Southern Cross Goldfields looks to generate early cash flows...

Southern Cross Goldfields looks to generate early cash flows from portfolio in 2011

Thursday, November 04, 2010

Southern Cross Goldfields (ASX: SXG) has reviewed its portfolio of gold projects in the Southern Cross region of Western Australia to enable it to fast-track commencement of potential gold production during 2011.

SXG has been reviewing development options for this portfolio of gold resources, including the potential to monetise these deposits through heap leach, toll-treatment and/or joint venture or other arrangements.

This will be done to capitalise on the current strong gold price environment and generate cash flow to support the continued evaluation and development of its gold, nickel and iron ore assets.

MARDA PROJECT GROUP

The Marda Project Group, comprising the Python, Dolly Pot, Dugite and Goldstream deposits, is located 120km north of Southern Cross and the Great Eastern Highway.

The Marda Project Group comprises a total Measured, Indicated and Inferred Resource of 2.1Mt grading 1.9 g/t Au for 128,000 ounces of gold. Importantly, 90% of these resources are in the Measured and Indicated categories.

SXG has decided to prioritise Feasibility and Development activities within the Marda Project Group. Work currently in progress on the Marda deposits includes pit shell optimisations using contemporary gold price and cost data and a review of previous test work and studies.

Production scenarios considered for the Marda deposits include processing via a standard CIL plant and/or treatment with heap leaching. Both options have been the subject of detailed Pre-Feasibility to Feasibility level studies by the previous owners.

PARKER RANGE

The Dulcie Laterite Project is located within the Parker Range Project Group some 40km south of the regional mining centre of Marvel Loch. The Project comprises a low-grade resource of 1.12Mt @ 0.68g/t Au for 24,600 ounces of contained gold which is amenable to extraction using heap leach methods. 91% of the resource is in the Indicated category.

Test work and studies are in progress aiming to optimise the operating costs associated with crushing, agglomeration and reagent use while achieving acceptable metallurgical recovery characteristics

Concurrently with heap leach optimisation testwork and studies, work is in progress to determine the recovery characteristics of a vat leach operation under a number of reagent addition regimes. These studies are also looking at the metallurgical characteristics of a vat leach operation without the requirement for crushing and agglomeration.

Other work currently in progress for the Dulcie Project includes:

- applications for Miscellaneous Licences to enable access to borefields located north and south of the deposit on SXG tenements;
- flora studies; and
- preparation of a detailed project development and approvals schedule.

The Battler Gold Deposit is located within the Parker Range Gold Project, 20km north of Marvel Loch and 15km south of Southern Cross.

The gold resource at Battler has recently been upgraded to an Indicated and Inferred Resource of 504,000 tonnes grading 2.32g/t Au containing 37,500oz of gold following additional drilling completed this year. Importantly, 89% of the Battler resource is in the Indicated category.

In addition, SXG has announced the results of diamond hole BGDD001 which returned 17m @ 9.9 g/t Au.

Work currently in progress on the Battler deposit includes pit shell optimisations using contemporary gold prices and cost data. Production scenarios considered for the Battler deposit include processing via a standard CIL plant and/or treatment with heap leaching.

Project development work in progress includes:

- applications for Miscellaneous Licences for access to the road network and remote borefields;
- discussions with potential toll treatment parties;
- environmental studies into flora distribution;
- a review of the resource estimate and drill density; and
- a review of the potential for extensions to mineralisation.
Project development work which will be accelerated in the event of positive outcomes from pit shell optimisations include:
- additional metallurgical testwork;
- geotechnical review;
- hydrological testwork to ascertain the near deposit borefield potential; and
- environmental studies into fauna, soils, geochemistry, ethnography and heritage;

The British Hill deposit is located 40km south of Marvel Loch, immediately south of Dulcie. The Project comprises an Indicated and Inferred Resource of 1.724Mt @ 1.9 g/t Au for 106,000 ounces of contained gold. 67% of the resource is in the Indicated category.

Work in progress on the British Hill deposit includes a review of the existing resource model and resource drill density. Pit shell optimisation work will be conducted after this review.

Applications have been lodged for a Mining Lease over the deposit and for Miscellaneous Licences to access the road network and existing borefields on SXG exploration tenements. Additional work currently being undertaken includes flora surveys.

JACKSON TREND

The King Brown deposit is located 130km north of Southern Cross. The Project comprises an Indicated and Inferred Resource of 201,000 tonnes grading 2.9 g/t Au for 19,000 ounces of contained gold. 89% of the resource is in the Indicated category.

A new resource estimate is in progress using Ordinary Kriging (OK). The new OK and previous MIK resource estimates will be subject to pit shell optimisations using contemporary gold price and cost data. Other project development work being undertaken currently includes flora studies.

In the event that pit shell optimisations are positive it is likely that additional drilling will be required at King Brown to increase resource confidence and to provide samples for metallurgical testwork and geotechnical studies. Additional project development work required would also include:

- metallurgical testwork for CIL and heap leach characteristics;
- hydrological testwork;
- environmental studies into fauna, soils, geochemistry, ethnography and heritage; and
- a geotechnical review.

Production scenarios considered for the King Brown deposit include processing via a standard CIL plant and/or treatment with heap leaching.

Golden Orb lies to the north of King Brown and is a larger deposit located approximately 150km north of Southern Cross. The Project comprises an Inferred Resource of 1.023Mt grading 2.2 g/t Au for 71,000 ounces of contained gold.

The resource at Golden Orb will be subject to pit shell optimisations using contemporary gold price and cost data with a heap leach processing route as the base case. In the event that pit shell optimisations are positive, additional resource in-fill drilling will be required to lift the resource estimate into Measured and Indicated categories.

Additional project development work required would also include:

- metallurgical testwork for CIL and heap leach characteristics;
- hydrological testwork;
- environmental studies into flora, fauna, soils, geochemistry, ethnography and heritage; and
- geotechnical review.

PROJECT DEVELOPMENT CO-ORDINATION

Project development activities required for each deposit are being undertaken by independent consultants assisting SXG. These activities and all permitting, statutory approvals and related activities are being co-ordinated by Peter George of Rock Team.

GOLD EXPLORATION

The company will be continuing exploration for new gold discoveries and to augment existing gold resources.

A substantial RAB drilling program at Mt Correll is planned to commence in the first quarter of 2011. This program will test gold anomalism in the Copperhead Shear Zone which hosts the Copperhead gold deposit at Bullfinch, 50km to the south.

Work will also continue along the Evanston Shear Trend in the Marda Project where gold mineralisation occurs in a variety of geological settings.

The trend is masked by thick soil cover over much of it?s strike making earlier prospecting and exploration ineffective. RAB drilling is also planned to test this area beneath the cover in 2011.

At Andromeda the auriferous structure previously drilled will be traced along strike to the north and south toidentify targets on that prospective trend.

On SXG?s tenements south of Southern Cross exploration is aimed at adding to SXG?s laterite resource around Dulcie and target generation is ongoing on our tenement holding between Southern Cross and British Hill.

http://www.proactiveinvestors.com.au/companies/news/11426/southern-cross-goldfields-looks-to-generate-early-cash-flows-from-portfolio-in-2011-11426.html