Movers and Shakers March Resource sector merger and acquisitions 2007 Benambra Mine Rehabilitation $7m rehabilitation project BassGas Offshore gas supply project launch Perseverance Corporation ’s second biggest domestic gold producers Nexus Energy Set to develop Longtom gas field Henry Gas Field Commitment to start FEED work 2007: Discovery’s 10 Year Anniversary ’S EARTH RESOURCES JOURNAL DISCOVERY

Gold Undercover Unearth Victoria’s Gold A three year, $9 million Government initiative REGULARS

Minister’s Foreword News Updates Tenement Updates

02 Peter Batchelor, the new Minster 03 PDAC International Convention and Contacts for Energy and Resources’, 03 Geology web portal opens 32 What’s happening with mineral introduces the special ‘Gold to the world applications and licences

Undercover’ edition of 04 changes tack in an effort 33 Your guide to Minerals and Discovery magazine. to restart mining Petroleum contacts and resources sector websites 04 Walhalla goldfield keeps getting bigger

05 Attracting international interest to onshore Gippsland Basin

05 Hamilton mineral separation plant complete CONTENTS

FEATURES ARTICLES

Movers and Shakers Resource sector workplace For Discovery online visit: Merger and Acquisitions in the Victorian www.dpi.vic.gov.au/minpet/discovery OH&S or to receive your free copy send your resources sector Safety transfers to Victorian WorkCover details to: Page 8 Authority Gordon Chakaodza Page 6 Resources Development Officer Benambra Mine Rehabilitation Department of Primary Industries The award-winning, $7m rehabilitation Does Victoria host nickel Phone: 03 9658 4401 project deposits? Fax: 03 9658 4499 Page 10 Email: [email protected] The question has intrigued mineral BassGas explorers for decades Page 7 PUBLISHING DETAILS Offshore gas supply project launch Discovery is published by the Victorian Page 14 Government Department of Primary South Gippsland Natural Gas Industries, Minerals and Petroleum Division, Gold Undercover special project , March 2007. Page 18 Government program saves users ISSN Number 13282409 big money For more information contact: Perseverance Corporation Page 16 The Department of Primary Industries Australia’s second biggest domestic Level 16, 1 Spring Street, Melbourne 3000. gold producer Energy Technology Innovation www.dpi.vic.gov.au Page 26 Strategy (ETIS) DISCLAIMER Clean energy from brown coal This publication may be of assistance to you, Nexus Energy but the State of Victoria and its officers do Page 17 not guarantee that the publication is without Set to develop Longtom gas field in flaw of any kind or is wholly appropriate Leviathan Resources for your particular purposes and therefore Page 28 Success in search for hidden gold disclaims all liability for any error, loss or Page 24 other consequence which may arise from you Henry Gas Field relying on any information in this publication. Commitment to start FEED work Pacrim Energy This publication is copyright. No part may Page 30 Fosterville regional gold exploration be reproduced by any process without the written permission of the Department of project Primary Industries. Page 25

ACKNOWLEDGMENTS Minerals and Petroleum Division acknowledges contributions made by private enterprise. Acceptance of these contributors, however, does not endorse or imply endorsement by the Department of Primary Industries of any product or service offered by the contributors. Gold Undercover Unearth Victoria’s Gold

A $9 million initiative over three years to:

• Reduce exploration risk for discovery of gold resources undercover • Deliver 3D models and Victorian gold deposit footprints • Improve access to new geoscience data and knowledge

For more information about the Gold Undercover Initiative contact: Kathy Hill Director, GeoScience Victoria Phone: 03 9658 4562 Email: [email protected] www.dpi.vic.gov.au/minpet/goldundercover

For more information about DPI visit www.dpi.vic.gov.au or call 136 186 DISCOVERY JOURNAL MARCH 2007

As we start 2007, we plan to build on the strong Minister’s Foreword growth in our resources sector, starting with a $12.1 million package.

Since the Bracks Government came into office in 1999, we have been working hard to harness the resources boom and create new jobs and investment across Victoria, particularly in rural and regional communities.

It gives me great pleasure to introduce myself to you as the new We will continue to promote and develop south-west Victoria Minister for Energy and Resources in Victoria. and the as hubs for energy and resource processing industries to generate a new wave of economic I come to this role after spending a number of years as the growth and prosperity. Minister for Transport and Major Projects. The emergence of the mineral sands industry, the opening of the In these roles I worked on a number of large and complex projects Otway Basin gas fields, proposals for new wind farms and gas across Victoria and had the opportunity to meet many people. power stations combined with the potential for coal seam gas makes the south-west an area to watch. It is my hope in this new role that I will continue to have the opportunity to do this with a new sector – an industry that is In September 2006, Premier and former Energy developing new and exciting earth resources right across the state. Industries and Resources Minister, announced the grant of a mining licence to Monash Energy for Since the Bracks Government came into office in 1999, we have an estimated US$5 billion project to convert the Valley’s brown been working hard to harness the resources boom and create coal into diesel fuel with capture and geological storage of new jobs and investment across Victoria, particularly in rural and resulting greenhouse gases. regional communities. If successful, this project would be the biggest Victorian resource We have overseen a resurgence of the energy and resources development in at least 25 years, and would make us the world’s sector, including gold exploration and mining and continued leader in large scale, commercial geosequestration, which is diversification of our vital gas supplies. critical technology needed to make the major reductions we Victorian voters have given us another four years to promote need to address climate change. Victoria. As we start 2007, we plan to build on the strong growth I would also like to note that the energy portfolio now sits with in our resources sector, starting with a $12.1 million package. the Department of Primary Industries having moved from the The package includes $7.1 million to establish a Clean Coal Department of Infrastructure. Authority in the Latrobe Valley to help develop new clean coal Including both energy and resources in the one department will industries for Victoria. give us many opportunities to create synergies between energy This builds upon the strong commitment this government has and resources issues such as clean coal technology and new already made in the energy sector with the funding allocated to energy resources including geothermal. the Energy Technology Innovation Strategy (ETIS). In closing I would like to pay tribute to the former Minister for Initiatives under this program include $83.5 million for large Energy Industries and Resources, Theo Theophanous, for the scale brown coal power demonstration projects, $12 million work he did over four years to promote Victoria both nationally for brown coal research and development grants, $4 million for and internationally. a carbon capture and storage project in the Otways and $1.2 I look forward to continuing this work and meeting with as many million for brown coal post doctoral fellowships. In the renewable of you as I can in the near future. energy sector we have committed $50 million for a large scale demonstration photovoltaic solar and $10 million for sustainable energy research and development grants.

We have also committed $5 million to the Rediscover Victoria program. This program includes a targeted drilling initiative working in conjunction with the private sector to focus on parts of Victoria where little exploration has occurred. Peter Batchelor In another first, we will develop a world-class 3D geoscience map Minister for Energy and Resources. of the state to assist current and future minerals explorers. It will include regional scale information for all commodities including, coal, nickel, copper, gold, mineral sands, oil and gas as well as 02 key extractive products. MIneralS and PETROLEUM NEWS UPDATES

