- The Hellyer Mine Lease (CML103/1987), which Bass
Metals already held a sublease over giving it the mineral rights.
- The Hellyer tails resource as described below
- A cutter suction dredge and spares recently utilised to reclaim
tailings to produce a bulk lead-zinc concentrate (which was suspended in
September 2008).
Settlement
of the acquisition occurred in March 2009, with BSM paying the remainder of the
$4.0 million cash payment into a solicitor’s trust account pending final
completion, at which time it will be paid to Macquarie Bank Limited, Intec’s
secured lender. Final completion of
the purchase occurs on receipt of Ministerial approval for the transfer of the
Mining Lease and extension of the Mining Lease for 21 years.
Ministerial Consent and Extension of the Mining Lease
Bass
Metals has now received written advice that the application to transfer the
Hellyer Mine Lease from Intec Hellyer Metals Pty Ltd to Hellyer Mill Operations
Pty Ltd (a 100% owned subsidiary of Bass Metals) has been approved by the
Minister. Extension of the Mining
Lease is pending submission of the Hellyer Mine Project development and environmental
management plan, which is scheduled to occur in July, 2009.
Hellyer Tails Mineral Resource Update
Transfer
of the Mine Lease includes the ownership of the Hellyer tails storage facility
and mineral resource. A revised
Mineral Resource estimate is required to form the basis of further assessments
of re-treatment options.
AMC
Consultants Pty. Ltd. (AMC) was appointed to undertake a review of the historic
drilling, production and survey data to revise its Hellyer Tails Mineral
Resource estimate of 2005 accounting for the recent tails re-treatment
operation. This operation reclaimed
tailings from the main Hellyer tails dam using a dredge for reprocessing in the
Hellyer Mill to produce a bulk lead-zinc concentrate for approximately 18
months until September 2008,(refer Figure 1). Figure 2
illustrates the location of the Hellyer tails storage facility and other site
infrastructure.
The
revised Mineral Resource, reported in accordance with the JORC Code is presented
in Table 1 below. A more detailed
breakdown of the Mineral Resource classified as Inferred is provided in Table
2; much of this material represents the reprocessed tailings which were
deposited into new sites (Shale Pit Dam & Western Arm), with less well
defined survey control.
Table 1: Hellyer Tails Mineral Resource Estimate, June
2009
JORC classification
|
Tonnes
(m)
|
lead
%
|
zinc
%
|
copper
%
|
silver
g/t
|
gold
g/t
|
Density
g/cm3
|
Measured
|
4.9
|
3.1
|
2.8
|
0.2
|
104.9
|
2.7
|
1.93
|
Indicated
|
2.5
|
3.0
|
2.6
|
0.2
|
103.9
|
2.6
|
1.93
|
Inferred
|
2.1
|
2.9
|
1.7
|
0.2
|
102.9
|
2.4
|
1.74
|
Total
|
9.5
|
2.8
|
2.5
|
0.2
|
104.0
|
2.6
|
1.89
|
Reference: Model
MDHL1AOK - 2000 Drillhole Data only, 2009 tailings surface survey constrained
The
figures in the tables have been estimated using the drillhole data collected in
2000. An empty block volume model
was created using the original pre-deposition topography and tailings surfaces
for 1998, 2000 and 2009. Grade was
estimated into the empty blocks by ordinary kriging, using the 2000 drillhole
data only (as with the 2005 resource estimate).
