Summary
Exploration has focused on the main Chatree Mining Leases, aiming to extend the mine life prior to the grant of the new Chatree North Mining Leases. This resulted in the doubling of the resource at H West which is now a new open pit. Very limited work was carried out at Chatree North, but will recommence in earnest once the new leases are granted, and Resources are expected to grow rapidly once that occurs.
Regional exploration continued to identify new prospects, within the granted exploration leases, with a substantial increase in ground geophysical coverage. Negotiations commenced on land access in order to drill the exploration targets. One key target is well advanced.
Chatree/Chatree North
The emphasis of the exploration drilling was on extending the resource within the currently approved Chatree Mine Leases. H West, adjacent to the H South open pit, was expanded into a 124,000 ounce resource, with potential for high grade zones beneath the new open pit. Further drilling also resulted in an adjustment to the H orebody and a decision to commence a cut back.
Mineral Resources for Chatree within the currently granted leases reduced from 0.96 million ounces to 0.73 million ounces gold. Ore Reserves reduced from 0.26 million ounces to 0.13 million ounces. Further drilling under the H pit assisted a remodelling of the H pit orebody which reduced the ounces reported in Resources and Reserves. The geological model is a robust tool for exploration and mining, but is limited when modelling the peripheries of the orebody.
Total combined Mineral Resources for Chatree and Chatree North now stand at 3.43 million ounces of gold, as at 30 April 2007, down from 3.78 million ounces last year. Total combined Ore Reserves for Chatree and Chatree North now stand at 1.63 million ounces of gold, as at 30 April 2007, down from 1.70 million ounces last year. Apart from the remodelling at Chatree, the A Pit was also remodelled, with a reduction of nearly 0.1 million ounces, based on grade control and mining that has occurred in the A Pit.
It is anticipated that resources will be added at a rapid rate, once the new leases are granted, as the mineralisation continues to be extended within and beyond Chatree North, with the system open in virtually every direction. The gold mineralisation at Chatree is closely associated with a ‘resistivity’ geophysical |
signature and exploration work has identified this discernable anomaly for approximately 23 kilometres in strike length north and south of the Chatree operations. Kingsgate geologists believe the potential exists for 10 million ounces of gold in the Chatree area alone apart from other discoveries further from the mine.
Ground geophysics coverage (resistivity) was extended up to 220km2, or around 15% of the total area of the exploration leases. This has proved the best tool for searching for new mineralisation beneath the cover of flat rice fields.
Exploration expenditure during the year was US$7.7 million and is forecast to expand to US$10 million in 2007/08 after the new mining leases are granted. The exploration focus during 2007/08 will be to extend the near surface high grade results within the Q pit resources, in an undrilled area.
Regional exploration - Thailand
The Company controls an area of approximately 1,300km2 in the highly prospective central gold belt of Thailand, with approximately 60% of the area under granted exploration licences, with five drill ready targets and 40 targets identified for detailed follow-up. Kingsgate’s Thailand subsidiaries have conducted reconnaissance exploration including airborne geophysics, regional stream sediment sampling, rock chip sampling and geological mapping. Detailed ground-based geophysical surveys and detailed mapping were the focus of the regional exploration team during the past year. One target now hosts a geochemical anomaly of approximately 30km2, which is larger than the 23km2 anomaly over Chatree.
The key focus is on negotiations with landowners to gain access for drill rigs to two key targets. The Company prefers to have agreements in place with all stakeholders in an area prior to drilling to avoid any potential future issues. The regional exploration focus during 2007/08 will be to drill-test the best of the drill ready targets away from the main Chatree system.
South America
Kingsgate has been exploring in Peru, Chile and Argentina for four years seeking low sulphidation epithermal gold deposits similar to Chatree. Most of the exploration emphasis traditionally had been for larger, higher grade high sulphidation epithermal gold deposits and it was felt that Kingsgate could leverage its exploration skill base into new projects. |
After a detailed review of the tenements and prospects currently held, it was decided to limit expenditure and to seek joint venture partners to farm-in to the tenements in Peru and Chile. The prospects are all early stage (grass roots) in nature and a decision was made to expense previous exploration costs.
Australia
Kingsgate had been exploring in the Cloncurry area in Queensland from 1988-1993. Before the exploration licence expired, a new licence was applied for, which was granted on 23 November 2005. EPM 12409, covers four sub-blocks (13km2), 25km east of Cloncurry, with good access from two paved highways. Attempts to sell the exploration licence into another company’s IPO did not eventuate. Kingsgate decided in 2007 to re-initiate exploration in EPM 12409 and approached neighbouring licence holders with a view to joint venture into those licences.
The previous data generated by Kingsgate of 3,448 metres of reverse circulation drilling, was re-evaluated and an updated JORC compliant resource was determined using geo-statistical block modelling for the West Lens at the Wynberg Prospect. An inferred Mineral Resource of 329,000 tonnes at 2.0 grams/tonne (g/t) for 20,600 ounces of gold was established from surface.
A detailed ground based gravity survey with a detailed airborne magnetic/radiometric geophysical survey is scheduled for October 2007. Top of bedrock sampling by RAB drilling and deeper reverse circulation drilling is planned this financial year, depending on drill rig availability.
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