2007: Discovery’s 10 year Late last year, DPI’s Roger Buckley, anniversary Damia Ettakadoumi and Paul McDonald also attracted interest at the Mining 2006 Welcome to the first issue of Resources Convention in Brisbane after Discovery for 2007. This issue marks presenting a paper outlining Victoria’s the magazine’s 10th anniversary – mineral wealth. a major milestone for Discovery and a testament to the information and Geology web portal commentary within these pages. opens to the world Since its inception in 1997, Discovery is Explorers seeking a single point of Introducing… reaching more readers than ever before access to geological and geophysical DPI’s new Secretary, in its quest to deliver the latest news data need look no further than the new- Richard Bolt in Victoria’s minerals, oil and gas and look Geoscience Portal. extractive industries. It was a privilege and pleasure to The Chief Government Geologists begin work as DPI’s Secretary in Produced three times a year by the Committee, a subcommittee to the December, 2006. Victorian Government, Discovery’s Ministerial Council for Mineral and Petroleum Resources, has unveiled a circulation has increased to 4000 copies, The earth resources sector is a new-look Geoscience Portal. NEWS UPDATES delivered free-of-charge to industry major contributor to Victoria’s Website: www.geoscience.gov.au executives, stockbrokers, academics, economy and sustaining and suppliers and other stakeholders across Through the Geoscience Portal, people growing that contribution in a the country and internationally. and companies interested in Australian way which meets social and mineral exploration now have a direct environmental expectations is In fact, a 2005 survey on Discovery link to all Commonwealth, State and a key challenge for Victoria. readership among industry members Territory geological surveys. The portal also provides information about legal indicated that 94 per cent were aware My background in engineering – requirements for exploration in all of the magazine, and 88 per cent would beginning as an undergraduate Australian jurisdictions. trainee at the Whyalla steelworks – recommend it to a friend. and my work with the State The portal aims to be a one-stop If you would like to join this growing list shop for base line geological data for Electricity Commission of Victoria and receive your regular copy of individuals, companies and global mining (SECV) and the Essential Services Discovery, send your details to: conglomerates seeking highly detailed Commission has fostered my information about the potential for the passion for energy policy. Gordon Chakaodza discovery of new mineral and energy Resources Development Officer deposits in Australia. Before moving to DPI, I headed Department of Primary Industries energy policy in the Department Level 16, Spring Street The new web portal provides: of Natural Resources and Melbourne VIC 3000 • A download facility for scanned images Australia of all Australia’s geological maps at Environment; and in 2002 became Phone 03 9658 4401 Executive Director, Energy and Email: [email protected] 1:250,000 scale • Airborne geophysical data and digital Security in the Department of elevation data downloads from all State We wish readers all the best for 2007, Infrastructure, where my brief and Territory Geological Surveys and expanded to include counter- and hope you continue to enjoy Geoscience Australia terrorism, emergency management Discovery magazine. • All mining legislation and reporting for energy and transport and guidelines leading negotiations on Alcoa’s • The Australian mines atlas PDAC International • Current minerals tenements. proposed smelter expansion. Convention The integration of energy functions The new portal is a valuable resource to within DPI following the November Victoria’s geological prospectivity and promote the exploration and discovery of minerals in Australia. 2006 Victorian State Election multiple exploration opportunities have represents a great opportunity been promoted far and wide in recent Check it out! to develop the energy sector in months with Department of Primary Industries (DPI) staff generating strong an integrated way and deal with FOR MORE INFORMATION CONTACT: interest in the State at national and challenges such as climate change. Alan Willocks international minerals and investment Manager, Geoscience Information I look forward to tackling conferences. GeoScience Victoria these tasks with DPI, and with Phone: 03 9658 4501 Minister Batchelor. In March this year, GeoScience Victoria will Email: [email protected] Website: www.geoscience.gov.au be a part of the Team Australia pavilion at the Prospectors & Developers Association of Canada International Convention in Toronto, the largest mineral exploration Richard Bolt conference and trade show in the world. 03 Secretary. MINERALS AND PETROLEUM NEWS UPDATES

Bendigo changes tack in Goldstar Resources: effort to restart mining Walhalla goldfield keeps getting bigger

Bendigo Mining Ltd has made a Drilling at Goldstar Resources’ Tubal Goldstar’s in-fill drilling to December 2006 dramatic change of strategy as it works Cain gold project near Walhalla has had achieved resounding success with to restart mining at the Bendigo gold confirmed a potentially significant the first of a four-hold diamond drilling field, still one of the world’s biggest and expansion to the northern end of the program returning visible gold in two richest gold producing regions. dyke bulge, and has returned visible intersections out of a total 11 mineralised gold in two samples. zones intercepted in the hole. After a disappointing first three months of production in which the company Gold intersections within the hole produced 9,218 ounces of gold at a grade included 0.3m at 18.4g/t Au from 413m, of 4.1g/t Au gold and high production 0.95m at 14.7g/t Au from 428.7m and 1m costs, the company has temporarily at 7.6g/t Au from 190m. suspended mining and ore processing and returned to exploration in a bid to locate higher grade ore reserves.

The low production rate has been NEWS UPDATES attributed by the company to a general over estimate of the potential of the historically less productive Sheepshead and Deborah lines of reef. Bendigo Mining had planned to mine reefs from these lines first because they were the shallowest.

The company has now turned its attention to the historically richer Garden Gully, New Diamond drilling at Tubal Cain will continue Chum and North Sheepshead lines of reef. through 2007, with Goldstar hoping to Garden Gully and New Chum accounted confirm the potential of the Tubal Cain for around 70 per cent of historic gold dyke bulge in addition to Eureka as a production in Bendigo and are the key priority target for early production from In addition, a ‘significant high-grade exploration targets. the region. zone of mineralisation’ was intersected Bendigo Mining chairman, Peter McCarthy Following the completion of the bulk on the northern margin of Tubal Cain, said, “We are obviously very disappointed sampling at the Eureka project, Goldstar and Goldstar said the results provide with having to implement this change in now expects to begin bulk sampling at confirmation of an expansion of the strategy, but … changes had to be made.” Tubal Cain some time in 2007. dyke bulge of up to 10 per cent below a depth of 250m. “We remain confident of the rich Goldstar managing director, Andrew King, endowment of the Bendigo system recently told shareholders that, “The hole was designed as part of the and our ability to deliver high rates of “the initial geological model for Tubal Cain in-fill program to 450 metres depth and to production in the future, but we need has quantified substantial tonnages of assist in designing the future bulk sample to access more productive lines of quartz reef material, demonstrating that location at Tubal Cain,” Goldstar said. mineralisation to be able to demonstrate the tonnage potential per vertical metre “It targeted and intercepted eight of the this ability.” at Tubal Cain is more than double that currently defined at Eureka.” previously identified 15 high-grade quartz Since the change in strategy in early reefs, providing strong validation of the January, which caused Bendigo Mining’s He added that “ongoing programs of geological and mineralisation model for share price to plunge, Melbourne based in-fill drilling are expected to substantially the Tubal Cain dyke bulge.” St Barbara Ltd has acquired a ten per cent increase the volumes of high-grade quartz The Eureka Skipway ore haulage system stake in the company. reef material, when results down to 600 metres are added to the tonnage originally was also commissioned in January 2007.

FOR MORE INFORMATION CONTACT: defined down to 300 metres.” FOR MORE INFORMATION CONTACT: Tim Churcher Chief Financial Officer Andrew King Bendigo Mining Ltd Managing Director Phone: 03 5447 1834 Goldstar Resources NL Email: [email protected] Phone: 08 9321 1577 Website: www.goldstarnl.com.au

04 MIneralS and PETROLEUM NEWS UPDATES

Lakes Oil: Attracting Iluka Resources: international interest to Hamilton mineral separation plant complete onshore Gippsland Basin Victoria’s first major heavy mineral The MSP will take heavy mineral Oil and gas exploration in the onshore separation plant at Hamilton is concentrate currently being produced part of the Gippsland Basin will get complete, after a series of lengthy and stockpiled at the Douglas mine, and a $A40 million boost after US based delays and higher than expected has been configured to accommodate independent oil exploration and construction costs. production from both Douglas and a production company, PetroHunter second Murray Basin concentrator plant Energy Corporation of Denver, yet to be built. Colorado agreed to farm-in to Dependent on ramp up progress, Iluka tenements controlled by locally expects to produce approximately 110,000 listed Lakes Oil NL. tonnes of zircon and 70,000 tonnes of Lakes Oil and PetroHunter Energy have rutile during 2007. agreed to jointly develop Lakes’ onshore petroleum prospects (focusing on unconventional gas resources) in both the

Gippsland and Otway Basins in Victoria. NEWS UPDATES

PetroHunter Energy has exploration activities in the USA, Europe and the Beetaloo Basin in Northern Territory, Australia. The company is considered to be one of the world leaders in the extraction of oil and gas from unconventional reservoirs. Project operator, Iluka Resources, announced late in 2006 that it had issued Under the farm-in arrangements, a certificate of practical completion to PetroHunter Energy or its subsidiary construction group, Roche Mining Pty Ltd, company Sweetpea will initially farm into for the company’s Murray Basin Mineral 33.33 per cent of Lakes Oil’s permits Separation Plant (MSP), located by spending $A9.3 million. In addition, at Hamilton. PetroHunter Energy will subscribe for $4 Iluka’s Murray Basin mineral sands project million in new shares in Lakes Oil at 1.5 Following the completion of all major includes contracted mining activities at cents per share. on-site construction and equipment Douglas, a mining unit plant (MUP), a wet installation work, as well as testing of all concentrator plant (WCP), the MSP and PetroHunter Energy will also have the circuitry, Iluka reported that it had taken storage and ship loading facilities at the right to increase its position in Lakes over operation of the site. Initially, a joint Port of Portland. Oil’s permits with two further 16.66% Iluka/Roche Mining team planned to farm-in tranches of $A13.3 million each, continue with final commissioning and FOR MORE INFORMATION CONTACT: exercisable within 12 months and 24 plant ramp-up activities. Robert Porter months respectively. PetroHunter Energy General Manager, Investor Relations will become operator of the permits where The MSP uses wet gravity, dry magnetic Iluka Resources Ltd relevant, and will be invited to nominate and electrostatic processes to separate Phone: 08 9360 4751 Email: [email protected] a representative to the Lakes Oil Board. the final saleable products of rutile and zircon from a low grade concentrate Lakes Oil Chairman, Rob Annells, said produced at the company’s Douglas the addition of PetroHunter Energy to the mineral sands mine located to the north Gippsland Basin would help move the of Hamilton. The new plant has permits from exploration prospects into a processing capacity of 55 tonnes per full scale oil production. ‘Lakes Oil hour. Commercial production at the MSP believes that the onshore Gippsland is expected to start in February, permits will become a valuable new with production rates to be ramped up asset for Victoria, strategically placed for over the course of the first half of 2007. new industry and low emission power generation,’ Mr Annells said.

