Exploring the corridor of riches

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 09 Aug 2012   Posted by admin


The short, medium and long-term future for mid-tier Australian copper-gold producer Sandfire Resources seems fairly assured. While not immune to the fluctuations of the market, its high-grade, high-margin
DeGrussa project lies in a region that boasts well-established infrastructure.
The world-class DeGrussa project, in the northeast part of Sandfire’s Doolgunna project tenements and about 900km east of Perth, began first production from both open pit and underground operations in February 2012, less than three years after its first exploration holes were drilled.
The project’s copper-gold resource was one of Australia’s more exciting greenfield discoveries in recent times, with Sandfire expecting copper production of 77,000 tonnes per annum during the first three years.
The company expects that about 143,000t of direct shipping ore (DSO) reserves grading an impressive 25.6 per cent copper and 2.5 grams per tonne of gold for about 37,000t of copper and 12000 ounces of gold will be extracted from the DeGrussa open pit during its life.
It has also estimated that more than 10.72 million tonnes of ore, grading 5 per cent copper and 1.7g/t gold containing about 541,000t of copper and 599,000oz gold, will be extracted during the life of the longer-term underground operation.
The March 2012 quarter marked a step change for the company as both open pit and underground ore production started at DeGrussa, slightly ahead of schedule and under budget.
The first DSO was mined from the open pit on February 17, with initial underground ore mined less than two weeks later on February 29.
The first shipment, 6000t of high-grade DSO with an estimated value of $13 million, left Geraldton Port for delivery to Chinese customers, and Sandfire reported that it expected production to progressively ramp up in upcoming months.
Sandfire has been developing its open pit and underground DeGrussa mines concurrently and rapidly. In its March quarterly report, the company stated that open pit development was on schedule, with a total of 6.6 million bank cubic metres mined, while the Evans decline had progressed to more than 1250m from the portal. Total underground development passed the 2.7km mark during the quarter. Sandfire reported that open pit mining had progressed further as of late June, with 6.9 million bank cubic metres of material mined.
Underground mine development also advanced, with the Evans decline progressed to 1460m from the portal, 234m below surface.
Construction and development
Construction and development activities continued during the March quarter, with the overall project more than 80 per cent completed by the end of March.
A $120 million, five-year contract was awarded to Qube Bulk during the quarter, for the supply of a fully-integrated haulage and port services solution for both DSO and copper concentrate production from DeGrussa.
The DSO is trucked to port in purpose-built, half-height sea containers to facilitate ship loading by means of Qube’s Rotabox container rotating system.
Major equipment, including three grinding mills, thickeners, flotation cells and filters, were assembled at the mine site during the March quarter.
Sandfire reported that construction of the tailings storage facility was nearing completion, while provision of the 1.5mtpa process plant was well under way.
The plant was advanced to more than 67 per cent complete during the March quarter, scheduled for first concentrate production in the current quarter.
Structural steel work also continued during the March quarter, with electrical and piping installation progressing to schedule.
An engineering, procurement and construction contract was awarded to GR Engineering Services for a paste plant to service the underground operation; it is due for completion in the fourth quarter of 2012.
Open pit mining and ore production By the end of the March quarter, about 4750t of DSO grading 34 per cent copper and 3g/t gold had been mined and crushed. In addition, about 1.4mt of oxide copper material grading 1.1 per cent copper, and 169,000t of oxide gold ore grading 2.1g/t gold, had been mined and stockpiled.
During the quarter, Sandfire came to an agreement with Barrick Gold for the sale of 100,000t of higher-grade oxide gold ore currently stockpiled on site. Trucking of the ore to Barrick’s Plutonic gold mine for processing started during the March quarter.
Underground mining
Total ore mined and delivered to surface during the March quarter was 1000t grading 3 per cent copper. By late June, 30,000t of massive sulphideore grading 5 per cent copper had been mined from the underground operation and stockpiled on the run of mine pad, ready for processing.
Development in the Evans decline was somewhat impacted by major upgrades to the primary and secondary ventilation systems combined with the shotcreting of areas of the decline. At the March quarter’s end, the decline was well past level 2375 access: the first extraction level for underground stoping.
Substantial progress was made in opening up the 2400 and 2425 levels, as well as construction of permanent ventilation and other access drives.
Focussing on grade control, Swick Mining Services started underground diamond drilling in January.
A total of 7776m was drilled in the March quarter, confirming the grade and shape of the mineralisation as defined in Sandfire’s resource estimates.
Exploration
Sandfire has an annual exploration budget of about $20 million that is used predominately for its Doolgunna project, where exploration activity has been aimed at identifying those at volcanogenic massive sulphide (VMS) mineralised systems similar to those at DeGrussa.
VMS deposits such as DeGrussaare typically rich in copper, lead, zinc, gold and silver, and form at or near the seafloor in submarine volcanic environments.
Importantly, the most significant VMS mining fields worldwide comprise multiple high-grade deposits, often with numerous centres of mineralisation.
For example, the Noranda mining field in Canada hosts 21 VMS deposits.
Part of Sandfire’s vision is to discover additional VMS deposits within the promising 30km-long, 1.2km-wide prospective Doolgunna mineral field that it has dubbed ‘the corridor of riches’. Of this, only 1.2km strike length has been extensively explored to a vertical depth of 600m. Minimal drilling has been conducted below 50m outside the central mine corridor campaign.
Reverse circulation drilling at Doolgunna during the March quarter totalled 7774m, with the main focus being the Old Highway gold prospect 22km southwest of DeGrussa. Drilling was intended to improve the definition of gold shoots discovered during earlier drilling. Best results from the drilling included 3m at 22.52g/t gold from 85m.
Drilling at Old Highway has continued to indicate strong structural controls and Sandfire now has an adequate data set with which to start preliminary geological modelling at the prospect.


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