centrex metals – 2006 EXPLORATION plan
Direct exploration expenditure (before Administration allocations) is currently planned to be $3,144,000. No major changes are anticipated to the exploration philosophy however the actual expenditures may change from tenement to tenement as exploration programmes unfold.
Planned exploration programmes are as follows:
EL3317 - WILGERUP
Wilgerup will be the main exploration target for the Company in 2006. Exploration and resource definition drilling will be undertaken to drill the main geophysical targets, to infill drill the known northern and southern hematite pods and to test for strike extensions between the two hematite pods and to the north of the northern pod. Approximately 14,000 drill metres is planned to enable the calculation of an Indicated Resource (JORC standard) by December 2006. Later in the financial year it is planned to obtain large diameter drill core samples for detailed metallurgical testwork. The location and number of drillholes required will be determined once the resource potential has been quantified. For budgeting purposes it is planned to drill some 500 metres of large diameter diamond coring (≥150mm diameter).
Wilgerup has an Inferred hematite resource of 7.8 million tonnes grading 59.8% Fe, 5.2% SiO2 and >0.1% P, in two deposits. The resource tonnage increases to 9.2Mt if a density of 3.3g/cc is applied. The main body remains open along strike to the north and it is possible that extensions could be delineated with further drilling.
Extensive computer modelling of magnetic and gravity data over the Wilgerup area has highlighted several areas that have reduced magnetic response and a high gravity response indicative of the presence of hematite.
Reverse circulation hammer drilling at is scheduled to commence by early to mid August 2006. Drilling through the 20 metres of Tertiary sands may dictate that mud rotary drilling and immediate casing may needed to keep the holes open and ensure quality samples can be taken.
Gomex Drilling has been contracted to undertake the drilling. Their drill rig is currently completing three small contracts in the Northern Territory.
To ensure effective utilisation of the drill rig the initial drilling at Wilgerup will focus on wide-spaced RC drilling of 6 of Hanneson’s (consultant geophysicist) main interpreted hematite targets that were defined by coincident gravity high/low magnetic responses. Drilling will be initially on 320m spaced lines with 40m on section drilling for an aggregate 4,800m. In areas of hematite mineralisation, drilling will be closed to 20m on section drilling to provide better local structural and stratigraphic information. This initial work will be evaluated and subsequent drilling appropriately planned.
Drilling will then focus on both the North and South hematite pods which will be RC drilled on 80m x 20m. This spacing will enable the Inferred resource to be upgraded to Indicated resource status. For the north pod 10 lines of 8 holes will be drilled for an aggregate of 8,000m. South pod drilling will be approximately 2,800m. Resource drilling will take some 3 months to complete.
PQ coring or larger diameter coring will be undertaken in both the North and South pods (and possibly on Hanneson’s gravity targets if drilling identifies hematite mineralisation) to collect physical samples for crushing, sizing and analysis. The drill rig associated with Primary Resources may be suitable and available to conduct this drilling.
Reconnaissance RC drilling will also be undertaken in the Wilgerup area to screen for hematite prospectivity.
Direct exploration expenditure on Wilgerup is estimated to be $1,554,566 in FY2006/2007.
ADDITIONAL HEMATITE PROSPECTS
EL3287 – STONY HILL
Little detailed exploration has been conducted at either the Stony Hill Prospect or the Ironstone Hut Prospect, which are located immediately west of OneSteel’s tenements in the Middleback Ranges.
Early exploration by BHP indicated the presence of beneficiable hematite BIF at Stony Hill. The area is also prospective for hematite and for magnetite-rich BIF. The recent detailed aeromagnetics has highlighted hematite targets that require drill testing.
Exploration will commence with geological mapping and a detailed gravity survey. Results will be used to establish a reconnaissance RC drilling programmeme. It is planned to drill 2,100 metres of reverse circulation hammer drilling on the best of the identified targets.
Direct exploration expenditure on EL3287 will total $220,794.
EL3048 – IRONSTONE HUT
Like Stony Hill, Ironstone Hut has had little exploration completed to date. In 2006 a high resolution aeromagnetic survey will be completed to identify prospective hematite and magnetite deposits.
Direct exploration costs will amount to $47,028.
EL3125 – IRONSTONE HILL
Like Stony Hill and Ironstone Hut, Ironstone Hill has had little exploration completed to date. In 2006 a high resolution aeromagnetic survey and gravity survey will be completed and modelling undertaken to identify prospective hematite and magnetite deposits.
Direct exploration costs will amount to $94,928.
EL3018 – KIMBA GAP
As with Stony Hill, Ironstone Hill and Ironstone Hut, Kimba Gap has had little exploration completed to date. Existing data suggests the presence of potential hematite deposits. In 2006 a high resolution aeromagnetic survey will be completed and modelling undertaken to refine target selection for drilling in 2007.
Direct exploration costs will amount to $56,228.
EL3375 – GILLES DOWNS
Gilles Downs has had little exploration completed to date however the area is considered to be very prospective for both hematite and magnetite deposits. In 2006 a high resolution aeromagnetic survey will be completed and modelling undertaken to refine target selection for drilling in 2007.
Direct exploration costs will amount to $69,966.