FOR MORE INFORMATION CONTACT: Rob Annells Chairman Lakes Oil NL Phone: 03 9629 1566 05 Email: [email protected] DISCOVERY JOURNAL MARCH 2007

u Alliance Resources Mining crew shotcreting decline portal, August 2006

Resource Sector Workplace OH&S Safety transfers to Victorian WorkCover Authority

Responsibility for the regulation of occupational health and safety (OH&S) across Victoria’s earth resource industries, including mining, quarrying and onshore petroleum production, has been transferred from the Department of Primary Industries (DPI) to the Victorian WorkCover Authority (VWA).

A 2006 inquiry into OH&S regulation of these industries, led by Neil Pope, prompted the changes that bring the resources sector into line with other Victorian industries, ensuring consistent and independent regulation.

Mine safety became a national issue last year, highlighted by the Beaconsfield disaster in Tasmania, which illustrated the importance of an effective and independent OH&S regime. The Victorian Government will also continue to promote mine safety at a national level through the Ministerial Council on Minerals

and Petroleum Resources. p Hansen Construction Materials Lysterfield quarry

Victoria’s earth resources sector has sharply reduced the The VWA is expected to develop an appropriate structure to incidence of workplace injuries in the last seven years. After meet the needs of Victorians working in the sector and the industry. a transition period, the VWA will formally take on regulatory No permanent transfer of staff or resources from DPI to VWA is responsibility for the resources sector under the Occupational anticipated with the change. Health and Safety Act 2004 and the Dangerous Goods Act 1985 These arrangements will allow DPI to retain its existing regulatory in January 2008. staffing levels, and allow it to redirect resources into upgrading Victoria’s former Minister for Energy Industries and Resources, its activities in the increasingly important areas of environmental Theo Theophanous, said the change to the regulation of OH&S in regulation and community engagement. This is timely, given that Victoria came “at a time when Victoria’s earth resource industries Victoria’s resource industries are growing strongly and communities are growing strongly. These arrangements will allow DPI to direct are seeking higher standards and a greater say in development its resources to the increasingly important areas of environmental decisions. regulation and community engagement.” DPI and VWA have established a Steering Committee to manage Minister for WorkCover, John Lenders, said this move will help the transition process and ongoing cooperation between the reduce red tape for industry. “From 2008 the regulation of Victoria’s agencies. The Steering Committee will use the established Tripartite entire OHS framework rests with the Victorian WorkCover Authority, Forum as a stakeholder reference group for the transition process. providing more certainty to all Victorian businesses,” FOR MORE INFORMATION CONTACT: Mr Lenders said. John Mitas Manager, Minerals and Extractive Operations Department of Primary Industries Phone: 03 9658 4422 Email: [email protected]

06 u Allegiance Mining NL Underground operations at Avebury nickel mine, western Tasmania

Does Victoria Host Nickel Deposits? The question has intrigued mineral explorers for decades

Victoria has good prospectivity for a range of commodities, having produced copper and other To assist exploration for nickel in the state, base metal ores in the past, as well as hosting some of the most highly mineralised gold deposits GeoScience Victoria has recently completed a in the world. new study into Victoria’s nickel prospectivity.

While Victoria is rightly regarded by geologists as a greenfield area for nickel exploration, the discovery of the Avebury nickel mine in western Tasmania and the possible links between parts of Victoria and the highly prospective Mt Read Volcanics in Tasmania, provide new incentives for exploration. To assist exploration for nickel in the State, GeoScience Victoria has recently completed a new study into Victoria’s nickel prospectivity.

Past nickel exploration in Victoria has been sporadic, driven largely by high nickel prices in areas with known nickel occurrences.

Few attempts have been made to identify and utilise deposit models for nickel mineralisation – so the new GeoScience Victoria study provides a substantial opportunity for explorers. The report documents a ‘whole-of- system’ approach to nickel deposits. It involves the use of relevant deposit models for the geotectonic setting of Victoria and assesses viable exploration targets. The report highlights potentially important styles of nickel mineralisation. These include nickel-copper sulphides in mafic- ultramafic intrusions; igneous rock-hosted Ni-Cu mineralisation; remobilised hydrothermal nickel sulphides (particularly associated with granites); and lateritic nickel. It examines the potential for the occurrence of these styles in the state, considering tectonic setting, regional geology, and type and age of mineralisation. The report can be downloaded free from our online store via www.dpi.vic.gov.au/minpet.

FOR MORE INFORMATION CONTACT: Paul McDonald Manager, Resources GeoScience Victoria Phone: 03 9658 4531 Email: [email protected]

07 DISCOVERY JOURNAL MARCH 2007

Movers and Shakers Merger and acquisitions in the Victorian resources sector

Leading the charge has been major Papua New Guinean gold producer Lihir Gold, which has made its first move out of PNG in an agreed merger with Goldfields NL.

The Lihir move came as Perseverance Corporation, operator of the Fosterville mine near Bendigo, set out to become Australia’s second biggest domestic gold producer behind Melbourne-based Newcrest Mining through an agreed takeover of Leviathan Resources, the Stawell goldminer. p Leviathan Resources Exploration near Stawell Gold Mine

In addition, active Victorian gold explorer, Sedimentary Holdings, “As a cornerstone of a larger, multi-mine company, we will have has been acquired by Melbourne-based mining investor, the financial resources required to ensure that this project is AuSelect. properly developed,” he said. The flurry of activity – the combined value of the deals was Underground development work at Ballarat East recommenced $480 million – comes at a time when global gold prices have in December 2004 but the decision to design a mine based on marched to multi-decade highs. recently discovered high-grade mineralisation at depth means full It also reflects the growing recognition that the Victorian gold gold production – at a cost of $120 million – will be pushed back industry offers higher-grade and longer-life opportunities when until 2008. compared with its interstate counterparts. To cover interim funding requirements, Lihir provided Ballarat Lihir owns and operates one of the world’s biggest goldmines Goldfields with $42 million through an unconditional share on the island of Lihir, 900 kilometres north-east of Port Moresby placement ahead of the final vote by shareholders on the merger in PNG’s New Ireland province. deal. It is a $4 billion company and plans to produce 800,000 ounces Under the merger, Ballarat Goldfields’ shareholders get five of gold in 2007. The choice to make Ballarat Goldfields its first Lihir shares for every 54 Ballarat Goldfields shares. investment outside of PNG was widely viewed as an endorsement The merged group has forecast annual gold production of of plans to return the historic goldfield to its former glory. more than one million ounces from 2009, most of which will come Lihir chairman, Ross Garnaut, said that for both companies, from the Lihir mine but with a steadily rising contribution from the the merger was compelling. Ballarat operation. “The deal creates genuine value for shareholders of the Perseverance’s takeover of Leviathan creates not only a new merged group by creating a tier-one Asia-Pacific gold producer force in the Victorian industry – Ballarat and Bendigo have a lot of with strongly growing production,” Dr Garnaut said. work to do to catch it – but also the national industry. Ballarat Goldfields managing director, Richard Laufmann, Because so much of the national industry is owned by offshore said that the merger represented a landmark in the development interests, the merged group’s annual forecast production of more of the Ballarat project. than 200,000 ounces is enough to rank it as Australia’s second “This merger secures the future of the Ballarat operation. biggest domestic producer behind Newcrest (1.6 million ounces). It means that shareholders and employees can be confident in The combined resource base between Perseverance’s the long-term future and prosperity of the operation.” Fosterville operation and Leviathan’s Stawell operation is also one of the country’s highest at 3.8 million ounces of gold (1.4 million ounces in reserves). The enlarged group boasts a 5,800 square kilometre tenement

