Bendigo builds confidence (December 20, 2004)

Having spent more than A$105 million on exploration and assessment over the past seven years, Bendigo Mining has confirmed the informal “resource potential” of its New Bendigo gold project in southeastern Australia’s Victoria state.

The Aussie junior has reclassified a substantial portion of the project’s 13-million-oz. potential into an inferred resource totalling 23.5 million tonnes grading 14.5 grams gold per tonne, calculated in accordance with Australian standards. Another 720,000 tonnes grading 10 grams gold are classified as indicated resources.

The newly tabulated resources include an existing probable underground reserve of 656,000 tonnes grading 9 grams gold, which is sufficient for only three years of operation. The company says the cost of defining more reserves would be prohibitive, owing to the nuggety nature and depth of the ore. Instead, Bendigo plans to have just 2-3 years of reserves defined at any given time.

Gold at New Bendigo is hosted by reefs over a strike length of 5 km. The reefs run parallel to the hinges of enclosing anticlines and commonly occur in clusters, forming distinct linear bands, or ribbons, which repeat at depth. Historically, the most productive part of the field has been one in which 15 anticlines occur over an area measuring 17 km long by 4 km wide.

Meanwhile, the project’s exploration potential has been boosted via the identification of mineralization on three adjacent lines of reefs, and extensions to the five main lines of reefs. In all, Bendigo says the project could contain up to another 11-13 million oz. of gold.

Between 1851 and 1954, the Bendigo camp yielded around 22 million oz. of gold (including 18 million oz. of hard-rock production and 4 million oz. of alluvial production) from thousands of small operations that typically focused on ore at depths of up to 200 metres.

In July, Bendigo wrapped up a global book building tour by selling A$100 million worth of shares to investors in Australasia, Europe and North America. Harmony Gold (hmy-n), with an 11.6% stake in Bendigo, and General Oriental Investments, with 1.9%, also agreed to underwrite a share purchase plan of up to A$15 million for existing shareholders.

Initial production at New Bendigo is slated for the fourth quarter of 2005; during the first three years of operation, production is pegged at 83,000 oz. per year. A second million-tonne-per-year processing plant will be added in 2011 to boost annual production to more than 570,000 oz. Thereafter, production should average 600,000 oz. per year for a further 19 years. Average cash operating costs are estimated at less than US$120 per oz. Initial capital costs are pegged at A$215 million. (T.N.M., July 19-25/04).