EL2815 - COCKABIDNIE
Exploration in 2006 will consist of a high resolution aeromagnetic survey. Subsequent drilling in 2007 will be defined through analysis of the geophysical surveys.
Direct exploration costs will amount to $63,843.
EL2905 – MOUNT HILL
Existing geophysical modelling has identified prospective hematite targets. Drilling in 2006 will consist of some 3,000 metres of slimline reverse circulation to test the accuracy of the modelling.
Direct exploration costs will amount to $207,500.
MAGNETITE DEPOSITS AND HEMATITE PROSPECTS
Five potentially significant magnetite-rich BIF deposits and one potentially significant magnetite prospect have been outlined on the Company’s tenements thus far.
It is estimated that a standalone magnetite concentrate operation requires a magnetite-rich BIF reserve of ≥150 million tonnes. Two areas stand out as being able to meet or exceed the tonnage requirements.
The combined Greenpatch, Koppio and Iron Mount Deposits and the Bald Hill Prospect in aggregate have potential to substantially exceed this tonnage. The second is the Bungalow Deposit located just 9 kilometres NNW of Cowell which has the potential to host >250Mt of magnetite-rich BIF to a depth of 200 metres.
Whilst the Greenpatch/Koppio/Iron Mount/Bald Hill area is very prospective, the deposits occur on numerous freehold farming properties which may prove a significant barrier to future mining.
The Greenpatch aeromagnetic anomaly is the strongest magnetic anomaly on southern Eyre Peninsula, and contains a magnetic unit about 120 metres thick believed to be due to a major plunging antiform. The magnetite-rich BIF at Greenpatch is typically strongly recrystallised by high grade metamorphism and potential exists for upgrading and thickening of magnetite in the axial regions of folds.
Metallurgical testing of magnetite-rich BIF from Greenpatch indicates a high-grade magnetite concentrate may be produced from beneficiation after grinding to 75 micron. The relatively coarse grind would reduce the power requirements to needed to produce concentrates.
The Bald Hill-Koppio-Brennand-Kapperna belt comprises a discontinuous series of dominant, high amplitude magnetic anomalies, commencing with the main Bald Hill-Charlton Gully synform, and trending through Koppio and easterly to Brennand and Kapperna where BIF is known from previous drill holes to be relatively shallow.
EL2816 GREENPATCH
The 2006 exploration programme will consist of detailed gravity survey to complement the existing aeromagnetic coverage. Modelling of the geophysics will enable the identification of drill targets for subsequent drilling in 2007.
Combined direct exploration expenditure for 2006 will amount to $57,951.
EL3269 WANILLA
The 2006 exploration programme will consist of detailed gravity survey to complement the existing aeromagnetic coverage. Modelling of the geophysics will enable the identification of drill targets for subsequent drilling in 2007.
Combined direct exploration expenditure for 2006 will amount to $69,234.
EL3401 LOCK
The 2006 exploration programme will consist of a high resolution aeromagnetic survey. Modelling of the geophysics will enable the identification of drill targets for subsequent drilling in 2007.
Combined direct exploration expenditure for 2006 will amount to $51,58.
EL3421 DUTTON BAY
The 2006 exploration programme will consist of a high resolution aeromagnetic survey. Modelling of the geophysics will enable the identification of drill targets for subsequent drilling in 2007.
Combined direct exploration expenditure for 2006 will amount to $57,468.
MAGNETITE DEPOSITS
The Bungalow Deposit as indicated by Parker (refer Independent Geologist’s Report in Part 7 herein) may contain over 250 million tonnes of magnetite-rich BIF. Metallurgical testing indicates high iron recoveries and grades at a grind of 75 micron. The resultant magnetite concentrates had elevated silica levels possibly reflecting a grind size during sample preparation that was not optimal. Testing is required to determine the optimum grind size.
Another potentially important magnetite deposit is the Carrow Deposit located just 6km NNW of Port Neill. Metallurgical testing on drill samples indicates a coarse grained carbonate ore which, when ground to 75 micron, produced high grade magnetite concentrates (average Fe 69.12%) which had very low impurity levels (SiO2 averaged 2.51%, alumina 0.32% and phosphorus 0.02%). Additional magnetite ore potential may exist in north-northeast trending BIF belts which have been outlined by geophysical surveys.
Exploration at all three areas will include RC drilling on 3 section lines spaced 320m apart with on-section drilling at 40m intervals. Drilling will test vertically to 250m.
This work when combined with previous drilling will enable the ranking of areas and enable exploration to focus on the best deposit.
EL2817 – BUNGALOW
The 2006 exploration programme will centre on the drilling of 2,000 metres of reverse circulation hammer drilling. This drilling will compliment the significant diamond drilling undertaken in 2002/2003 and permit the Company to better characterize the deposit in terms of head grade and metallurgical recovery.
Direct exploration expenditure is planned to amount to $562,447.
EL2887 – CARROW
The 2006 exploration programme will involve a total review of existing data as a platform to develop drilling programmes planned for 2007.
Direct exploration expenditure is planned to amount to $30,529
Bungalow planned drilling June 2006 stony hill total magnetic intensity wilgerup planned drilling June 2006 