08 Corporate interest in p Images clockwise from top Victoria’s rich mineral Underground drill rig at Ballarat Goldfileds. Underground works at Stawell Gold Mine. and energy resources Operations at Stawell Gold Mine, Leviathan Resources endowment has never been higher, with record levels of exploration drilling, mine project development and resources sector infrastructure expansion underway

position in central Victoria – one of the world’s top 10 “The Stawell goldmine is a mature underground operation, gold provinces. and the operating track record of the Leviathan team in terms of In a joint statement on the marriage, the companies said that performance, safety and environment is excellent.” the consolidation of the two businesses offered a number of AuSelect’s $80 million takeover of Sedimentary is focused unique operational advantages. on Sedimentary’s 30 per cent share of the Newcrest-managed “As Leviathan’s Stawell mine moves towards the completion Cracow goldmine in north Queensland. But Sedimentary had of its current reserves over the next three years, there will been a long-term participant in the Victorian industry, having been be opportunities to transfer Leviathan personnel, plant and a small-scale gold producer from around Avoca. equipment to Perseverance’s Fosterville operations.” In more recent years, the company had turned some of the cash “This period coincides with Perseverance’s plan to increase it was receiving from the Cracow mine to exploration in Victoria. underground output and treatment plant capacity at the In October 2006, the company reported promising results from Fosterville mine.” the first two diamond drill holes drilled at St Arnaud in western “The dual mines will allow greater operational flexibility and Victoria. Both holes intersected the Nelson Lode north of the provide procurement, staffing and management efficiencies,” the Lord Nelson mine in the town of St Arnaud. Results included companies said. 0.6 metres grading 4.88 g/t Au from 289.5 metres down hole Under the deal, Leviathan shareholders receive 1.7 and 0.42m at 1.6 g/t Au from 224.25 metres down hole in Perseverance shares for each Leviathan share, implying a value another hole. of 56.1 cents per Leviathan share. The intersections were 120 metres apart vertically and 150 Leviathan chairman, Brian Phillips, said while the company had metres north of the Lord Nelson mine. Ahead of the takeover by successfully recapitalised the Stawell mine in 2004/05, exploration AuSelect being completed, Sedimentary was looking to sell its had not added to its reserve base. exploration assets, including St Arnaud. However, Leviathan has had some off-lease exploration St Barbara Limited is also looking to expand into Victoria, success, most notably at its Tandarra prospect, 40 kilometres recently applying for a total of 10 exploration licences covering north of Bendigo, where coarse gold has been encountered more than 2100 square kilometres of central and western under cover. Victoria (see page 31 for details). St Barbara has also taken a Perseverance chairman, John Quinn, said the mix of substantial significant position in Bendigo Mining, purchasing 10 per cent of production interests, expansion potential and extensive Bendigo shares in early January. The acquisition of these shares exploration tenements will have appeal to international gold is consistent with the company’s stated objective of acquiring investors. interests in Australian gold assets which have the potential for He said he was confident that Leviathan’s “leading operational development of long life, low cost gold operations. practices will be able to deliver additional value St Barbara’s head office has also moved from Perth to at Fosterville.” Melbourne, effective 2 January 2007.

2309 DISCOVERY JOURNAL MARCH 2007

Benambra Mine Rehabilitation The award-winning, $7m rehabilitation project

The award-winning, $7 million rehabilitation project has raised the bar in terms of what can be achieved to reduce the visual and environmental impacts of mining, even in sensitive, high-rainfall areas like Victoria’s remote highland forest regions.

The Benambra mine, in the remote upper- catchment of the Tambo River, 23 kilometres t Benambra mine rehabilitation project wins a north-east of Omeo, had operated for just four National CASE Earth Award for Environmental Excellence. years when it was shut down in mid-1996. Left to right: Peter Reid (ATC), Fiona Warren and Graeme It was abandoned in 1998 when the operator, Chambers (Abigroup), Denehurst Ltd, went into administration. George Bulkland (DPI).

That left the company’s administrator and later, the Victorian When the mine was abandoned, buildings, equipment and Government, with a serious environmental liability, ultimately related infrastructure on the site became DPI’s responsibility, costing close to $7 million to rectify. removing or rendering harmless plant and materials, and carrying Initially, the mine site was managed by the administrator out necessary earthworks and revegetation to generally restore the and later by the Department of Primary Industries (DPI) when site to near pre-mining conditions. its sudden closure failed to meet the conditions of the mining Benambra’s copper and zinc mine is surrounded by sub-alpine lease or procedures described in the Environment Effects forest and typically receives average annual rainfall of around Statement. But the subsequent restoration of the site has 900 millimetres. proved the success of the department’s contingency plans for The Benambra mine was operated by Denehurst Ltd as an rehabilitation of abandoned and dangerous sites. underground base metal mine from October 1992 and was initially The success of the Benambra rehabilitation project has expected to operate for up to 20 years, after which the site would been recognised with the three parties – DPI, Australian be rehabilitated. In its four years of mining, 927,000 tonnes of ore Tailings Consultants (ATC) and Abigroup Contractors – from the Wilga mine were processed, producing copper and zinc winning the 2006 Victorian and the prestigious National CASE concentrates and nearly 700,000 tonnes of tailings, which were Earth Awards for Environmental Excellence from the Civil placed in a nearby tailings dam. Contractors Federation of Australia and a national Australian After its closure, the entire site had to be rehabilitated to maintain Mining Prospect Award for Excellence water quality in the Tambo River and the Gippsland Lakes. in Environmental Management.

10

q Plant site prior to commencement of plant dismantling and on completion (below)

The abandoned Benambra mine site has been successfully rehabilitated, stabilising the site and creating an environmentally self- sustaining zone around the mine and tailings retention area.

q Plant site during dismantling

THE rehabilitation process

The key site facilities requiring rehabilitation were the: Stage 2 – Design • Drilling core farm (0.25 ha) The next stage involved development of a rehabilitation strategy • Waxlip Spur plant site (2.1 ha) and detailed specifications for the rehabilitation works, including • Tailings dam and surrounds (24 ha) the preparation of an Environmental Management Plan (EMP). • Surrounding road network (3.5 km). The rehabilitation strategy was developed by ATC, while the EMP was prepared by ATC and Earth Systems, with both completed The rehabilitation project objective was to achieve environmentally and approved by stakeholders in September 2005. self-sustaining and stable sites that conformed to industry best practice and met stakeholder, community and legislative Stage 3 – Earthworks requirements. It comprised four stages, the first three of which The rehabilitation earthworks, costing $5.4 million, were have been completed. undertaken by Abigroup Contractors Pty Ltd (Abigroup), started in January 2006 and were completed in May 2006. Stage 1 – Plant sale and disposal The first stage required the decommissioning of the mine Stage 4 – Revegetation processing plant, and the removal of all plant infrastructure and The final stage of the project involves revegetation of all waste, except for the heavy concrete foundations and tanks. This rehabilitated sites, including weed control. Local species seed stage began in February 2005 and was completed by end of collection and plant propagation started in November 2005. December 2005. 10,000 plants were planted within the newly created wetland in May 2006 and an initial 9,000 extra plants placed around the former tailings dam in August 2006. A further 21,000 plants will be placed around the site in two phases by mid-2008. 11 Ten different options for the long-term safe storage of the tailings material were considered, with the most appropriate solution being to store the material under a minimum of two metres of water in the tailings dam, in accordance with world best practice.

u Tailings dam before commencement of earthworks

Environmental management issues

The rehabilitation of the Benambra Mine presented some To safely and permanently store the tailings, the material had to major environmental management challenges including the be levelled with a dredge. The tailings also had to be mixed with need to remove or safely manage: limestone sand to counteract the potential for acid generation • Remnant sulphide ore, the mine tailings and other soil when the tailings were disturbed and potentially oxidised. contaminated with heavy metals; In all, more than six hectares of jute matting was placed over • Waste concrete and metals; the tailings to act as an oxygen consumption layer. • Hydrocarbon contaminated soils; By combining recycled concrete with zinc-rich precipitates, • Waste chemicals oil and grease; a safe long-term repository was established while two alkaline • Contaminated storage tanks, including old mine ponds and an alkaline channel were created to neutralise slightly process tanks and septic tanks; and acidic receiving waters. • Other rubbish including electrical wire, plastics etc. The creation of an anaerobic wetland that treats seepage water from the dam will ensure the release of clean water into the wider Most of the waste was simply removed and disposed of in environment. suitable ways with follow-up validation testing as required. Now that the rehabilitation work is complete, monitoring of Concrete waste was recycled and used on site by Abigroup. water quality will continue within the dam, downstream of the One of the more challenging problems was the presence dam, and of the groundwater at several points downstream of the of sulphidic ore and mine tailings which lay at the plant site, dam. A permanent monitoring station was commissioned as part core farm, and both in and around the tailings dam. Rainfall of the rehabilitation project measuring, among other things, the had caused the sulphidic material to oxidise, forming sulphuric water level in the dam. acid which had the potential to leach into the surrounding Completion of works has minimised or eliminated environment. The large volume present made it necessary environmental risks from an abandoned mine and produced safe, to find an appropriate, on-site, rehabilitation closure strategy. stable landforms, with the former tailings dam now known as Ten different options for the long-term safe storage of the ‘Lake St Barbara’ (St Barbara is the patron saint of miners). tailings material were considered, with the most appropriate DPI completed the project within a strong governance solution being to store the material under a minimum of two framework, managing risks effectively, within budget and to metres of water in the tailings dam in accordance with world best schedule. Total expenditure was around $6.9 million which practice. The two-metre water coverage prevents the oxidation of includes provision for the completion of Stage 4 revegetation the tailings and hence, the formation of acid. and a contingency allocation.

