Brisbane, Mar 19, 2008 AEST (ABN Newswire) - North Queensland Metals (ASX: NQM) is pleased to release a Joint Ore Reserve Committee (JORC) compliant Reserve and Resource for the Pajingo Gold Mine totalling 486,000 oz gold. NQM took management control of Pajingo on 30 December 2007 following the acquisition of the mine by NQM and 40% joint venture partner Heemskirk Consolidated Limited.
Highlights:
- Gold Reserves of 102,000 oz and Resources of 384,000 oz
- Higher grade than anticipated
- Extends initial expected life of mine beyond five years
- Plans to raise production to more than 80,000 oz a year
- Anticipated average production cost of A$500-550/oz
- Further increases to Reserves and Resources expected
- Confirms excellent value of Pajingo acquisition
Last month, NQM achieved the planned initial production rate of 62,000 oz a year. The Company expects to increase that to more than 70,000 oz a year from July 2008 and more than 80,000 oz a year from July 2009.
NQM Chief Executive Officer, Mr. John McKinstry, said that the Reserves and Resources were in line with the joint venture partners' expectations though at higher than anticipated grades.
"This Reserve and Resource Statement confirms that Pajingo has a good life as a significant gold producing mine, which boosts the chances of further significant discoveries within the epithermal system." he said.
"It also underlines the extremely good value that NQM and Heemskirk obtained in acquiring Pajingo. As a result of revising the way we mine the orebodies we have been able to enhance the work of the previous owners. It is worth noting that the price of gold has increased more than A$200/oz since the acquisition process started, but this has not been considered in reevaluating cutoff grades for Reserves and Resources. Needless to say, we are very happy with the purchase price of $15 million paid for our 60% stake in Pajingo.
"The good value is magnified by the joint venture partners' view that the exploration potential presents real upside at Pajingo.
"The Pajingo acquisition was good value when compared to the cost per ounce paid by other gold producers, who obviously share the same upbeat view on mid to long term gold price. NQM's gold production is unhedged, thus enabling NQM to take advantage of the rising gold price," Mr McKinstry said.
All the gold production is unhedged, thus enabling NQM to take advantage of the rising gold price.
Reserves---------------------------------------------------- Proved Reserve Probable ReserveSource Tonnes g/t oz Tonnes g/t oz----------------------------------------------------Underground 194,000 8.6 53,000 114,000 6.6 24,000Open pit 230,000 3.3 24,000Total 194,000 8.6 53,000 344,000 4.4 49,000----------------------------------------------------Reserves 538,000 5.9 102,000----------------------------------------------------Resources------------------------------------------------------- Indicated Resource Inferred ResourceSource Tonnes g/t oz Tonnes g/t oz-------------------------------------------------------Underground 81,000 10.1 26,000 1,044,000 9.4 317000Open pit 350,000 3.7 42,000Total 81,000 10.1 26,000 1,394,000 8.0 358,000-------------------------------------------------------Resources 1,475,000 8.1 384,000-------------------------------------------------------- Note: Due to rounding on tonnage, the numbers in the above tables may not always mathematically add correctly- Note: Resource does not include Reserve
Mr. McKinstry, who was General Manager at Pajingo in the 1990's, continued: "The Vera-Nancy system at Pajingo has delivered a series of quality orebodies over 20 years and we expect discoveries to continue. Unlike many mature open pit mines which become more expensive with depth, the extensions of Pajingo come at a similar unit cost to those of the past. NQM expects production costs to average around $500 -550/oz."
"While much of the ore is in the Resource categories, we are proceeding with confidence in mine planning of the new orebodies."
"The early results from hand held mining have enabled us to assess the potential for narrow vein mining which will add new resource in areas not yet included in the orebody model," Mr McKinstry said.
NQM staff have re-estimated the resource on the Zed, Sonia and Bunty orebodies in the southern area, and Bell Vein in the north. The use of a 6g/t cut off is appropriate for these orebodies given the level of information. Details of calculations for the estimation on other orebodies are contained in the following appendix. The joint venture partners are moving quickly to recommence underground delineation drilling, which will increase certainty through infill holes and potentially add additional material around the fringes of the orebodies.
Production and Life of Mine
Production at Pajingo is forecast to total 390,000 oz gold over a life of mine extended to six years. In the Life of Mine plan only the underground Reserves and Resources are counted.
The open pits, while potentially viable, are not a priority for the joint venture partners. The simple goal is to add to the Resource each year above production rates, although expectations are considerably higher.
-----------------------------------------------------------------Financial year 07/08 08/09 09/10 10/11 11/12 12/13Tonnes Milled (t) 106,000 278,000 300,000 300,000 300,000 149,000Grade (g/t) 7.3 8.6 9.0 9.0 9.0 9.0Recovery (%) 96.5 96.5 96.5 96.5 96.5 96.5Ounces Forecast 24,000 74,000 83,800 83,800 83,800 41,600-----------------------------------------------------------------
About North Queensland Metals
North Queensland Metals is an Australian based and listed mining company with a focus on activities in far north Queensland. The company has a 60% interest, and is the Manager of the Pajingo Gold Mine near Charters Towers, and has a 100% interest in the Baal Gammon copper-tin project near Herberton west of Cairns. In addition to its gold operation, North Queensland Metals is pursuing a strategy of developing several mines in the Herberton area to feed ore to a central milling facility.
North Queensland Metals' tenements in far north Queensland cover the world class Pajingo epithermal gold system as well as the Herberton mineral field which covers hundreds of historic tin and base metal mines and is also prospective for tungsten and molybdenum.
The information in this report that relates to Mineral Resources and Ore Reserves is based on information compiled by Geoff Phillips, who is a Member of the The Australasian Institute of Mining and Metallurgy. He is a full time employee of NQM Gold 2 Pty Ltd. Geoff Phillips has sufficient experience which is relevant to the style of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Geoff Phillips consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Contact
John D McKinstry
Tel: +61-1300-308-832
CEO Fax: +61-7-3666-0510
Email info@nqm.com.au
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