EvaluationofMineralResourceriskata

highgradeundergroundgoldmine

Presentedby:
AaronMeakin
Manager CorporateServices
CSAGlobal
21August2015 www.csaglobal.com
ProjectBackground

BeaconsfieldGoldMine,Tasmania
240,000tpa undergroundminingoperation
Orogeniclodegolddeposit(quartzankerite reef)
Multipleminingheadings/methods
Freeandrefractorygold(60:40)
Gravity/bacterialoxidationcircuits
Mineconstrained

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ProjectGeology

TasmaniaReefMineralisationCharacteristics
Mechanicalcharacteristicsofthehostrocksgoverned
developmentofthefaultwhichcontainedthereef
Laminatedtexturessuggestedepisodiccracksealvein
growth
Widthofreef0to8m(average2.2m)
Gradeofreef0to300g/tAu(average20g/t)
Majorityofgoldislessthan100micronsinsize
2Moz onasinglestructure

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ProjectGeology

Geology Plan

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ProjectGeologicalIssues

Significantunexpectedgradeandwidthvariationona
monthbymonthbasiswhichcausedfinancialvolatility
Achievedproductiontargetsbutouncesoftenwerent
realised
Ledtounderstandablefrustration

Triggeredareviewofdata,geologyandestimation
techniques

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MineralResourcesReview Data

FaceSamplingData
Continuouschipsamplingatchestheight1.5mfromthe
floorofundergrounddrivesevery2.2m
Horizontaldevelopmentallowsfacesamplingtobe
completedevery13mvertically
Faceswashedwithsurveycontrolforlocation
QCdatasupportsquality

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MineralResourcesReview Data

DiamondDrillingData
Nominaldiamonddrillpattern(NQ)ofapproximately25
mEby50mRL
Slightlowbiascomparedwithfacesamplingdatabut
probablyduetocoarsespacing
QCdatasupportsquality

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MineralResourcesReview Geology

BroadCharacteristics
Largerelativelycontinuousreef
Localstructuralcomplexitydifficulttopredictpriorto
mining
Potentialforstructuralintersectionstoenhancegrades
Geologicalcontrolswellunderstood

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MineralResourcesReview Modelling

SummaryofTechniques

Industrystandardsoftware
Wireframemodellingrobust
ID2/OKinterpolationwithtopcutting
MIKalsoused
Nomajorsissuesdetected

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MineralResourcesReview Findings

SummaryofFindings

DataqualityOK
Geologywellunderstood
Nomaterialissueswithmodelling/estimationfound

Allmethodssmooththedataandnonewereableto
reproducetheinherentvariabilityofthedeposit
AdecisionwasthenmadetoquantifyMineralResource
uncertaintythroughconditionalsimulationtechniques

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EstimationversusSimulation

Estimation Simulation
Blockscale Pointscale
Single estimate Manyrealisations
Smooths sampledata Reproducessamplehistogram
andvariogram
Enablesuncertainty
assessment

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ConditionalSimulationBackground

Conditionalsimulationistheprocessofbuildingnumerous
equallyprobablerealisationsofaparticularvariable
Thedifferenceintheseimagesprovidesameasureof
uncertaintyofunsampledvaluesinspace
Nearbydataandpreviouslysimulatedvaluesused
Realisationsareconditionalinthateachrealisationhonours
datavaluesandvariography
Arangeofoutcomesforanygivenvariableandlocation(or
block)canthenbedetermined

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ConditionalSimulationCaseStudy

Step1 Setdomainsandcompletevariography
Step2 Compilerawdataintodomaincodednodesfile
Step3 Runsimulations(100) nodepathvaries
betweeneachsimulationtogivedifferentresults
Step4 Blockaveragingrequiredtogetblockresults

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ConditionalSimulationCaseStudy

Domaining LongSection

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ConditionalSimulationCaseStudy

AuVariography

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ConditionalSimulationCaseStudy

AuSimulation LongSection

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ConditionalSimulationCaseStudy

ThicknessSimulation LongSection

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ConditionalSimulationCaseStudy

Conclusions
SignificantdifferencebetweenAurealisations,
particularlyatdepth
Reasonabledifferencebetweenthicknessrealisations,
particularlyatdepth
Atdistances>10mfromdatapoints,significant
differencesexistedbetweenrealisations

Howdoweusethisdatatocommunicateresource
uncertaintytostakeholders?
Whatmitigationstrategiesareavailable?

