white dam qtrly update

From the PLY qtrly report:

Drew Hill, SA (White Dam Gold Mine)
?? PLY share of gold produced was 3,985 ounces, with 3,809 ounces sold
?? Cash operating cost of $383/oz
?? Average gold price received A$1,621/oz
?? 367 holes drilled for a total 7,610 metres

EXS share would be 3 times the amount shown for oz produced and sold.

Production
Total project production for the Quarter was 15,938 ounces (Polymetals share is 3,985 ounces). This figure is down from last Quarter’s 21,810 ounces as the project moves towards the end of production from the Hannaford pit. As noted in Figure 1, cumulative production to date of 116,280 ounces is substantially ahead of the original approved financing projections (“Budget”).

Mining from Hannaford Pit moved 451,000 bank cubic metres of material comprising 500,000 tonnes of ore and 630,000 tonnes of waste for a strip ratio of 1.25.

During the Quarter, a northern cutback of Hannaford Pit commenced. The current plan is that mining from the Hannaford Pit will continue until late 2011 and gold production will continue until mid 2012. However, near-mine exploration and resource definition continues with the aim to extend the life of the mine if economically feasible to do so.

A total of 500,000 tonnes of ore at 0.89 g/t was placed on the leach pad. Leaching performance continues to exceed target. Gold recovery to date of 73% is significantly higher than the feasibility estimate of 65%.

Costs
Total operating costs for the Quarter were $383/oz with total cash costs at $437/oz.

These levels remain consistent with the FY2011 costs, although operating costs are trending up due to the reduced production levels from the previous Quarter. This trend is expected to continue as remaining mining activity targets commercially viable, but higher cost, production extensions, such as the north wall cutback, to maximise value extraction from the Hannaford pit.

Total cash costs reflect a reduction in exploration costs from the previous Quarter. This is due to an uneven spend profile rather than a trend. The joint venture continues a strong focus on extending mine life through near-mine exploration.

Gold sales and revenue
In the Quarter, Polymetals sold 3,809 ounces at an average price of A$1,621/oz. This is above the A$1,425/oz achieved in the previous Quarter.

Project development
Assessment to mine the nearby Vertigo deposit continued during the Quarter. The mining lease application for the Vertigo deposit and a deed of variation to the native title agreement is nearing completion. If Vertigo is mined, ore would be treated at the existing White Dam facilities, less than 2 km away. Capital requirements would be minimal.

Assessments of White Dam North and White Dam East prospects concluded during the Quarter. These prospects are not economic based on current project parameters. However, White Dam North regulatory approvals are being progressed so that it may be developed promptly should circumstances change.

Exploration
Polymetals, having recently taken over management of the exploration programs, has focussed on developing an understanding of patterns of known mineralised occurrences at White Dam, Vertigo, White Dam North and White Dam East. Methodical compilation of new and existing data to better understand the deposits and the regional geology is fundamental to Polymetals’ approach to exploration drill targeting. This will assist in the next phases of near-mine and regional exploration.

Currently, the focus for exploration continues to be near-mine while regional prospects represent strong medium term opportunities. Known Drew Hill near-mine and regional prospects are shown in Figure 4.

A correlation exists between all known economic and sub-economic bodies of mineralisation (White Dam, White Dam North, and Vertigo) and subtle aeromagnetic features. Mineralisation occurs in areas of complex fault structure associated with domal to arcuate shaped magnetic bodies. Forward geophysical modelling of these magnetic bodies shows that they may be interpreted as a cluster of sub-volcanic intrusive pipes; which also accords with recent pit mapping that has shown a felsic volcanic unit to exist in the south wall of the White Dam open cut. These units can inform an IOCG type exploration model, such as Olympic Dam; whereby the mechanism of mineralisation is caused by high-level intrusives of this type. The correlation between mineralised bodies, structure and magnetics (Figure 5) in its simplest form will be used to target new areas for scout drill testing. In its most complex form the correlation could inform new exploration models.

Exploration work planned for the December Quarter includes the following:
• Deeper follow-up RC drilling of gold anomalies located in the northern tenement areas.
• Scout drilling in new areas.
• Extend the coverage of high resolution aeromagnetic data to all areas in the tenement group.
• Review the extensive historical surface geochemical dataset and determine effectiveness for use as an exploration tool.


Figure 6: Drew Hill – near mine drilling