Because it is a narrow vein epithermal mine with predominantly vertical veins, they move inferred resources into the indicated category as they actually develop within ore. The fresh indicated resources then become the new probable reserves which they announce at the end of the financial year.
Glancing back at 17th July 2009, they announced reserves of 500 koz in 1,041,000 tonnes of ore. Since then (over 5 years) they have actually sold 409 koz of gold but the recent reserve/resource update (using the stricter JORC 2012 code) still gave them a reserve of 446 koz within 1,920,000 tonnes. In other words they have continued to replace production on an annual basis as they have moved deeper in the mine.
By definition, epithermal veins are formed by rising mineralised fluids heated by the local mantle, so there would appear to be little reason to doubt that they will continue to find ever more gold as they trace those veins down over many years to come.
The proposed new L16 shaft is evidence of this as it will allow haulage of future mining from all levels from 16 and above as the mining slowly depletes all the current stope levels from 8 and above.
I expect them to continue to have 2-3 years of reserves in hand for many years just as was seen at the Diwalwal mine which is some way south of Co-O - or as occurred in some of the Australian deep vein mines (like the Norseman mine).
CPDLC
MML Price at posting:
86.0¢ Sentiment: Buy Disclosure: Held