12 qTailings  dam during earthworks

Strong interest in Benambra tender

p Aerial view of Tailings dam on completion Strong global base metal prices have helped generate 15 applications to resume exploration for resource deposits in the Benambra area in East Gippsland. The successful tenderer for the exploration area, which once hosted the Benambra copper and zinc mine, will be known early in 2007. Former Minister for Energy Industries and Resources, Theo Theophanous, welcomed the mining industry’s interest in the Benambra area noting that all Victorians benefit from the current mining boom. “We are confident this tender will lead to new jobs p Tailings dam on completion and investment in the Omeo area,” he said. The Benambra area, which has potential for copper and zinc production, has not been available for exploration and mining since October 2004, when the Department of Primary Industries (DPI) commenced rehabilitation of the former Denehurst Ltd mine site. Victorian taxpayers were forced to pay for a $6.9 million clean-up of the site after the original operator went into administration at a time of falling metal prices, and the Administrator was unable to sell the mine. However, the recent dramatic rise in base metal prices p Core farm before to rehabilitation now suggest that the Benambra mine may contain in-situ resources valued at up to $US2 billion. The latest tender for the Benambra area, excluding the tailings dam and rehabilitated area, was released in June 2006. There are several prospects within the tender area, which lie in similar geological environments to that of Wilga and the adjacent Currawong deposit. These include the Peppermint, Gang Gang, Brumby, Austerlitz, Wallaby and Banksia base metal targets. The Hells Hate Hole, a nickel-cobalt prospect, offers further opportunities in the south.

FOR MORE INFORMATION CONTACT: p Core farm area on completion George Buckland Manager, Minerals and Petroleum Tenements Department of Primary Industries Phone: 03 9658 4439 Email: [email protected] 1311 DISCOVERY JOURNAL MARCH 2007 Victoria’s newest offshore gas supply project has started production, dramatically improving the security of the state’s natural gas supply and providing another key component in the development of South-East Australia’s booming energy market.

BassGas Offshore gas supply project launch

p BassGas control room Employees with the BassGas Chief Operating Officer, Karen Moses (centre front) and the General Manager of Oil and Gas Production, Paul Zealand (far left). The BassGas project produces gas, condensates (petroleum liquids) and liquid petroleum gas (LPG) from the Yolla gas field, 147 kilometres off Victoria’s southern coast in offshore Tasmania. These petroleum resources are processed at Lang Lang, near Phillip Island, before the gas enters the Victorian natural gas grid near Pakenham, while the LPG and liquids are sold from the plant.

The project, which is operated by Origin Energy on behalf of a joint venture between AWE Ltd, CalEnergy and the Mitsui group of companies, was opened by Victorian Premier,

Steve Bracks, in October 2006. pVictorian  Premier, Steve Bracks and Origin Energy’s Managing Director, Grant King at the official opening of the BassGas project in October 2006 and presentation on The joint venture spent $750 million over six years to develop behalf of the local indigenous communities at the BassGas opening. the project, which will produce over 20 petajoules of gas, 1 million Bruce Phillips, managing director of AWE said, “AWE’s barrels of condensate and 65,000 tonnes of LPG each year for at engineers played a key role in establishing the initial least 15 years. commercial viability of the BassGas project and accordingly, At that rate, the project will have the capacity to supply about we are pleased the project has progressed to production 10 per cent of Victoria’s current gas demand. This is all the more after a difficult construction phase.” important considering Victoria’s natural gas demand is predicted In the past five years, AWE has spent $280 million on to more than double over the next 20 years. petroleum exploration and development projects in Bass All of the natural gas produced from the BassGas project will Strait and offshore Otway and has been a major proponent of be acquired by Origin Energy under long-term gas contracts, increased competition in the supply of natural gas and LPG while the condensate is being sold to Shell. Each of the joint for the region. venture members will sell their LPG entitlement. Mr Phillips said, “AWE has made a big commitment to the Speaking at the official opening, Origin Energy managing development of new gas resources in south-east Australia as director, Grant King, said, “This has been a challenging project to a major participant in both the BassGas project in the Bass deliver. It has taken a significant effort from Origin as operator, for Basin and the Casino gas project in the Otway Basin.” the joint venture partners and many other contractors, consultants To help meet South-East Australia’s growing demand and suppliers.” for gas, the BassGas project was established in July 2001 Mr King thanked all people involved in the project for their to commercialise the gas and liquid reserves located in efforts, adding that, “The strength of Origin’s gas retailing the Yolla field located 147 kilometres south of the Victorian business in South-Eastern Australia underpins Origin’s purchase coastline in Bass Strait. of the natural gas produced from this facility. It was a key factor At the official opening, Mr Bracks said the $750 million project in the commercial development of this project. Origin has a had created over 300 jobs during construction with another 60 42.5 per cent interest in the BassGas project.” permanent jobs created in the region with ongoing operations. “We now look forward to the completion of the offshore Otway “We have worked with the gas industry for almost seven years gas project, which will add further strength to Origin’s competitive to deliver more secure, efficient and affordable energy supplies for position in Victoria,” Mr King said. Victorian families,” Mr Bracks said.

14 The unmanned offshore platform involves the 8,000 tonne Yolla facility, which measures 50 x 50 metres and stands 120 metres high.

It was constructed on Batam Island in Singapore, then towed to the Yolla field and finally installed in 80 metres of water in Bass Strait in mid-2004.

p Yolla platform in Bass Strait

p Revegetation project with the Bass Valley Landcare group

“This project has special significance for 10,000 households in A small volume of water is produced as a bi-product of the South Gippsland, who will be able to use reticulated natural gas separation of gas, LP Gas and condensate. This water, along for the first time as a result of the project.” with any other water collected on the site from stormwater run- The former Minister for Energy Industries and Resources, off operations, is filtered and treated in a purpose-built wetland Theo Theophanous, said BassGas was one of a number of system and held in reserve for emergency response. new Victorian gas projects including the BHP’s Minerva, Santos’ To ensure the safety of the increased traffic around the entry to Casino, Woodside’s Otway and Esso’s Kipper gas projects in the the plant on the South Gippsland Highway, the project partners Bass Strait. also funded the development of new turning lanes and traffic “Victoria now holds an impressive record in petroleum signs to alert drivers of the changed traffic conditions. development, with over $3 billion in investment and an estimated Community consultation has ensured a high level of public 3,000 construction and 200 permanent jobs created since 1999,” acceptance of the plant, particularly considering the interruption he said. to normal operations by the construction of the pipeline. Mr Theophanous said with the development of gas pipelines Representatives of the local Boon Wurrung people worked to the north, west, and across the Bass Strait, Victoria has now as cultural heritage monitors and advisors to ensure that confirmed its position as South-East Australia’s energy hub. construction works did not disturb sacred objects, places or The BassGas project is a complex amalgamation of several artefacts. The Bass Valley Landcare group helped the project key components, including an offshore production platform, an meet its environmental ‘net gain’ regulations, which require undersea pipeline and an onshore gas and petroleum liquids the adequate replacement of vegetation removed during the processing plant. construction phase. The platform is usually operated remotely onshore but key staff The BassGas project has gone beyond its net gain obligations visit the structure by helicopter to carry out maintenance and by investing over $180,000 in its 10-year revegetation project. repair work. This will result in the rehabilitation of around 4.5 times the area The undersea pipeline transports the gas and liquids from of land than required by the project’s net gain obligations. the Yolla field to the Victorian coast where it crosses the beach The BassGas project has and will continue to provide local at Kilcunda, south-east of Melbourne. To avoid environmental jobs, improve the security of gas supply in Victoria and other disturbances near the shoreline, a horizontal directional drilling states, as well as potentially attract regional development (HDD) program was used to connect the undersea and onshore opportunities. underground pipelines. The HDD passed under the beach, coastal dune area and Bass Highway and in total, measured FOR MORE INFORMATION CONTACT: 1.4 kilometres. From Kilcunda, the raw gas pipeline travels 32 kilometres to Tony Wood General Manager, Public and Government Affairs connect to the Lang Lang processing plant. The refined gas Origin Energy is then transported to the Victorian Principal Gas Transmission Phone: 03 9652 5506 Pipeline, near Pakenham. Email: [email protected] The Lang Lang processing plant occupies two acres within a Website: www.originenergy.com.au 194-acre property six kilometres from the town of Lang Lang. 15 DISCOVERY JOURNAL MARCH 2007

u Lang Lang processing plant and project location map

South Gippsland The South Gippsland Natural Gas Project Natural Gas Project is funded under the Victorian Government program to save Government’s $70 million Gippsland gas users big money. Natural Gas Extension Program, and takes to Construction has commenced on pipelines for the 34 the number of towns South Gippsland Natural Gas Project. Gippsland connected as a part of gas users will save big dollars when a $50 million program to connect the operation. five new towns to the state’s rapidly expanding natural gas pipeline system is complete. Lang Lang A $50 million investment agreement with Multinet Gas will link Inverloch, BASS GAS STATION Korumburra, Lang Lang, Leongatha Korumburra and to the natural gas network by 2010.

