Kanowna Lights Limited (KLS) – Reviewing Mount Carrington in NSW

• In November 2002, KLS acquired an option from Virotec (VTI) over the historic Mount Carrington epithermal polymetallic field (primarily gold and silver, with minor copper and zinc) in northern NSW. The requirements of the option are for KLS to raise about $1m to complete a feasibility study by 15 March 2004.
• The feasibility study requires a mining operation capable of producing 200,000ozpa of gold equivalent for at least 5 years (there is already a resource of 280,000oz gold and 10.3moz silver), and if the option is exercised VTI is issued with 19.9% of KLS’ ordinary shares and an equivalent number of options.
• Mount Carrington has been mined at various times since 1886 and parts have been joint ventured with most of the major companies at one stage or other. The last mining was a series of shallow open-cuts between 1989 and 1990 by Mt Carrington Mines (MCM) who closed their operations citing lower grades than expected and poor metallurgical recoveries, which appears to have mainly
• resulted from a geological misinterpretation of probably steeply dipping veins.
• A joint venture with CRA from 1990 to 1994 resulted in a completely different interpretation and a new stratigraphy with 75% more intrusives than those previously recognised. However, CRA did not have access to the entire field and after they withdrew, little work was undertaken as MCM passed through various guises before becoming Virotec focusing on cleaning acid mine drainage water.
• Although the MCM open-cuts focused on the central area of the field, there were significant mines outside of the central area which appear to have been barely explored such as Lady Jersey which produced 25% of the field’s wealth from gold, and possibly Pioneer, White Rock etc. KLS intends to take a two pronged approach focusing on the old open-cuts and the other historic mining areas.

Zimplats (ZIM) – Turning the Vision into Reality

• The Hartley complex’s 170moz of platinum resources have been incomprehensible in terms of actually being mined, yet Implats in their February 2003 half-yearly presentation in Johnannesburg stated that Zimplats could increase its current platinum production from 85,000ozpa to 440,000ozpa within 10 years using 100,000ozpa modular units.
• The transformation of the vision into potential reality has been due to the initial success of the Ngezi open-cut followed by encouraging early development signs from the Ngezi underground. These early indications and signs are probably what is behind the IMP remarks that ZIM is the jewel in IMP’s crown and is of strategic long-term importance to Implats.
• The initial progress at the Ngezi underground has resulted in Zimplats starting a BFS on the first expansion phase to double production by about 200,000ozpa 4E (platinum, palladium, rhodium and gold) to attain nearly 400,000ozpa 4E by Dec 2005 with about 2mtpa from the Ngezi open-cut and 2mtpa from underground.
• The platinum price rose by 45% or US$210/oz to peak at US$700/oz in the past year before falling back towards US$600/oz, however demand still appears to be favourable, driven by 3 previously overlooked factors such as Chinese jewellery demand (higher than IMP’s mine production), increasing Chinese autocatalyst demand, and accelerated American development of the fuel cell.

Heritage Gold NZ Ltd (HTM) – Given An Unexpected Opportunity to Potentially Achieve Gold Production

• Heritage is a North Island NZ gold exploration company that was established in 1984 by Peter Atkinson and has the opportunity to toll treat ore through Newmont’s Waihi Gold (or Martha Mine), following the discovery of the Favona mineralisation and extension of Waihi’s life to ~2015 at 300,000t and >100,000ozpa.
• Newmont’s expected >1moz Favona gold mineralisation was discovered using geophysics, following up the relationship between vent breccias and gold mineralisation that HTM had proven at its Onemana project. HTM are applying similar geophysical techniques (and the same consultant) at its Waihi North project, located almost on the edge of the Waihi open-cut and extending through to the old Golden Cross mine.
• Heritage initially uses an inverted aeromag technique to target potential gold mines in its main project areas of Waihi North and Karangahake, before following up with geophysics. The inverted aeromag technique highlights epithermal alteration that can be shown as identifying the historical gold mining districts (adjacent to HTM’s projects) of Waihi and Golden Cross.
• Apart from Onemana, all HTM’s exploration projects are located within about a 10km radius of the Waihi gold mine. At Karangahake, Heritage are using the inverted aeromag technique and a recently completed 3-D perspective of the old workings, development and stopes, so as to prioritise where to explore with a view to attaining early cashflow.
• At adjacent Rahu, HTM have identified a hidden potentially mineralised system through applying geophysics, that can now be drilled with a focus on attaining early cashflow by potentially using the spare capacity in Waihi’s 1.3mtpa mill.

LionOre Mining International Ltd (LIM) – Developing Into A Premier Nickel & Gold Company

• LionOre Mining (LIM) has had a staggering growth record in terms of gold and nickel discoveries and converting them into producing assets within only the past 2 years, to become a major nickel and gold company focused on Australia and Botswana with a market cap exceeding A$1bn.
• LIM currently has three operating mines, being two nickel (Emily Ann in Australia, and Tati’s Phoenix in Botswana) of which both are in phases of expansion, and one gold (Thunderbox in Australia). LIM is aiming to convert some of its exploration prospects (like the Waterloo/Amorac nickel prospect) into mines too.
• On 3 June 2003, LIM announced its intention to list on the ASX in July 2003 and merge with Dalrymple (DRE) on the basis of 1 LIM –for- 2.92 DRE shares requiring about 25m new LIM shares to be issued. The merger was expected to be completed in September 2003, and result in LIM holding 100% of Thunderbox, Waterloo, and the North Eastern Goldfields, plus Dalrymple’s other exploration assets, in addition to LIM’s existing holdings at Tati and the Emily Ann area of WA.
• In its latest 2002 Annual Report, LIM stated its 3-year strategic targets as doubling attributable nickel production to at least 30,000tpa, and increasing the Thunderbox asset in WA to achieve sustainable gold production of more than 200,000ozpa.

