Despite having delineated less than two years’ worth of reserves, management of
In May, the company began breaking ground for the construction of a 600,000-tonne-per-year processing plant on the south end of the goldfield at a cost of A$53 million (US$41 million).
“Our reserve base at the moment dictates we should be processing at about 450,000 tonnes,” said Managing Director Doug Buerger during a presentation earlier this year at the BMO Global Resources Conference in Florida. This translates into production of about 120,000 oz. gold per year at a cash operating cost of around US$300 per oz. Plant commissioning is scheduled for the second quarter of 2006.
“As we delineate more reserves, we will be able to ramp that production up to 600,000 tonnes,” predicted Buerger.
Despite boasts of more than 11 million oz. of inferred resources, Bendigo has defined probable ore reserves of just 193,000 oz. gold in 656,000 tonnes grading 9 grams gold per tonne. This is equivalent to a little more than a year and a half of production. Thereafter, production comes from conceptual ore sources.
The company said the cost of defining more reserves would be prohibitive, owing to the extreme “nuggety” nature and depth of the ore. Drilling from surface is restricted, as Bendigo, a city with a population of 100,000, lies directly over the deposit.
“Our target is to have around 240,000 oz. in reserve by June 2006 and we’re confident that we can progressively increase our delineation rates to support the targeted production rate,” said Buerger. The company, which is currently drilling with three underground rigs, recently discovered a new reef in the S4 ribbon on the Sheepshead anticline at a depth of 1,000 metres, some 150 metres below the existing decline.
Bendigo Mining has spent A$105 million (US$82 million) over the previous 10 years trying to unlock the value of the historic district, 200 km northwest of Melbourne, Victoria’s capital.
Discovered in 1851, the Bendigo gold camp ranks behind Kalgoorlie’s Golden Mile as the second-largest producing goldfield in Australia. By the time mining ceased in 1954, something in the order of 22 million oz. had been mined (including 4 million oz. of alluvial production) from the thousands of small mining leases that historically supported some 1,500 public mining companies and three stock exchanges. The most productive portion of the Bendigo district came from 15 major lines of reefs or anticlines in an area measuring 15 km long by 5 km wide. The reefs are continuous and can extend more than 8 to 9 km in individual length.
Buerger stressed that mining ended in the 1950s not because they ran out of gold but because it was no longer economically feasible. “At that time, the gold price was fixed at US$35 per oz., so gold wasn’t exactly the flavour of the day, or decade in fact,” said Buerger. Dewatering and ventilation also posed serious problems at deeper depths.
Gold mineralization at Bendigo is exclusively associated with quartz veining and faulting within, or near, anticlinal fold hinges. It was recognized very early on in the camp’s history that these structurally complex zones occurred close to the anticlinal axis, forming ribbons, which follow the horizontal or near-horizontal plunge of anticlinal crests and are repeated with depth.
This early breakthrough in the predictability of the gold-bearing reefs led to the practice of deep shaft-sinking on productive reefs as the main exploration tool — a practice that formed the basis of much of the exploration success and long history of gold production in the Bendigo camp.
More than 5,000 shafts were sunk on the Bendigo goldfields through the years. At least 140 shafts were deeper than 300 metres, 67 exceeded 600 metres, and 11 were well over 1 km below surface on three separate reefs. The two deepest shafts extended to depths of 1,312 metres and 1,406 metres.
“In its one hundred years of mining history, they mined the top slice of 750 metres,” said Buerger. “Our plan is based on mining the lower portion of the deposit from 750 to 1,500 metres on five lines of reef, where we have eleven million ounces.”
The company has long boasted of the potential for many millions of ounces beneath the historic workings of the Bendigo camp based on a geological model it developed to promote the project. “We made a geological breakthrough,” Buerger told analysts. “We understand this deposit probably better than anybody has in its one-hundred years of history.”
Gold mineralization at Bendigo is found in structurally controlled mesothermal quartz veining hosted by Lower Ordovician turbiditic sequences. Compressional tectonism has pushed the sediments into a regular pattern of chevron folds to produce a series of anticlines and synclines trending north-northwest. Fold plunge reversals, differential attenuation of hinge zones giving rise to domes and sub-domes, and disruption and dilation caused by bedding parallel and oblique reverse faults, all played a role in localizing gold mineralization.
Gold-bearing quartz reefs run parallel to the hinges of enclosing anticlines and commonly occur as groups or clusters. The “ribbon model” as proposed by Bendigo, which doesn’t appear to be radically different from the old timers’ way of thinking, suggests that potential ore shoots occur in sub-horizontal gold-bearing ribbons that repeat at regular, predictable vertical intervals beneath the historic camp workings.
In order to justify the redevelopment of the historic goldfield, the Aussie junior used its “ribbon model” to arm wave, suggesting some 13 million oz. at historic grades continues beneath the old Bendigo workings in a series of predicted ribbons to a depth of 1,500 metres on five separate lines of reef. Bendigo has since reclassified a substantial part of that potential into an inferred resource totalling 23.5 million tonnes averaging 14.5 grams, equivalent to 11 million oz. But this was achieved by extrapolating historic grade and tonnage values downwards along the corridor defined by anticlinal hinge zones, based on a predicted pattern of regularly repeated quartz veining every 200 metres of depth stretching over a 10-km strike length.
This innovative approach to resource estimation — which some in the geological community might term “geofantasy” owing to its heavy reliance on modelling rather than hard-earned drill results — is considered by the company to be “a fair and reasonable portrayal” of the project’s potential. “The geological model on which it is based is supported by a rigorously compiled database, robust and reasonable geological interpretations, and is backed by appropriate professional judgment and experience,” according to the company.
