Gold

• Gold
• Resources
• Accessible EDR
• JORC Reserves
• Exploration
• Production
• World Ranking
• Industry Developments

Gold prices remained strong through out 2006 but this strength was could not maintain exploration expenditure which fell in the face of very strong metal prices which underpinned substantial growth in base metal exploration. Production fell in 2006 but with developments currently occurring is expected to increase in 2007. Exploration generated a large number of intersections of economic significance justifying further work but there remained a lack of discovery of large or world-class deposits.

Gold has a range of uses but the two principal applications are as an investment instrument and in the manufacture of jewellery. Secondary uses, in terms of the amount of gold consumed, are in electronic and dental applications.

Australia's gold resources occur and are mined in all States and the Northern Territory. At the end of 2006, total Australian gold resources were 312 t higher than at the end of 2005. After allowing for the replacement of those resources lost to production (246 t) newly delineated resources added to the national inventory totalled 447 t (13 mozs) in 2006.

Australia's EDR rose by 256 t (8.2 mozs) in 2006 to 5481 t and accounted for 80% of total demonstrated resources, an increase on the 78% share in 2005. In 2006, EDR increased in New South Wales, Western Australia and the Northern Territory. Western Australia continued to dominate EDR with 54% of the national total which was an unchanged share. In 2006 its EDR was 2938 t. South Australia had the second largest EDR.

Sub-economic demonstrated resources fell by 40 t in 2006 as para-marginal demonstrated resources fell and sub-marginal demonstrated resources rose. Resources in the para-marginal category fell by 50 t to 1265 t with Western Australian para-marginal resources falling by 34 t to 921 t which remained at 73% of total para-marginal resources. Increases occurred in the para-marginal category only in the Northern Territory. The sub-marginal demonstrated resources rose by 10 t to 128 t, over half of which was in Western Australia.

Inferred resources rose by 96 t to 4499 t. Western Australia continued to dominate inferred resources accounting for about 45% of total inferred resources which was a similar level to 2005.

EDR for gold are essentially unencumbered (less than 1% is in any form of restricted area). At Australia's 2006 rate of production, EDR is sufficient for about 22 years production. If, however, resources only classified as reserves under the JORC Code are considered, they will support only 14 years at the 2006 production rate. This is slightly higher than the 2005 reserve:production ratio. These are average figures and that there are some operations that may continue after these periods and there are others that will close before the end of those periods. These figures continue to highlight the need for ongoing successful exploration in both the short and medium terms.

EDR is the sum of the JORC Code reserves categories plus those resources from the measured and indicated resource categories assessed by Geoscience Australia as likely to be economic. In 2006 just under 61% of EDR fell into the JORC reserves.

On the basis of calendar year exploration spending reported by ABS, gold remained the dominant target in 2006 but its share of total spending fell sharply from 34% in 2005 to 29% in 2006. This substantial fall occurred despite a 12% increase in gold expenditure to $429.8 million. The reduced share resulted from increased spending on almost all other commodities on the back of strong international demand for commodities and high or record metal prices. Western Australia continued to dominate gold exploration by attracting $259.7 million ($18.4 million more than in 2005). However, its share of total gold exploration fell to 60.4%. All other regions had gold exploration during the year and encouraging results were reported from them. Selected highlights which are indicative of the year's activity are reported at the end of this section.

It should be noted that ABS data reported on above will not include exploration for copper-gold mineralisation where the explorer nominates copper as the principal commodity. Such expenditure will be reported as exploration for copper.

On a financial year basis, ABS reported gold exploration spending for 2005-06 was $399.7 million, a reduction of $8 million over 2004-05. Increases in Victoria, Queensland, South Australia and Tasmania were insufficient to offset reductions in other jurisdictions. Western Australia was the focus of gold exploration with $240.3 million (60% of total gold exploration spending).