The Minister for Regional and t Caption copy Leongatha Rural Development, , q Caption copy said, “Multinet estimates it will initially Existing gas pipeline Wonthaggi lay about 20 km of high-pressure Proposed SGNGP transmission pipeline, 57 km of supply transmission pipeline Inverloch mains and over 182 km of distributions Proposed distribution mains To Gas Field mains, passing approximately 10,000 dwellings in South Gippsland, with gas becoming available progressively to the five towns from 2007.” The extended gas network will draw natural gas from the BassGas processing plant at Lang Lang, built to commercialise gas from the Yolla gas field in Bass Strait. The previous Minister for Energy Industries and Resources, Theo Theophanous, said that, “Average households could save between $600 and $1200 a year by converting from LPG. A medium business can save up to $30,000 a year. For some big businesses that annual saving can be hundreds of thousands of dollars.” The South Gippsland Natural Gas Project is funded under the Victorian Government’s $70 million Natural Gas Extension Program, and takes to 34 the number of towns connected as a part of the operation. In addition to the five towns announced recently, Multinet Gas is also delivering natural gas to nine extra towns in the Yarra Ranges under the program. Other towns included in the program are Bairnsdale, p Inverloch township Paynesville, Camperdown, Port Fairy, Maiden Gully, Barwon Heads, Creswick, Hurstbridge, seven towns in the Macedon Ranges and five towns in the Mornington Peninsula.

FOR MORE INFORMATION CONTACT: James Wong Marketing Manager Alinta Network Services Phone: 03 8544 9480 16 Email: [email protected] u Hazelwood Power Station – 2008 Coal drying equipment on Unit 1, Carbon Capture on Units 7 & 8

Energy Technology Innovation Strategy (ETIS) The major objective of ETIS is to protect the Victorian economy in a Clean energy from brown coal carbon-constrained future.

Victoria’s brown coal powered electricity supply system will be among the world’s first to trial large scale carbon emission reduction projects through a variety of new initiatives being encouraged by the Victorian Government’s Energy Technology Innovation Strategy (ETIS), being led by the Department of Primary Industries

ETIS encompasses a series of initiatives in the brown coal and renewable energy sectors and aims to ensure that Victoria’s response to climate change does not prejudice the state’s continued strong economic performance. One of the first projects to be developed will be the modification of an existing boiler, expected to be p Hazelwood Power Station – 2030 the world’s first boiler to burn 100% dried brown coal as a fuel. 2400 MW Ultra-supercritical Units & 600 MW CCGT or IGCC International Power’s $369 million Hazelwood coal drying this is subject to obtaining funding from the Commonwealth project was awarded $30 million from the Victorian Government Government. The major objective of ETIS is to protect the and $50 million from the Commonwealth Government to Victorian economy in a carbon-constrained future. build the project which, by using the newest coal drying and Brown coal, a significant contributor to greenhouse gas combustion technology, should reduce CO2, emissions by up to emissions, is currently used to produce over 90 per cent of 30 per cent. Victoria’s electricity used in Victoria each year accounting for International Power also plans, by 2008, to become the first 52 per cent of Victoria’s total greenhouse emissions. power plant in Australia to demonstrate the post-combustion While the low-cost electricity of brown coal production gives capture and sequestration of up to 50 tonnes per day of CO2. Victoria a competitive advantage, it is also obvious that Victoria’s The coal drying and carbon capture technologies to be used next tranche of baseload power is generated from power plants at Hazelwood can be retrofitted onto existing brown coal-fired that guarantee lower emissions from brown coal generation, power stations and integrated with new power stations or coal- whilst maintaining low cost energy supply to the State. to-liquid production facilities. New power generation, probably from brown coal, Support was also announced late last year for Solar Systems will be required in Victoria by 2015 to 2020. The introduction of to build a 154MW solar photovoltaic demonstration power station clean coal technologies for Victorian brown coal will depend on in the north of Victoria. the success of such large scale demonstrations in Victoria in The Victorian Government has contributed $50 million order to attract new investors. in addition to $83.5 million allocated to the Large Scale This ETIS initiative leveraged private and public investment Demonstration Project part of ETIS, while the Federal and facilitated access to the Commonwealth Government’s $500 Government has committed $75 million to the project, expected million Low Emissions Technology Demonstration Fund (LETDF) to cost $420 million. for Victorian based projects. A joint announcement by the The 800 ha total site area will ultimately provide power for Commonwealth Government and the Victorian Government of two 45,000 homes, with the first power to be produced in 2008 and successful Victorian projects was made in October 2006. the project fully operational by 2013. The solar concentration technology has been developed in Victoria and is recognised FOR MORE INFORMATION CONTACT: as world-leading in its field. This project will reduce Victoria’s Dr Peter Redlich by 369,000 tonnes per year. Director, Energy Technology Innovation The Victorian Government has also announced support of Energy Technology Innovation Division $50 million for HRL Ltd for a coal gasification project, however, Phone: 03 9651 9978 Email: [email protected]

17 Department of Primary Industries Gold Undercover Unearthing Victoria’s gold future

The ‘Developing Gold Undercover’ initiative has been framed to unlock the secrets of Victoria’s vast gold potential. Its aims are to deliver the geoscience data and techniques that give the best chance of exploration success in covered areas.

ictoria has a golden past, with New geoscience information and online The six themes fall under the two broad V much of the state’s wealth built on data delivery systems that supply information headings of Geoscience and Information the massive income generated from a to potential investors quickly and efficiently and Communication Technology. booming gold industry founded more than are seen as the keys to opening up new areas 150 years ago in places like Bendigo, for gold exploration in Victoria, especially in Geoscience: Ballarat and Castlemaine. covered areas where limited or no exploration • Data capture and analysis, involving Now Victoria’s gold industry has been has taken place. The objective of the initiative the acquisition and interpretation of new reawakened with some of the state’s old is to create a revitalised gold mining sector seismic, gravity and magnetotelluric goldfields again producing wealth, while new which will provide a sustainable source of geophysical data and acquisition of new areas are also opening up, creating new jobs income and employment in provincial Victoria. drill hole and geochemistry data. and rekindling the spirit which helped found Current new mine developments have • Exploration toolkit, involving a ‘Marvelous Melbourne’ more than a century anticipated production lives of 10 or more Lithogeochemistry study, a geochronology and a half ago. years and future developments can be study, production of deposit models The vast majority of Victoria’s 80 million expected to have similar longevity. and exploration models for Victorian ounce historical gold production has come New operations include Fosterville and gold deposits, as well as studies of the from outcropping areas. All of Victoria’s Costerfield while intensive exploration in other geophysical signatures of gold deposits operating goldmines at Stawell, Fosterville regions around central Victoria. For example and HyLogger spectral analysis of drill and Costerfield are operating within and Bendigo, Ballarat, Maldon and Castlemaine, holes. around historical mines in outcropping areas are widely tipped to produce other new, • Gold resource potential assessment where new reserves have been discovered by potentially long-life developments. • 3D Geological model, involving modern exploration programs. Advances in New mine developments require large publication of a 3D geological model of the technology, plus high gold prices have made capital investments, large labour forces and ‘Tasmanides’ geological terrane of reopening these mines economically feasible. have ongoing multi-million dollar equipment, central Victoria. More than 10 million ounces are scheduled for service and consumable supply requirements production over the next 20 years. over the life of the mine. Many of these Information and More significantly, rocks in Victoria with requirements can be supplied by local Communication Technology: gold bearing potential are not simply confined businesses, providing major opportunities for • Infrastructure, incorporates framework and to rocks which outcrop at the surface where wealth creation in regional areas. project management support, the provision they can be more easily located. There is Products of the ‘Developing Gold of new or improved geoscience databases every reason to believe that another 80 million Undercover’ initiative will be delivered under and an upgrade of the GIS capabilities. ounces of gold, and possibly more, remains six key themes, each aimed at producing • Data delivery, provides a new website undiscovered, hidden beneath younger, either geoscience data or geoscience and new web services to better enable sedimentary material which now covers much information management and delivery Minerals and Petroleum Division to deliver of northern Victoria. systems that will produce increased geoscience data online, as well as other The ‘Developing Gold Undercover’ initiative awareness of opportunities, reduced technical improvements to service delivery by has been framed to unlock the secrets of risk and improved access to data. GeoScience Victoria. Victoria’s vast gold potential. Its aims are to FOR MORE INFORMATION CONTACT: deliver the geoscience data and techniques that give the best chance of exploration Larry Stewart Manager, Geoscience Strategy success in covered areas. GeoScience Victoria Phone: 03 9658 4536 Email: [email protected] Website: www.dpi.vic.gov.au/minpet/goldundercover 18 A three year, $9 million initiative Gold Undercover Unearthing Victoria’s gold future Lifting the lid on styles of Victorian gold deposits