Table 2: Inferred Material by location
Location
|
Tonnes
(m)
|
lead
%
|
zinc
%
|
copper
%
|
silver
g/t
|
gold
g/t
|
Density
g/cm3
|
Main Dam Area
|
0.7
|
3.0
|
2.7
|
0.2
|
104.4
|
2.74
|
1.93
|
Shale Pit
|
1.0
|
2.8
|
1.2
|
0.2
|
102.2
|
2.23
|
1.64
|
Western Arm Dam
Area
|
0.4
|
2.8
|
1.2
|
0.2
|
102.2
|
2.23
|
1.64
|
Total Inferred
|
2.1
|
2.9
|
1.7
|
0.2
|
102.9
|
2.40
|
1.74
|
The
material mined by Intec Hellyer Metals Pty Ltd. between 2007 and 2008 was
treated to produce 89,700 tonnes of concentrate, with the tailings from this
process re-deposited in the Shale Pit and the Western Arm Dam area. According to the GHD Pty Ltd. (GHD)
report, this re-treated tailings material would have a bulk density of
approximately 15% less than the original tailings material. Thus AMC has assigned a bulk density of
1.64 g/cm3 to this material.
Gold
grades in the re-treated tailings material have been set at 2.23 g/t as advised
by Bass Metals based on production records from the tails re-treatment project.
Commentary
Bass
Metals has initiated several programmes to review the potential mining and
processing opportunities for this mineral resource including:
1. Update of the Mineral Resource estimate;
2. Review of operating cost model to retreat the tailing
to produce a bulk lead-zinc concentrate and possible off-take terms; and
3. Metallurgical testwork on tailings sample to test the
concept of producing a separate gold-sulphide concentrate as part of a bulk
concentrate process flow sheet.
The
Mineral Resource estimate highlights a large inventory of base and precious
metals. Bass Metals is interested
to evaluate the potential reprocessing of the tails as a value enhancing side
project to the main focus of developing the Hellyer Mine Project.
Retreatment
of the tails was successfully achieved on a technical basis between November
2007 and September 2008 with recorded production of approximately 90kt of a
bulk lead-zinc concentrate. All of
the equipment required to restart this operation is on site and owned by Bass
including the cutter suction dredge.
Several
commercial factors converge to determine the viability of restarting this
project, namely; metal prices, operating costs and the global market for bulk
lead-zinc concentrates. Bass Metals
notes the current improved lead and zinc prices and the improving metal price
outlooks emanating from a variety of respected industry analysts and continues
to liaise with potential off-take parties for possible sales contracts.
Bass
Metals continues to investigate various potential enhancements to the tailings
re-treatment project including the possible recovery of a gold-sulphide
concentrate. Metallurgical testwork
is currently underway examining selective recovery of gold bearing arsenopyrite
minerals from the largely pyritic tails.
This has not been tested previously at Hellyer and the work is in
progress. With an insitu endowment
of 800,000 ounces contained gold, recovery of even a modest portion into a
saleable product could significantly enhance an overall tails retreatment
programme.
The
Company’s main focus is the completion of the Hellyer Mine project
Feasibility study, now expected in July 2009. An important component of this is the
ability to utilise the newly acquired Hellyer Mill to process its ore, albeit
at significantly reduced throughput rates-based on the proposed mine
production. Therefore co-treatment
of Hellyer tails, on a campaign basis is regarded as a high priority
opportunity to fully utilise the Hellyer Mill with cost benefits flowing to
both projects.
I
look forward to reporting further on the Company’s progress and outcomes
on these issues.
Yours Sincerely
Mike Rosenstreich
Managing Director
JORC COMPLIANCE STATEMENT
The information in this report that relates
to Mineral Resources is based on information compiled by John Tyrrell who is a
full-time employee of AMC Consultants Pty Limited and a Member of the
Australasian Institute of Mining and Metallurgy. John Tyrrell has sufficient
experience that is relevant to the style of mineralisation and type of deposit
under consideration and to the activity that he is undertaking, to qualify as a
Competent Person as defined in the 2004 Edition of the "Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The
JORC Code)". John Tyrrell consents to the inclusion in the report of the
matters based on their information in the form and context in which it appears.
Figure 1: The BSM Crew aboard the cutter suction dredge on care & maintenance
on the Hellyer TSF.
Figure 2: Hellyer location plan showing location of
Hellyer Tails Storage facility (TSF).