Data published by the Canadian company Metals Economics Group (MEG) on company exploration budgets for non-ferrous minerals indicates that intended budgets for gold exploration in Australia for 2006 totalled US$373.9 million (A$505 million based on the exchange rate used by MEG). This budget was about 17% higher than actual spending reported by ABS. The differences between reported budgets and actual spending on gold exploration may in part have been caused by the rapid increase in base metals exploration resulting in gold budgets being reduced as additional funds were directed to base metals.

The MEG data show that 33% of gold exploration budgets were expected to be directed at grassroots exploration while a further 33% was directed to minesite exploration. The remaining 34% was for late stage exploration. These shares are indicative of the trend to brownfields exploration that Australia has been experiencing in the major commodities.

New gold mineralisation was found across the continent and at depth below known deposits. A variety of styles of mineralisation also continued to be found. The Archaean greenstones of Western Australia's Yilgarn Craton remain a very favourable target, but the reported results that follow suggest that substantial opportunities exist in other provinces. Indicative intersections are noted below.

• Reconnaissance drilling at the McPhillamys prospect, 35 km SE of Orange, by Alkane Exploration Limited discovered mineralisation including 24 m at 2.03 g/t Au from 4 m including 5 m at 5.69 g/t Au and 17 m at 1.50 g/t Au while later drilling returned 77 m at 1.65 g/t Au from 140 m and 31 m at 1.64% Zn, 12 g/t Ag and 0.18 g/t Au from 64 m.
• Goldminco Corporation released a revised resource estimate for the Discovery Ridge project, near Blayney, of 4.2 Mt at 1.2 g/t Au in the indicated category and 2.4 Mt at 1.4 g/t Au of inferred resources for an aggregate 0.272 mozs Au.

• Tanami Gold NL discovered the Tekapo mineralisation in an unexplored area of its Lake Mackay project 400 km NW of Alice Springs. Intersections of 16 m at 3.4 g/t Au from 29 m, 3 m at 1.79 g/t Au from 10 m and 2 m at 2.01 g/t Au from 22 m were reported. Later drilling yielded copper mineralisation including 4m at 2.67% Cu, 2 m at 0.83% Cu and 4 m at 0.60% Cu.
• GBS Gold International Inc released new drill intersections from exploration at the Fountain Head deposit, 70 km NW of Pine Creek. Intersections included 17 m at 4.4 g/t Au, 6 m at 5.0 g/t Au and 29 m at 4.8 g/t Au. The Company will mine the deposit as part of its Union Reefs operation.

• Extensions to the high-grade mineralisation in the Kilkenny structure at Cracow were reported by Sedimentary Holdings Limited. Intersections included 49 m (28.3 m estimated true width) at 4.8 g/t Au from 766 m and 9.3 m (7.2 m estimated true width) at 21 g/t Au. Kilkenny is 400 m from and readily accessible by the Crown decline being developed to access the Crown Shoot.
• At the Agate Creek prospect, 80 km S of Georgetown, Renison Consolidated Mines NL reported thick, near-surface mineralisation in the Zig-Zag Fault. Intersections included 61 m at 0.9 g/t Au including 26 m at 1.5 g/t Au. Renison is undertaking a feasibility study into open pit mining at Agate Creek based on a total resource of 13.2 Mt at 1.0 g/t Au (0.428 mozs).
• At the Mount Carlton Project, Conquest Mining Limited discovered high-grade mineralization. Intersections include 85 m at 3.39 g/t Au, 17.4 g/t Ag, and 0.24% Cu from 79 m, 36 m at9.93 g/t Au 32.7 g/t Ag and 0.4% Cu from 92 m, and 21 m at 1864 g/t Ag and 3.52% Cu from 54 m. Project resources were revised to 6.646 Mt at 1.47 g/t Au (313,410oz), 85 g/t Ag (18.175 mozs) and 0.39% Cu (25,923t).

