation airflow).

Processing

The treatment processes comprises a jaw crusher supplemented by a cone crusher, two ball mills, a gravity circuit to recover coarse gold, cyanidation leaching and adsorption circuit and conventional elution and electrowinning to produce gold bullion.  In January 2010 the processing plant was upgraded with a secondary ball mill and thickener installed to increase throughput from 430,000 tpa to 650,000 tpa.  The process plant is located approximately 1 km southeast of the Challenger Open Pit and utilises a CIP process for the extraction of gold.

Challenger 24

Accommodation

The main accommodation village for Challenger can accommodate 240 personnel in transportable buildings.  In addition to the accommodation units, the main camp comprises kitchen and dry mess, wet mess and pool room, television room, laundry blocks and a gymnasium and tennis court.

Services and Utilities

Challenger is not connected to the power grid and electricity is generated by two on site power stations consisting of seven and six 700 kW diesel generators respectively.  The maximum load available from the power houses is approximately 8 MW.  The power stations supply the crushing circuit, processing plant, all mining related infrastructure and the main camp and comprise generator units, switch room, transformer compound and fuel storage facility.

Outside telecommunications to Challenger are provided by Telstra satellite feed, and internal communications addressed with a two-way radio network.

Water Sources

Water for the Challenger operations is sourced from two main underground aquifers.  Process water is sourced from the paleochannel aquifer and Reverse Osmosis (RO) water is sourced from the fractured rock aquifer.  All potable water for site is produced from the RO plants.

Regional Exploration

Challenger Gold Operations controls a number of Exploration Licences in the Gawler Craton totalling 2,394 km2 in a number of joint ventures as detailed in the table below. The Gawler Craton hosts the world class Olympic Dam IOCG deposit currently being mined by BHP Billiton and also hosts the significant Oz Minerals owned IOCG deposits of Carrapateena and Prominent Hill, as well as the Challenger, Tarcoola and Tunkillia gold deposits.

Exploration tenements are subject to a number of Joint Venture arrangements as indicated in the table below.

EL No

TENEMENT NAME

AREA km2

JV11 Gold

JV22 Iron Ore

JV33 All

JV44 All

EL 5767

Sandstone

42

TYX 66% CGO 34%

IRD 90% CGO 10%

EL 5720

Mobella

89

TYX 66% CGO 34%

IRD 90% CGO 10%

EL 4951

Blowout

110

TYX 66% CGO 34%

IRD 90% CGO 10%

EL 5298

Mulgathing

1,112

TYX 66% CGO 34%

IRD 90% CGO 10%

EL 56615

Jumbuck

660

CGO 100%

IRD 90% CGO 10%

Typhoon/ Monsoon

TYX 66% CGO 34%

EL 5732

Sandstone

104

TYX 66% CGO 34%

IRD 90% CGO 10%

COO 10% CGO 90%

EL 5183

Campfire Bore

33

TYX 66% CGO 34%

IRD 90% CGO 10%

COO 10% CGO 90%

EL 5450

Barton West

244

IRD 90% CGO 10%

NTM 10% CGO 90%

 

TYX (Tyranna Resources); IRD (Iron Road); COO (Coombedown Resources); NTM (NT Mining)
1 Gold only and minerals associated with gold
2 Iron Ore only – CGO 10% interest is free carried
3 All minerals except Opal and Palygorskite – 10% free carried interest
4 All minerals – 10% free carried interest
5 EL 5661 comprises three portions – the ‘Jumbuck’ portion, contiguous with the Challenger Mine ML, is 100% owned by CGO

All the exploration tenements are located within the infrequent use zone of the Woomera Prohibited Area, other than a small southern portion of EL 5298 which is outside of the WPA and eastern half of EL 5732 which is located in the periodic use zone 2.  The WPA is a Prohibited Area regulated by the Defence Act 1903, Defence Force Regulations 1952 and the WPA Rule 2014 and is a Defence area used for the testing of war materiel under the control of the Royal Australian Air Force.

Exploration activities in the area have been well documented by Tyranna Resources (previously Trafford Resources) since acquiring the project through ASX releases and detailed quarterly and annual activities reports.

The Golf Bore prospect, located on EL 5732 approximately 40km northeast of the Challenger Gold Mine, has a Mineral Resource estimate which was publicly reported by the then owners Southern Gold Limited on 24 February 2010.

The Golf Bore Inferred Mineral Resource is 3.2 Mt at a grade of 1.0g/t Au, for 102,600 ounces contained gold metal.

Contact:

www.wpgresources.com.au