ne of the first projects within the O Victorian Government’s $9 million Gold Undercover initiative is to try to categorise the different styles of gold deposits present in the exposed areas of Palaoezoic bedrock in central and western Victoria. Although gold mining has been conducted for more than 150 years in Victoria, there have been few recent attempts to scientifically classify the different deposits. Yet understanding the rocks and ore bodies is an obvious first step in trying to find something new. Understanding the exposed and visible gold deposits is crucial to locating new deposits which may be hidden from view, particularly deposits that might lie beneath Murray Basin sediments – north of the exposed bedrock in pDiagram  illustrating the correlation of orebody style with increasing metamorphic grading, showing selected the Ballarat and Bendigo regions. gold deposits as examples. Abbreviations: B = Central Deborah-Bendigo, Ba = Baillieston, Br = Brunswick, BSb = Antimony mineralisation in the Bendigo Zone, Ma = Magdala-Stawell, Mx = Maxwell-Inglewood, N = Nagambie, The present study has focused on the major Nc = New Cambrian-Tarnagulla and Wg = Wattle Gully-Castlemaine. gold mining areas west of the eastern edge of After VandenBerg et al 2000, The Tasman Fold Belt System in Victoria, GSV Special Publication. the Bendigo 1:250 000 map sheet and east of The present study has tried to integrate the Victorian explorers, the potential regional the Moyston Fault. insights gained by the previous studies with extent of this style of mineralisation is also of The approach taken in the present study the 150 years of information in the GSV files real interest. has been to treat the gold deposits in a similar and in open file exploration reports. Both the timing relationships of a gold way to that taken by petroleum explorers: One important piece of information is the deposit and the presence of significant look at the entire system, the source, the minerals present in each deposit. amounts of the antimony-bearing mineral transporting fluid, its pathways and finally, While the minerals provide information stibnite are sometimes recorded in the old the trap. This ‘whole-of-system’ method is about the temperature and pressure of data. Plotting these deposits will help define a major move away from the ‘gold is where deposition of the deposit, they can also give the edges of the potentially favourable zone. you find it’ thinking which dominated earlier clues to the source of the fluids. Another potentially important style of gold exploration efforts. It has the advantage of For example, fluids sourced from granites mineralisation is that associated with granites. potentially taking explorers to new areas, are likely to have much higher concentrations Although granites have traditionally been particularly those that might be under cover, of tin and tungsten and these are likely to seen as unprospective in Victoria, this may since it asks explorers to think systematically show up as trace amounts of cassiterite, not always be true. Certainly the Leven Star about all aspects of why a gold deposit has scheelite or wolframite in the deposit. deposit at Malmsbury is linked to a small formed where it is and not somewhere else. Comparing the fluid inclusion data from the intrusion. Other examples are perhaps less Previous research programs supported by Costerfield and Bendigo areas suggests that clear, but high tin or tungsten concentrations GeoScience Victoria have looked at the timing the antimony-rich gold deposits at Costerfield are likely to show that a granite has been of gold mineralisation, while others have were deposited at much lower temperatures involved in forming the deposit. looked at the temperatures of deposition and and pressures than those at Bendigo. some of the styles of mineralisation. The Costerfield mineralisation seems likely FOR MORE INFORMATION CONTACT: These have given important insights into to have formed at the same time as gold Peter O’Shea some of the major deposits, but inevitably mineralisation at Fosterville, which also has Manager, Minerals Geoscience GeoScience Victoria they only look at a trivial number of the 17,000 a relatively high concentration of antimony. mines and mineral occurrences listed in the Phone: 03 9658 4525 Since Fosterville-style mineralisation is Email: peter.o’[email protected] GSV VicMine database. presently receiving much interest from Website: www.dpi.vic.gov.au/minpet/goldundercover 19

Gold Undercover Unearthing Victoria’s Gold

Assessments of this kind include: 1) Delineation of the areas where undiscovered deposits may occur (permissive tract); 2) Characterisation of the undiscovered deposits by an appropriate grade and tonnage model; 3) Estimation of the likely number of undiscovered deposits consistent with the grade and tonnage model; and 32m ounces waiting to be found 4) Estimation (through a computer simulation) of the total undiscovered gold endowment. report from GeoScience Victoria The GSV report entitled ‘Assessment of A (GSV) has estimated that up to 32 undiscovered mesozonal orogenic gold million ounces of gold are still waiting to endowment in the northern part of the be discovered within Victoria. Bendigo Zone under cover’ (Lisitsin et al., What’s more, the ‘under cover’ region to 2007) indicates that the mean expected gold the north of Bendigo is estimated to host endowment is 32 million ounces, with 90 per 25 significant (containing more than 26,000 cent of computer simulation results predicting ounces of gold in each) gold ore fields, with more than 9 million ounces. up to six likely to contain more than one Most of the total gold endowment is million ounces of gold each. expected to be contained in just a few large Little wonder Victoria is undergoing its ore fields with more than one million ounces of biggest gold exploration boom in a century, gold in each. with more companies holding exploration The northern part of the Bendigo Zone also ground in the state than ever before and has a high potential for undiscovered gold

operating the highest number of drill rigs deposits of other types – most importantly, pGrades  and tonnages of mesozonal orogenic gold recorded to date. disseminated gold mineralisation such as ore fields in the Bendigo Zone that in production at Interpretation of the Palaeozoic geology Fosterville, and alluvial hidden by recently deposited sediments ore bodies worked within the assessment area indicated that it originally more than a is essentially identical to the geology of the century ago. central, mostly exposed, part of the Bendigo The assessment Zone. This close geological similarity and utilised methodology spatial proximity justified the use of known gold developed by deposits in the Bendigo Zone as analogues for the United States undiscovered deposits under cover. Geological Survey The permissive tract defined within the which has been used assessment area excluded areas underlain by extensively around the Devonian-age granites as these were deemed world over the last 30 not prospective by analogy with the central part years. of the Bendigo Zone. The methodology A Victorian grade and tonnage model (see uses the assumption above) was constructed for 73 ore fields in that undiscovered the Bendigo Zone. Ore fields were defined as gold deposits can areas of mineralisation similar in spatial extent be characterised by to historic goldfields or clusters of goldfields. statistical distributions This local model was used to characterise created from a large probable grade and tonnage properties of the number of known undiscovered ore fields under cover. deposits of the The area north of Bendigo ‘under cover’ is same type. estimated to host 25 significant (containing For example, the more than 26,000 ounces of gold in each) known gold deposits mesozonal orogenic gold-quartz vein ore fields in the Bendigo with a likely range from 15 to 32 ore fields. Up (geological) Zone to 6 of these are expected to contain more than include the Bendigo one million ounces of gold each. ore field (18 Moz) and A copy of the report can be downloaded from the Ballarat ore field www.dpi.vic.gov.au/minpet/goldundercover. (3 Moz). FOR MORE INFORMATION CONTACT: Paul McDonald Manager, Resources p The Bendigo Zone and the assessment area (in red) under cover GeoScience Victoria 20 Phone: 03 9658 4531 Email: [email protected] Seismic survey 3D Geological model capability project

nderstanding key geological s geologists develop an U structures across central Victoria A understanding of an area, will be made easier when the data from a they usually visualise the region in new seismic survey through the Central 3 dimensions. The project will provide a goldfields is interpreted in mid-2007. Geology is inherently a 3D or, with framework for 3D viewable the inclusion of time, a 4D science, and geologists usually have a 3D model in and useable models that mind as they create a mental image of an explorers can download ore deposit. A 3D model uses information technology to convert this mental image into and incorporate with their a tangible product that allows the concealed own data. geology of an area to be shared with others.