• Drilling by Minotaur Exploration Limited at the Tunkillia deposit, 145 km NE of Ceduna, intersected significant gold mineralisation in the supergene and primary zones and lower grade gold in the oxide zone. Better intersections included 7 m at 7.7 g/t Au, 3 m at 8.5 g/t Au and 6 m at 3.9 g/t Au. Later drilling appears to confirm the presence of a coherent oxide zone and intersections included 10 m at 4.2 g/t Au and 5 m at 5.9 g/t Au from above bedrock mineralisation and 12 m at 15.8 g/t Au and 5 m at 12.1 g/t Au peripheral to known bedrock mineralisation.
• At the old Bird-in-Hand gold mine near Woodside, Maximus Resources Limited reported high-grade gold mineralisation with an intersection of 6 m (estimated at 4.2 m true width) at 23.5 g/t Au and including 1.5 m at 78.2 g/t Au.

• Deep drilling by Lefroy Resources Limited at the Lefroy project, 40 km N of Launceston, identified the South Pinafore mineralisation 150 m S of the Pinafore Reef. South Pinafore occurs under basalt and intersections included 2 m at 14.5 g/t Au from 101 m.
• Frontier Resources Limited reported encouraging intersections from drilling at its Panama prospect 25 km NE of Launceston including 0.5 m at 7.5 g/t Au and 0.5 m at 5.83 g/t Au, both from 16 m below surface.

• Leviathan Resources Limited announced high-grade gold intersections at the Tandarra prospect 40 km N of Bendigo. Exploration targeted gold deposits under cover along an interpreted major crustal corridor which includes the Ballarat and Bendigo goldfields. Drilling confirmed quartz veining beneath 40-90 m of sediment cover with intersections including 1 m at 160 g/t Au from 104 m, 1 m at 24.7 g/t Au from 84 m and 4 m at 1.3 g/t Au from 70 m.
• Perseverance Corporation Limited discovered a new zone of sulphide mineralisation at its Fosterville project at Fosterville. It reported that the mineralisation is analogous to the main mineralisation at Fosterville and intersections of 5.1 m at 5.0 g/t Au, 4.0 m at 6.1 g/t Au and 10.4 m at 2.2 g/t Au were returned.
• Goldstar Resources NL advanced the Walhalla project with underground development, bulk sampling and drilling at the Eureka and Tubal Cain prospects. Encouraging drill results including 1.05 m at 1,869 g/t Au.

• Successful exploration continued to be reported by Avoca Resources Limited from its Trident deposit at Higginsville. Wide zones of high-grade mineralisation were identified 100-150 m below the Western Zone mineralisation including 25 m at 4.0 g/t Au and 14 m at 4.7 g/t Au. Drilling in the Athena Lodes at Trident returned 3 m at 63 g/t Au, 3 m at 18.2 g/t Au and 4 m at 8.3 g/t Au. Avoca reported that resources at its Higginsville project were 8.7 Mt at 4.0 g/t Au (1.11 mozs) of which 4.3 Mt at 6.2 g/t Au was in the Trident mineralisation.
• Drilling at the Independence Group NL and AngloGold Ashanti Limited joint venture at Tropicana, E of Laverton, continued to yield results that suggest potential for a large deposit. Indicative intersections reported included, from the Tropicana Zone, 30 m at 3.0 g/t Au and from the Havana zone 63 m at 3.0 g/t Au, 7 m at 3.9 g/t Au and 11 m at 3.4 g/t Au. At the Rusty Nail prospect 5 m at 3.4 g/t Au was reported.
• At the Doolgunna project, 150 km N of Meekatharra, Sandfire Resources NL reported encouraging intersections from the Old Highway prospect including 8 m at 2.81 g/t Au, 24 m at 3.22 g/t Au which included 12 m at 6.42 g/t Au and 48 m at 5.90 g/t Au which included 16 m at 11.28 g/t Au. The discovery of the Cow Hole Bore mineralisation with intersections of 4 m at 5.50 g/t Au and 4 m at 7.43 g/t Au was announced as was an intersection of 14 m at 10.40 g/t Au from the East Shed Well prospect.
• At the Brilliant prospect, 75 km ENE of Kalgoorlie, Shannon Resources Limited reported high-grade intersections including 52 m at 5.44 g/t Au including 7 m at 25.14 g/t Au and 29 m at 5.28 g/t Au including 3 m at 30.63 g/t Au.
• In the East Kimberley region, Northern Star Resources Limited reported encouraging intersections from drilling at its Range prospect 130 km N of Halls Creek. Intersections included 4 m at 15.06 g/t Au and 7.30 g/t Ag from 21 m, including 1 m at 57.15 g/t Au and 15.70 g/t Ag. Other results included 4 m at 2.05 g/t Au and 1.31 g/t Ag and 1 m at 3.50 g/t Au and 1.80 g/t Ag.
• Agincourt Resources Limited's drilling adjacent to the main East Lode at its Wiluna open pit found a new high-grade lens which is expected to improve the economics of a cutback option for the East Pit. Intersections included 56 m at 10.8 g/t Au and 24 m at 13.4 g/t Au, both true width. Agincourt also reported the discovery of high-grade mineralisation, Henry 5, between its Calais and Woodley systems at Wiluna with an 18 m (estimated true width of 9.0 m) intersection at 10.42 g/t Au and 8.8 m at 18.7 g/t Au. At Calais, high-grade intersections were reported from outside the reserve envelope including 10.5 m at 31.3 g/t Au, 23.0 m at 11.4 g/t Au and 14.5 m at 14.9 g/t Au.
• In drilling aimed at defining resources to supplement resources at its Yagahong deposit at Gabanintha, 45 km SE of Meekatharra, Reward Minerals Limited reported intersections of 5 m at 14.57 g/t Au and 6 m at 5.00 g/t Au from the Golden Hope North prospect.

