Quarterly Report for the period ended 31 December 2014
Highlights
Corporate
Non-renounceable rights issue raises $1.02 million, with shortfall of $1.18 million to be placed by 13 February 2015
Victoria
Octagonal agrees to sell Maldon Gold Operation to A1 Consolidated Gold Limited (ASX: AYC) for $5.09 million in A1 Gold shares & 1:3 options (exercisable at 3.0 cents)
Southern development on 1080 level at the Alliance South Deposit complete
Face channel sampling of reefs on 1080 level return 26.5 metres strike length grading 10.2 g/t Au over 3.1 metres width and 12 metres strike length grading 15.6 g/t Au over 1.7 metres width
Sludge hole drilling into Western Reef from 1100 & 1080 levels continues to intersect high-grade gold including
· 2 metres grading 27.7 g/t Au
· 2 metres grading 14.8 g/t Au
· 6 metres grading 15.9 g/t Au
· 2 metres grading 22.2 g/t Au
· 4 metres grading 26.7 g/t Au
· 6 metres grading 12.1 g/t Au
· 4 metres grading 14.8 g/t Au
· 2 metres grading 28.3 g/t Au
Western Australia
Company continues process of target prioritisation, tenement consolidation, & cost reduction
Summary
During the December quarter Octagonal agreed to sell the Maldon Gold Operation (including all of the Company's Victorian mining, ore processing, and exploration assets) to A1 Consolidated Gold Limited ("A1 Gold") (ASX: AYC) for $5.09 million in A1 Gold shares and 1:3 A1 Gold options (exercisable at 3.0 cents).
The Company's activities in Victoria focussed on development of the 1080 level of the Alliance South Deposit at Maldon. 133 metres of reef development was achieved to define two areas of high-grade gold associated with the Eaglehawk and Western reefs. At the northern end, near the cross-cut, face channel sampling returned 12 metres of reef grading 15.6 g/t Au over 1.7 metres width from the Eaglehawk Reef while sludge hole drilling defined 18 metres of reef grading 4.4 g/t Au over 5.85 metres width associated with the Western Reef.
Twenty metres further to the south face channel sampling returned 26.5 metres of reef grading 10.2 g/t Au over 3.1 metres width, including 9 metres of reef grading 30.9 g/t Au over 2.3 metres width, associated with the Western Reef.
53 sludge holes drilled into the west wall of the 1080 and 1100 levels to better define the distribution of high-grade gold associated with the Western Reef returned significant results including 2 metres grading 27.7 g/t Au, 2 metres grading 14.8 g/t Au, 6 metres grading 15.9 g/t Au, 2 metres grading 22.2 g/t Au, 4 metres grading 26.7 g/t Au, 6 metres grading 12.1 g/t Au, 4 metres grading 14.8 g/t Au, and 2 metres grading 28.3 g/t Au, while backs channel sampling of the Western Reef on the 1100 level returned 28.4 metres strike length of reef grading 41.4 g/t Au over 1.5 metres width and confirmed previous face channel sampling results in the same area of 30 metres strike length of reef grading 20.2 g/t Au over 3.2 metres width.
Ore processing remained on hold while the Company developed the 1080 level of the Alliance South Deposit and completed discussions with A1 Gold to sell the Maldon Gold Operation.
Ore stockpiled from the 1080 level of the Alliance South Deposit totalled 4,800 tonnes grading 4.7 g/t Au (estimated from uncut face channel sample results). This consisted of 1,080 tonnes grading 10.3 g/t Au (uncut) and 3,720 tonnes grading 3.1 g/t Au (uncut). Due to unresolved reconciliation issues between underground face channel sampling results and gold recovered from the mill (refer to ASX Announcement dated 23 October 2014), investors should be cautious of the estimated stockpile grade. Ore processing is required to determine the actual grade of the stockpile.
No exploration work was completed in Victoria or Western Australia.
In Western Australia work continued on target prioritisation, tenement consolidation, and cost reduction. Following the surrender of four exploration licences, Octagonal's annual tenement expenditure commitment was reduced to $109,000, with the Company to focus exploration on the high-priority Burns copper-gold Prospect. Other priority exploration target areas retained in Western Australia include the Quimby gold Prospect, the Lisa's Dune nickel sulphide Prospect, and the Yalca Hill nickel sulphide Prospect.
Work planned for the March 2015 quarter includes:
Settlement of the Maldon Gold Operation Share Sale Agreement;
In-specie distribution of A1 Gold shares and options to Octagonal shareholders;
Application for a Western Australian State Government co-funded drilling grant (Round 11 opening in February 2015) to advance exploration at the Burns Prospect; and
Continued review of historic exploration data from the Lisa's Dune and Yalca Hill nickel sulphide targets
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