Catalpa Resources Limited (CAH) –Bringing Edna May into Production at ~100,000ozpa from June 2010

• Catalpa Resources (CAH) has started construction of their refurbished ~3mtpa ex-Big Bell plant that is expected to start production from June 2010 and ramp up to ~100,000ozpa production at cash costs of ~A$640/oz. The expected production is based on an initial throughput rate of 2.8mtpa that increases after ~2 years to 3.2mtpa, processing ore at a grade of ~1.2g/t with a ~92% recovery.
• The host rock is the Edna May Gneiss which contains broad low grade gold mineralisation reminiscent of Kidston, Mt Leyshon or Mt Rawdon, except that it is enhanced by higher grades within the gneiss itself and by arcuate, high grade, generally laminated quartz veins, often containing visible gold and ranging at average values of up to ~1oz/t (30g/t) or so.
• The production forecast does appear to be conservative as historical grade reconciliations were up to ~20% or so higher (due to the extensive often higher grade mineralisation) and historical recoveries appear to have been mostly in the 93% to 95% region in the harder sulphide rock. Catalpa are using a gravity circuit which increased recoveries in the 1980s, but was not used in the 1910’s or 1940’s.
• Most of the previous production periods stopped producing at about the 1090m RL or 245m Level below surface due to a combination of water inflow and an extensive pegmatite unit, despite drilling showing that the mineralisation does continue with grade below this zone. Catalpa’s open-cut shell goes down to the ~1150m RL, with underground stoping a possibility at depth (not yet modelled).
• CAH is in the process of undergoing a merger with its major shareholder Lion Selection Ltd (LST, 47% of CAH) that is expected to be completed in Nov/Dec 2009 and results in Catalpa owning 30% of the Cracow gold mine in QLD, and no major shareholder. The other Lion assets go into a separate Lion vehicle, with CAH receiving gold (less costs and capex) from Cracow from August 2009.

NQM Limited (NQM) – Aiming to IncreasePajingo’s Gold operations to >100,000ozpa

• Formed largely of ex-Normandy personnel, the management and advisers of North Queensland Metals (NQM) Ltd envisage applying their expertise to build NQM into a major 300,000ozpa to 500,000ozpa gold producer through exploration and the acquisition of overlooked/defunct/brownfields and recognised operating mines.
• NQM’s current main operating asset is a 60% holding in the Pajingo Gold Mine in Queensland (Heemskirk [HSK] have the other 40%). The Pajingo mine is expected to potentially build up from underground and open-cuts to production of >100,000ozpa with Dotswood by the end of 2010, increase with Twin Hills to >120,000ozpa from early 2012, and head towards 140,000ozpa by mid-2012
• Its heyday was in about 2003, after the takeover by Newmont of Normandy with high grades and wide stopes, and an expanded plant (originally for the low grade stockpiles) capable of treating ~800,000tpa. Pajingo was then producing ~300,000ozpa at cash costs of <US$100/oz at a treatment rate of only ~700,000tpa. In January 2008, NQM took it over from NEM, and reduced its throughput to ~300,000tpa, on the currently thinner ore zones, with an expected life of > 5years.
• To fill the Pajingo plant, NQM has initially focused on two satellites, Dotswood and Twin Hills. Dotswood (previously called Far Fanning) is located NE ~180km by road from Pajingo and contains a high grade core of ~4g/t with a lower grade halo and surrounding mineralised quartz vein structures. The current expectation is production of ~60,000oz to 70,000oz over 2 years from open-cuts at Dotswood.
• The second operation, is the old Twin Hills underground mine of BMA gold ~190km S of Pajingo that started with high expectations, but closed after ~1 year. NQM have re-interpreted the abundant gold mineralisation as a series of flats and stacked lodes, more closely resembling a stockwork with high grade shoots, lending itself to an open-cut and later underground mining concept.