• Golden Cross Resources Limited announced a new resource for its Copper Hill deposit near Molong with indicated resources increasing to 79.9 Mt at 0.36% Cu and 0.35 g/t Au and an inferred resource of 56.1 Mt at 0.30% Cu and 0.27 g/t Au (total contained metal of 455,000 t Cu and 1.4 mozs Au). Ongoing exploration located mineralisation 400 m N of Copper Hill at Copper Hill North where intersections included 188 m at 0.39% Cu and 0.16 g/t Au and 184 m at 0.43% Cu and 0.15 g/t Au.
• Goldminco Corporation reported intersections at the Estoril prospect at Temora including 150 m at 0.31 g/t Au and 0.21% Cu which included 60 m at 0.5 g/t Au and 0.26% Cu. Another intersection was 123 m at 0.19 g/t Au and 0.16% Cu including 42 m at 0.25 g/t Au and 0.18% Cu.

• Universal Resources Limited reported that drilling by Xstrata Copper at Cabbage Tree Creek, immediately N of the Little Eva deposit (Roseby project), intersected copper-gold mineralisation beneath thick cover of younger rocks. The discovery hole returned 14 m at 2.00% Cu and 0.46 g/t Au from 393 m including 6 m at 3.19% Cu and 0.81 g/t Au from 393 m. The same hole had 4 m at 0.66% Cu and 0.15 g/t Au from 424 m and 14 m at 1.30% Cu and 0.29 g/t Au from 451 m.
• Malachite Resources NL reported encouraging copper grades from drilling at its Mount Lidster project between Mount Isa and Cloncurry. Two holes returned 6 m at 4.19% Cu, 0.37 g/t Au and 0.10% Co and 4 m at 5.29% Cu, 0.23 g/t Au and 0.07% Co respectively.
• Drilling by Ivanhoe Mines Limited at the Amethyst Castle and Swan prospects, 100 km S of Cloncurry, yielded IOCG type mineralisation and initial results from Swan included 79 m at 1.45% Cu and 0.99 g/t Au from 83 m, 115 m at 0.965% Cu and 0.86 g/t Au from 65 m, and 154 m of 0.81% Cu, and 0.49 g/t Au from 115 m.

