Lorena Gold Project - MLs 7147, 90192 to 90196 and EPMs 18908 and 18189
The Lorena Gold Project is located about 15km east of Cloncurry in northwest Queensland.
Malachite is the holder of six mining leases (ML7147, MLs 90192-90196), two exploration permits (EPM18189 and EPM18908) and one EPM application at Lorena.
Lorena has a total JORC Mineral Resource in the Measured, Indicated and Inferred categories containing approximately 56,600oz of gold at a 2g/t cut-off grade. This is made up by a resource of 179,500t at 8.8g/t Au containing 50,700oz of gold in the A Lode (16,700oz of gold in the Measured category and 34,000oz of gold in the Indicated category), and a resource of 23,700t at 7.8g/t Au containing 5,900oz of gold in the B Lode (800oz of gold in the Indicated category and 5,100oz of gold in the Inferred category). These resources are within a potential open pit mine and are open at depth. The gold-bearing mineralisation is principally of massive and stringer sulphide type and copper-gold mineralisation occurs in conjunction with the gold mineralisation. Drill intersections including 5.9m @ 12.9g/t Au (located 100m down-plunge from the defined resources) demonstrate the potential for significantly increasing the Lorena resource Inventory.
The Lorena gold project is forecast to mine a head grade of 9 g/t Au to produce around 30,000 ounces of gold from an open cut.
Figure 1: Lorena Gold Project – Tenement Plan
The Company recently entered into a non-binding heads of agreement with Ore Processing Services (OPS) to establish and operate a modular mineral processing plant to produce gold on site at the Company’s Lorena Gold Project. OPS is associated with “ammjohn”, a contract Engineering Company which has extensive experience in project management, project construction and engineering for mining and industrial projects
OPS will take responsibility for the supply, commissioning and operation of the whole mineral processing plant, which will be constructed as modular units to produce gold doré on site. The main advantage of this approach is a lower construction cost as these units can be constructed off-site and transported to site fully commissioned. Given the fast track nature of the initial open cut campaign, the modular plant provides flexibility to remain on site if more resources are identified, or to relocate the processing capability to other regional opportunities or other projects within Australia. OPS and Malachite will be working together to take advantage of these processing units as part of a longer term strategy. OPS and Malachite are currently reviewing other projects which could potentially use the concentrator module once the Lorena open cut campaign has been completed.
OPS is pursuing the necessary funding for construction of its plant modules. It is contemplated that OPS will commence construction of the plant modules once it has secured appropriate funding. In parallel, Malachite is also in discussions with a number of parties to fund the capital cost of preparatory work which Malachite is required to undertake prior to commissioning of the OPS modules. Documentation between OPS and Malachite is being prepared to formalise these arrangements.
The arrangement with OPS is expected to minimise Malachite’s share of capital expenditures whilst maintaining majority ownership of the project.
The arrangement between OPS and Malachite remains subject to a number of conditions precedent including:
The key terms of the arrangement are as follows:
The results of metallurgical test work have shown a gold recovery of 90% to a concentrate. Subsequent cyanide leaching of the concentrates resulted in a gold recovery of greater than 85% into solution from the concentrate.
The projected overall metallurgical recovery of gold from Lorena ore via flotation and leaching should be in excess of 75% under normal operating conditions.
The Lorena gold project has potential for resource extensions at depth, however this requires confirmation by drilling which is expected to occur as soon as cash flow is available from the project.
Extensions at Depth
The Company completed a program of drilling and Down-hole Electromagnetics (DHEM) geophysics at the Lorena deposit. The geophysical survey was designed primarily to detect extensions, down plunge from the known resource, as well as provide new targets for exploration beneath the existing Lorena deposit. The survey identified two large, strong electromagnetic conductors, associated with holes LMRD092 and LMDD093, suggesting possible depth extensions to the existing known gold lodes.
The Company is very encouraged that the Lorena DHEM survey generated these new targets in such close proximity to the drilling success of hole LMRD092, which intersected 5.3m @ 12.9 g/t Au from 224 metres down hole. The positions of these two conductor plates, relative to the existing Lorena resource and previous drilling, are presented in the long section diagram below (Figure 2). Importantly, the dimensions of each of these two DHEM conductors are similar to the area of the defined gold resource at Lorena.
Figure 2: Lorena Gold Project - Long Section showing potential extensions at Depth
The Company also believes that there are considerable regional opportunities once the plant is operating at Lorena.
EPM 18189 and EPM 18908 (100% Malachite)
The Company is negotiating an access agreement with the landowner of part of EPM18908 in order to carry out exploration drilling on the Lady Mary prospect.
The Company regards the tenor, width and continuity of gold and copper values in the soils at Lady Mary as extremely positive. The soil program and previous rock chip sampling have outlined a robust gold-copper drill target. The discovery of a resource at Lady Mary could potentially supply additional ore to a mill at Lorena (currently at the feasibility stage of development), only 6km away.
Once the Lorena gold mine is operational it is expected that the Company will be in a position to drill test the Lady Mary prospect, which is within a short trucking distance of the Lorena gold mine.