“The characteristic ‘nuggety’ nature, and lateral and vertical extent of the ribbons containing the Bendigo quartz reefs make it impractical to prove up substantial ore reserves ahead of production at an acceptable cost,” states a 2004 feasibility study. “Nevertheless, a combination of historical records, geological interpretation, exploration drilling and underground bulk sampling has enabled Bendigo to prepare an estimate of the target tonnage and grade of material that is expected to be accessed as the project is developed.”
The ribbon model attracted the likes of South Africa’s
Bendigo Mining currently has 253 million sha
res outstanding and is trading around A$1.16 per share. The company’s top shareholder, APS Asset Management, recently trimmed its holdings to 14% from 16.9%, after one of its clients transferred its portfolio.
WMC in Bendigo
At one time, WMC controlled exploration and mining leases covering most of the Bendigo goldfields. It began working in the area in 1978 and, for the next 14 years, spent a total of A$28 million on exploration, research, underground development and installation of a small 200-tonne-per-day pilot plant for bulk sampling. In addition, WMC completed more than 45,000 metres of core drilling and 65,000 metres of reverse-circulation drilling. In April 1993, WMC sold all of its Bendigo assets and database to the reorganized Bendigo Mining for A$1.6 million.
In the years that followed, Bendigo Mining focused its resources on gaining a better understanding of the potential ore distribution and the complexities it faced mining the erratically distributed coarse gold. Something like 80% of the gold is found in particles 3 mm or greater, making estimates difficult. The company acknowledges that “the extreme nuggety nature of gold mineralization meant that it is not possible to obtain representative samples from drilling alone.”
The problem was recognized early in the life of the field, and a system of large-scale bulk sampling of 50-200 tonnes, along with the visual identification of coarse gold, was used to determine grades. Historic mining essentially involved continuous bulk sampling, with individual parcels of ore treated separately through stamp mills to provide a running check on grade.
Bendigo says that its sampling work has shown the proportion of fine to coarse gold stays relatively constant. “Fine gold is our ‘microdiamond’ indicator for coarse gold,” stated the company in a recent presentation. The company has evolved its thinking: “Ignore the big hits and focus on the broader distribution of fine gold.”
Bendigo Mining’s exploration efforts have focused on the southern end of the field. The Swan decline, now more than 5.5 km long, was driven to 850 metres below surface to gain access to gold-bearing ribbons some 200 metres beneath historic workings on the Sheepshead and Deborah anticlines. In all, some 1,200 metres of underground development was carried out on seven separate reefs in the S3 and D3 ribbons.
With the objective of proving up grade and tonnage, nearly 30,000 tonnes of development ore was batch-treated in a new pilot processing plant. What’s more, some 900 mini-bulk samples, of which 100 samples weighing between 100 and 300 tonnes apiece, were collected and processed. The balance of the mini-bulk samples were 50 kg each. In excess of 110,000 metres of closed-space fan drilling was also completed.
Buerger says they have resolved the issue of estimating grade in the nuggety Bendigo camp. “We feel very confident now that estimating grade and grade distribution is something that we have to come to terms with and we understand.”
The company defined indicated resources of 720,000 tonnes grading 10 grams, equivalent to 236,000 oz., from the testing of 2,000 metres of ribbon, which compares very closely to a predicted grade of 10.9 grams for this portion of Bendigo. The 193,000 oz. of probable ore reserves is contained in 420 metres each of the S3 and D3 ribbons. However, the balance of 1,160 metres tested did not produce ore reserves.
“The confirmation of grades in line with historical production grades increases our confidence that grades will increase to the north and approach the average of 14.4 grams estimated for the entire New Bendigo project,” states the company’s 2004 annual report.
Based on the results of the trial bulk-sample processing, Bendigo says the ore has excellent metallurgical characteristics. More than 80% of the gold is expected to be recovered by gravity separation, followed by intense cyanide leaching of the concentrate. By further treating the gravity tails with flotation, recovery rates are expected to exceed 95%.
Construction of the 600,000-tonne-per-year processing plant began in late May near the decline portal at the Carshalton site. The new plant will use 3-stage crushing, including high-pressure grinding rolls, grinding, intensive gravity processing, sulphide flotation and carbon-in-leach processing. Detailed engineering design is more than 50% complete.
Earthwork activity is scheduled for completion in August. Concrete foundations are scheduled to be built by October, with steelwork and the delivery of major equipment items to start in November.
In the meantime, development priorities are set on gaining access to ventilation raise sites and providing additional drill stations. Underground development, which totalled 631 metres in the June quarter versus 456 metres in the preceding quarter, is concentrating on the decline, while drifting continues to the north and south along strike. Bendigo expanded its mining fleet during the past quarter, adding a second loader and a jumbo, as well as a third truck.
Detailed mine planning is under way in preparation for mining later this year. Two conventional stoping methods are proposed, including mechanized cut-and-fill, plus long-hole benching. The upgrade of mine infrastructure including power, dewatering, emergency response and surface facilities is continuing.
In spite of a probable reserve containing only 193,000 oz., Bendigo is spending A$53 million in what it describes as a first phase of development. Ultimately, the company would like to grow production to 1.6 million tonnes per year by adding a second processing plant and a second decline at the north end of the historic camp. Bendigo commissioned Melbourne-based AMC Consultants to prepare a feasibility study based on the perceived potential for 13 million recoverable ounces. The 2004 feasibility study details a mining strategy for underground development and production of 12 million oz. over a life of some 25 years. The study provides Bendigo with the framework to expand the project to more than 550,000 oz. annually in seven years time by bringing the northern portion of the district into production, at a capital cost totalling A$336 million (US$260 million).
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