• Oxiana Limited released initial results from near-mine drilling at Prominent Hill which highlights potential for increased resources. Copper-gold and gold-only mineralisation was intersected 400-500m beneath the current resource and mineralisation is open at depth. Better copper-gold intersections from chalcocite and bornite mineralised hematite breccias include 28 m at 2.1% Cu and 0.6 g/t Au, 17 m at 1.8% Cu and 0.6 g/t Au and 135 m at 1.5% Cu and 1.0 g/t Au. Wide intervals of 1-2 g/t Au-only mineralisation occur in, and peripheral to, the copper-gold system.
• Hillgrove Resources Limited continued drilling at its Kanmantoo project and holes adjacent to the Kanmantoo open pit yielded, from the North East zone, 37 m at 1.77% Cu and 0.21 g/t Au; from the Eastern Zone 25 m at 1.52% Cu and 0.14 g/t Au and from the South East Zone 25 m at 1.52% Cu and 0.13 g/t Au.

• Significant drill intersections continued to be returned at Batavia Mining Limited's Deflector deposit at Gullewa. Intersections included 5.00 m at 43.53 g/t Au and 2.1% Cu, 1.34 m at 25.74 g/t Au and 2.1% Cu and 12.13 m at 5.70 g/t Au and 0.5% Cu (all downhole depths). The total resource at Deflector is 2.65 Mt at 6.04 g/t Au and 1.23% Cu.
• Copper-gold mineralisation was reported by Crescent Gold Limited adjacent to the Admiral Hill gold prospect near Laverton. Results included 41m at 0.6% Cu, 0.7 g/t Au and 5.9 g/t Ag which included 3 m at 4.5% Cu, 4.2 g/t Au and 59.9 g/t Ag and 25 m at 0.5% Cu, 0.1 g/t Au and 0.6 g/t Ag including 3 m at 1.8% Cu, 0.1 g/t Au and 0.1 g/t Ag.

Australian gold production reported by ABARE for 2006 was 245 t a reduction of 18 t on the level they reported for 2005. The Super Pit at Kalgoorlie in Western Australia was again the largest producer with an output of almost 0.68 mozs (21 t) but it was followed closely by the Telfer mine, also in Western Australia, which produced 0.66 mozs (20.5 t) In 2006 Western Australia dominated Australian production with 165 t, just over two-thirds of total Australian output.

Australian gold production 2002 to 2006

Source: ABARE Australian Commodity Statistics 2005 and ABARE Australian Mineral Statistic December Quarter 2006.

ABARE's longer-term outlook is for gold production to rise to 335 t in 2009-10. The outlook for future production is reliant on new mines coming on stream successfully at expected levels of output especially the proposed Boddington (WA) and Prominent Hill (SA) operations and planned expansions at existing operations being realised.

The USGS estimate of World gold reserves of 42 000 t was similar to 2005 According to the USGS, South Africa still has the World's largest reserve of gold at 6000 t (14.3% a similar level as in 2005. According to the USGS Australia has the second largest reserve with approximately 12% of the World's holdings.

World mine production in 2006 fell by about 3% to 2415 t with South Africa remaining the leading producer with about 275 t produced. The USA regained second ranking with an output of approximately 253 t. Australia was the World's third largest producer with 245 t but was closely followed by China with approximately 240 t.