Michelago Limited (MIC) – Advancing towards Gold Production in China

• The approval of a number of resolutions on 16 July 2003, has paved the way forward for MIC to acquire a 60% interest in two joint ventures with 40% held by the Laizhou Jincheng Gold Mine Group (Laizhou Gold) in the Jinya Gold Mine and nearby Exploration tenements located in the Guangxi Zhuang Province of southern China.
• A Chinese feasibility study was completed on the Jinya Gold Mine following 304 diamond drillholes, exploration level and shaft development, and minor mining of the near surface ore in 1995. The mine closed in 1997 (due to the ore’s refractory nature), after producing 380,000t at 5g/t. The Jinya ore was tested in early 2002 (as part of the feasibility study) and bacox recoveries were a very acceptable 95%.
• However, a revised study and review of the data is being undertaken by Michelago. MIC have a conceptual schedule of commencing construction in January 2004, with trial underground mining starting in December 2004, and process plant commissioning in June 2005 for concentrate sales at 39,000ozpa from August 2005. MIC then intends to complete a feasibility study in April 2006 based on installing a bacox plant in Guangxi for production from November 2006.
• The development of the Jinya Gold Mine is being driven by the 40% JV partner Laizhou Gold which is doubling the size of its Bacox plant (in the Shandong Province) to 200,000ozpa in November 2003 and needs refractory ore.
• The Jinya gold ore mineralisation has been classified as Carlin-type by the US Geological Survey in a recent open-file. It has the potential to develop into a significant gold district, and has the advantage that it does not need to find a bacox plant to treat its ore, it already has an offtake agreement for a 95% recovery.

Abelle Limited (ABX) – Innovation, Logic and First PNG Production possibly by 2005

• Abelle’s PNG assets essentially consist of two regional, volcanic mega-complexes about 70km apart, and three significant mineralised systems, being Hamata- Hidden Valley (HHV), the Wafi Gold Complex (Wafi) and the Golpu Porphyry Copper-Gold Complex (also at Wafi). HHV is the most advanced, and is targeted to commence gold production during 2005, after about 12 months’ construction.
• The 5% NPV for Abelle at current gold prices is almost A$2.80/share. However, it must be emphasised that this is only one of a number of possible scenarios, and there is significant potential for this valuation to be exceeded, simply through attaining slightly higher grades, or including Golpu, or success from any of the other promising adjacent prospects amongst the complexes of HHV and Wafi.
• The scale of the complexes is huge, Wafi has a newly recognised >6g/t high grade Link Zone with potentially greater than 3.9moz, plus an existing ~4moz gold resource, and a number of gold orebodies within an inner radius of about 500m. Golpu has a delineated >90mt at 2.1% (cu-equivalent) copper-gold porphyry that extends beyond a depth of 1km from surface, & HHV consists of Hamata providing 350,000oz in early cashflow, followed by Hidden Valley / Kaveroi’s resource of >2moz gold and >37moz silver, amongst an overall resource base of ~4moz.
• The 3 projects have a market stigma attached to them for their previous failure to be developed, but Abelle has made major innovative conceptual differences to previous feasibility studies, that dramatically improve their economics. Abelle has also re-interpreted Wafi as near horizontal mineralisation (and is verifying it through drilling), instead of the near vertical previous interpretations.
• ABX is moving fast to bring HHV into production, scheduling completion of the feasibility study by the end of October 2003. Our site visit in August 2003 was part of a team examining where to construct the conveyor, access roads, plant etc.

Minotaur Resources Ltd (MNR) – Bringing Prominent Hill into Production possibly by 2006

• After acquiring 100% of the Mt Woods Joint Venture areas, MNR has farmed out the area to Oxiana Resources (OXR) such that OXR can acquire a 65% interest in the tenements that contains the Prominent Hill copper-gold discovery for $34m. The staged farm-in includes an initial $3.5m for infill drilling to result in a resource, followed by a $5m pre-feasibility, and then full feasibility study, which could result in Prominent Hill being in production by the end of 2006.
• The effective Strategic Alliance between MNR and OXR is a good “combination”, leaving MNR to focus on exploration with OXR taking over the mining aspects of Prominent Hill assuming that it is viable to some degree.
• The haematite breccia zone of the orebody appears to be consistently mineralised, for the northernmost limb, and a mineralised block can be estimated as containing about 70mt (our figures) (based on a conceptual block about 120m wide by 350m high by 1000m long) that allows for possibly a 30% reduction due to an apparent plunging grade distribution and assumes ~70% of the resource may be mineable.
• At this stage, it is too early to estimate grades and model MNR until the resource has been determined after the infill drilling. Possibly, Prominent Hill could be a selective 1mtpa to 2mtpa producer initially mining higher grade >2.5%Cu-equiv areas, which were observed in the detailed drillhole 1m sampling as in DP005’s intersection of 209m @ 1.54%Cu & 0.9g/tAu including lengths of 7m to 8m at about3.0%Cu & 4.5g/t Au.
• However, its actual throughput rate, be it 3mtpa sub-level open-stoping method or capex of ~A$200m depends on the feasibility study. A mine life of 20 to 25 years conceptually appears to be achievable and probably the target of the OXR farm-in.