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ConditionalSimulationCaseStudy

ApplicationofResults

Probabilisticcashflowmodels(communicateimpactof
resourceuncertaintyonprofit)
Drillpatternriskassessment(riskversuscost)

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CashFlowModelCaseStudy

ProbabilisticCashFlowModel
Spreadsheetconstructedusing@Risksoftware
Widthandgradesimulationdataimportedand
probabilitydistributionsfittedtodata(perminingarea
permonthforannualschedule)
OperatingCost(normal),exchangerate(uniform)and
goldprice(uniform)distributionsdefinedbasedon
historicalvolatility
MonteCarlosimulation(2000scenarios)employedto
randomlysampleeachdistributiontoachieveaprofit
rangeresult
Variablesrankedbyimpact

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CashFlowModelCaseStudy

12MonthSchedule(LongSection)

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CashFlowModelCaseStudy

SingleStopeAuDistributionforOneMonth

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CashFlowModelCaseStudy

Conclusions
Gradeisking themostinfluentialvariableinevery
monthindeterminingprofit
Periodsoflossovershortterminevitable
HighlightsimportanceofunderstandingMineral
Resourceuncertaintywhenassessingprojecteconomics

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DrillPatternCaseStudy

Method
Asinglerealisationwasreresampledatvariousgrids
representingarangeofsamplingstrategies(100simulations
runforeach)

25mby50m(preminingpattern)
25mby25m
12mby12m
2mby13m(nominalpostminingpattern)

12monthminescheduleinterrogatedagainsteachtoassess
uncertainty(monthlyandannual)

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DrillPatternCaseStudy

Results

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DrillPatternCaseStudy

Results
Thereislittlemeritinclosingfromthenominalexploration
drillspacingof25mby50mto25mby25m
Aregular12mby12mgridperformsbetterthantheactual
facesampleandexplorationdrillingdatacombination
Apointofdiminishingreturnshasbeenreachedoncethe
samplegridachievesthelevelsrepresentedbytheactual
productionfacesampling

Costandriskreductiontradeoffcanbeassessed.Drilling
patternrequiredtoachieveagivenconfidencelevelcanbe
determined.

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MineralResourcesfromExplorationTargets

JORCMineralResourceClassificationDefinitions
Measured Geologicalevidenceissufficienttoconfirm
geologicalandgradecontinuitybetweenpointsofobservation
Indicated Geologicalevidenceissufficienttoassume
geologicalandgradecontinuitybetweenpointsofobservation
Inferred Geologicalevidenceissufficienttoimply butnot
verifygeologicalandgradecontinuity

Geologicalcontinuity geometriccontinuityofmineralisation
(governstonnageestimates)
Gradecontinuity continuityofgradeswithinthezoneof
mineralisation

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MineralResourcesfromExplorationTargets

CaseStudyGeologicalLearnings
Veinstyledepositscomeandgoduetoveinpinchingand/orreef
offsets
25mx50mpatternmaynotbesufficienttoassumegeological
continuityandthereforereportIndicatedMineralResources
Gradecontrol(minimiseorelossanddilution)labourintensive.
Profilecontrol(development)criticaltocontrolstopedilution,
communicationwithoperatorscriticaltotrackore/waste
movement,regularblockmodelupdatesrequiredtohonournew
dataandreconciliationwithproductiondatatoimprovemodeland
enablemeaningfulmineplanning.

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MineralResourcesfromExplorationTargets

CaseStudyGradeLearnings
Gradeisgenerallythemostimportantvariableindriving
projecteconomics
Veinstyledepositsoftendisplayamediumtohigh
nuggetcomponentand significantshortrangevariability
Estimatinggrades>5to10mmaybedifficult
25mx50mpatternmaynotbesufficienttoassume
gradecontinuityandthereforereportIndicatedMineral
Resources

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MineralResourcesfromExplorationTargets

JORCClassificationThoughts
MeasuredMineralResources generallynotbasedon
drillingalone
IndicatedMineralResources maybebasedondrilling
aloneformoderate/highnuggetveindeposits
Judgementcall willfurtherdrillingmateriallychange
themodel?
InferredMineralResourcesmaybebasedondrilling
alonebutmultipleintersectionsstillrequiredtoassess
geologicalandgradecontinuity
Judgementcall isthereenoughdatatoimply
continuity?

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 MineralResourcesfromExplorationTargets

VeinstyleMineralResourceestimationToolbox
CollecthighqualitydatawithadequateQCdata
DiamondpreferabletoRCtoenabledetailedassessmentofthe
characteristicsofthemineralisation
Criticallyreviewgeologicalandgradecontinuity
Undertakebulksampling(ifpossible)
Pepperawindowofthedepositwithdrillholestotest
geologicalandgradecontinuityatthelocallevel
Classificationdecisionsultimatelyheavilyreliantonjudgementof
CompetentPerson
Seekpeerreview
Ensuretransparencythroughdocumentation,discussmaterial
issuesanddemonstratecompetence

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 ThankYou

Formoreinformationpleasecontact:
AaronMeakin
Manager Corporate/PrincipalResourceGeologist
ameakin@csaglobal.com

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