• A decision was taken to develop the Boddington project, S of Perth, WA, by Newmont Mining Corp and AngloGold Ashanti Limited at a cost of $1.8-$2.0 billion. Boddington has reserves of over 11 mozs Au. Initial production is expected in late 2008 or early 2009. The project has an estimated mine life of more than 15 years and over the first five years gold output will average about 1 mozs Au/year. Subsequent production will be around 0.85 mozs Au/year. Life of mine copper output will be about 30,000t Cu/year.
• Oxiana Limited announced in August that it would proceed with the development of a mine at its Prominent Hill deposit in the Gawler Craton, SA. Prominent Hill has resources of 118.7 Mt at 1.3% Cu and 0.5 g/t Au in the copper-gold breccia and 22.5 Mt at 1.24 g/t Au in the Eastern gold only zone. Planned output from the operation is 104,000 tpaof copper over the first four full years of operation and 71,000 tpaover the next six years and 115,000ozs of gold per year over the life of the mine. The pre-production capital cost is expected by the Company to be $775 million. The deposit remains open at depth and to the east and west and exploration is continuing.
• In Western Australia's area of the Tanami region, Tanami Gold NL poured the first gold from its Coyote mine in August. Annual production over an anticipated four-year mine life is 50,000ozs.
• Citigold Corporation Limited reported that it poured the first gold from its Warrior mine at Charters Towers, Qld, in November. Development of the Warrior mine is continuing and annual production is expected to rise to 40,000ozs.
• Production commenced at the Toms Gully mine, NT, with milling of ore and the first gold pour taking place in July. Annual production is expected to be around 45,000ozs over a five year mine life but upgraded resource estimates to over 0.5 mozs may extend its life.
• Range River Gold Limited commenced production from the Withnell East and Withnell South pits at the Indee project, 80 km SE of Port Hedland, WA. The first gold pour from the project took place in August and stage 1 production is expected to be around 64,000 ozs per year over 2 years.
• GBS Gold International Inc announced that it had decided to commence production in late-2006 from the Union Reefs project, near Pine Creek, NT. Anticipated production is 150,000ozs in 2007 rising to an annual rate of 250,000ozs from 2008. Mining of ore will be from the Fountain Head and Rising Tide open cuts and the Brocks Creek underground mine. The first gold pour from the operation took place in September.
• Ballarat Goldfields completed stage one of the Ballarat East processing plant in December 2005. Mine development is continuing with over 5 km of development completed. An extended mine design will focus on the recently discovered high grade mineralisation at depth around the Blue Whale Fault system. The extension of the mine will delay full gold production until 2009 and will cost an estimated A$120m.
• The first gold pour from the new Kangaroo Flat mine at Bendigo, Vic, took place in July and production of up to 90,000 ozs is expected by Bendigo Mining Limited in 2006-07.
• Avoca Resources announced that it had arranged a $15 million, one year financing facility to advance the development of its Trident gold project at Higginsville, WA, and to provide working capital. Avoca Resources is finalising a feasibility study into the development of Trident.
• Alkane Exploration Limited's pre-feasibility study for the development of the Wyoming One and Wyoming Three deposits considered a 0.5 m tpaopen pit mine followed by 0.25 m tpaunderground operation to produce 30,000 to 35,000ozs annually for six years. Total resources for the Wyoming deposits are 7.13 Mt at 2.70 g/t Au for 0.6 mozs.
• The Directors of Crescent Gold Limited approved the development of the $15.4 million Laverton gold project, near Laverton, WA. At full production the project is expected to yield 90,000ozs per year over a 4.1 years mine life. A revised reserve estimate based on further drilling may increase the mine life.
• Dioro Exploration NL conducted a pre-feasibility study into underground mining at Frog's Leg in the Mungari East joint venture NW of Kalgoorlie, WA, which returned positive results. The study indicated that 2.77 Mt at 5.43 g/t Au could be produced over 7.5 years, generating an operational surplus of up to $158.5 million.
• Gleneagle Gold Limited completed the refurbishment of the Fortnum project treatment plant mid-year and the first commercial gold production took place in July. At full production, annual output is expected to be around 55,000ozs for an initial three years.
• Production started at Barra Resources Limited's Burbanks project, 8 km southwest of Coolgardie, WA, in mid-year. Resources at the project at the start of production were 517,000 t at 4.5 g/t Au. Mining also started at Anglo Australian Resources NL's small Mandilla project 70 km south of Kalgoorlie, WA, in June. The deposit has a probable reserve of 70,100 t at 7.52 g/t Au. Kalgoorlie-Boulder Resources Limited mined the small Jackpot deposit 6 km east northeast of Coolgardie. Ramelius Resources Limited reported the first production of gold from its small Wattle Dam project in July.