p Seismic survey (in red) through the Central Goldfields In June 2006, a seismic traverse across the state was carried out as a project of the Cooperative Research Centre for Predictive Mineral Discovery (pmd*CRC). Seismic data was acquired from four deep seismic lines across central Victoria over a total of 398 kilometres. The project aimed to determine, using seismic reflection techniques, the geometry and nature of key faults bounding basement zones, the internal structure of the basement zones and the relationship of major gold deposits to regional structures in central Victoria. Processing of the data is currently underway at Geoscience Australia in Canberra and interpretation of the data, together with a final report, will be completed in mid 2007. Interpreted data from the project will be pAn  example of a 3D model (in progress) for the Walhalla – Woods Point – Tallangallook area. used to enhance and update a 3D model of This model and the LaTrobe Valley coal model are available as interactive PDFs on the DPI web page (see “What’s New”). Victoria currently being constructed within another pmd*CRC project. To help explorers to improve their The Tasmanides model being developed Enhancement of the 3D model in the understanding of Victoria’s complex geology, in conjunction with the Cooperative Research Developing Gold Undercover initiative will take GeoScience Victoria (GSV) is aiming to Centre for Predictive Mineral Discovery and place within a 3D Interpretation project during dramatically improve the 3D interpretation models developed as part of GSV’s 3D the latter half of 2008 and be released in of Victoria. geological mapping program will be available June 2009. A key part of the Developing Gold through this system. Undercover initiative is the expansion and Visualisation of models is an important FOR MORE INFORMATION CONTACT: development of geoscience data and the component for both GSV projects and external Peter O’Shea necessary online delivery mechanisms, to users. The models will be delivered via DVD Manager, Minerals Geoscience, supply information to potential investors and also be Internet-accessible. The project GeoScience Victoria quickly and efficiently. will provide a framework for 3D viewable and Phone: 03 9658 4525 Email peter.o’[email protected] The newly developed ‘3D Geological useable models that explorers can download Model Capability’ project aims to create an and incorporate with their own data. operational environment in which consistent FOR MORE INFORMATION CONTACT: and systematic digital models can be discovered, prepared, manipulated, stored, Alan Willocks Manager, Geoscience Information visualised and delivered. It will involve GeoScience Victoria the development of data standards for Phone: 03 9658 4501 management of corporate 3D models, the Email: [email protected] selection of appropriate applications and the Website: www.dpi.vic.gov.au/minpet/goldundercover documentation of workflows. 21 Gold Undercover Unearthing Victoria’s Gold

The Gold Undercover initiative aims to utilise a variety of geoscientific tools and open file data to find gold hidden beneath more recent rocks or alluvial sand and sediments. New gravity survey Lithogeochemistry project

major new gravity survey across he chemistry and mineralogy of rocks hosting gold deposits in Victoria are known A the central Victorian goldfields could T to have changed during the gold mineralising process, to form what are known help explorers locate major new gold as primary lithogeochemical alteration haloes. What is not clear is just how far these deposits beneath the blanket of sediments effects extend from the deposits and how they are modified by weathering. A new in the State’s north. project to more fully understand the importance of these lithogeochemical alteration haloes has been launched by GeoScience Victoria.

pCaption  copy

Previous GeoScience Victoria gravity surveys and recent company surveys such as those by Leviathan Resources have highlighted the prospective nature of ‘basement highs’ for gold mineralisation in areas under cover to the north of Bendigo. A new project, scheduled to start in April, will increase the gravity data density by establishing up to 8,000 new gravity stations at 500-metre spacing, between the Mount William and Avoca Faults north of Bendigo. The data will then be incorporated into Victoria’s already comprehensive gravity

database and interpreted. pDiamond  drill core from the Fosterville Gold Mine showing iron carbonate alteration Once fully analysed and interpreted, GeoScience Victoria expects that the data will The lithogeochemistry project will attempt this alteration and how to recognise show Cainozoic movements on Palaeozoic to define the extent of these alteration haloes changes in alteration as mineral deposits are faults which were possible conduits for gold in fresh and weathered rock around major approached. Mineral exploration companies mineralisation, and pre-Cainozoic topographic gold deposits such as Bendigo, Ballarat and therefore will be able to target zones of several highs which are possible sites of silicification Fosterville, as well as at smaller deposits, hundred metres across within which mineral and gold mineralisation. including Costerfield, Maldon, Wildwood deposits might occur. The data and interpretation will also provide and Castlemaine. Samples will be analysed A report on haloes in fresh rock will be input into the 3D and Predictive Mineralisation chemically for a suite of 28 different elements available in December 2007 and a report on Models project, which is also aimed at at an accredited assay laboratory, with haloes in the weathered zone will be available providing a greater understanding of gold and analysis for mineralogical changes using infra- in June 2009. other mineral potential of large areas of the red spectral analysis will also be undertaken. FOR MORE INFORMATION CONTACT: state hidden by recently deposited sediments. Preliminary work at Fosterville and Bendigo indicates that the extent of alteration exceeds Peter O’Shea FOR MORE INFORMATION CONTACT: Manager, Minerals GeoScience that previously described in scientific GeoScience Victoria Paul McDonald literature, with alteration minerals identified Phone: 03 9658 4525 Manager, Resources Email: Peter.O’[email protected] GeoScience Victoria in fresh diamond drill core samples over 100 Phone: 03 9658 4531 metres away from known gold mineralisation. Email [email protected] The project seeks to provide Website: www.dpi.vic.gov.au/minpet/goldundercover recommendations on how best to identify 22 23 Drill Hole project

ictoria’s drill hole database V currently contains records for over 160,000 holes drilled right across the state, representing a vitally important resource in helping modern explorers find new mineral deposits. Existing drill hole data enables explorers The Drill Hole project to gain a rapid foundation on understanding will not only improve the geology of areas without having to repeat earlier work. It remains imperative that the the quality of existing database is high quality, up to date and easily data, but provide key accessible to all. inputs into the Gold The current drill hole database contains Undercover 3D project records and information on core availability, and contribute to new lithology, geochemistry, mineralisation and other technical aspects of the drilling campaign. and improved basement This information can be useful in investigating, maps. These will be correlating and interpreting gold mineralisation progressively released which may lie beneath cover rocks. in June 2007, 2008 It is acknowledged that the current drill hole and 2009. database contains information from different sources that may be incomplete or inaccurate. The Drill Hole Gold Undercover project aims to conduct a thorough quality assurance review on this data where applicable and bring it up to date. It will also generate a set of GeoScience Victoria (GSV) drill hole standards for reporting that will be in line with the international collaboration on GeoSciML. pExample  of a geochemical anomaly map Aside from providing quality assured data, the project will also afford input into the Gold Undercover 3D project, as well as contribute to the generation of a more robust ‘basement map’ by June 2009, with interim products released in June 2007 and June 2008. In an associated second project, the DPI’s Mineral and Petroleum Division’s geochemistry database will also be reviewed to capture and p Diamond drill core from the Fosterville Gold Mine showing iron carbonate alteration validate new, open file, geochemistry data and revalidate existing open file geochemistry data within the Gold Undercover area. This is to assist explorers to determine the extent of previous work and improve their interpretation process. The current geochemistry database contains more than two million assay records. The data and interpretation will provide input into the Gold Undercover 3D project. Under the review project, new anomaly maps will be produced along with updated corporate databases. The delivery of data will be improved to international standards by June 2009 with interim products released in June 2007 and June 2008.

FOR MORE INFORMATION CONTACT: Paul McDonald Manager, Resources GeoScience Victoria Phone: 03 9658 4531 Email: [email protected] pExample  of a basement map 22 23 DISCOVERY JOURNAL MARCH 2007

u Leviathan Resources  Tandarra exploration project

Leviathan Some of the best intersections included 1m @ 8.0 g/t Au from 81m within a zone Resources of 19m @ 1.4 g/t Au from 74m. Success in search for hidden gold

The search for major new gold deposits hidden by a blanket of sediments has taken on a new urgency after Leviathan Resources, operator of the Stawell goldmine, reported the discovery of a potentially major gold deposit north of Bendigo.

Hidden beneath the alluvial debris of the Murray Basin, Leviathan has hit rich gold at its Tandarra prospect, located 40 kilometres north of Bendigo on the same trend as the massive Bendigo goldfield.

Leviathan, in the process of merging with Perseverance At Glenfine North, further RC/air core drilling and diamond drilling Corporation, the operator of the Fosterville goldmine, revealed in the December 2006 quarter continued to test the northern dome, in November 2006 that high grade gold intercepts had been targetting shallow gold stockwork-style mineralisation amenable to produced at Tandarra. open pit mining. The best result was a one-metre interval grading 160 grams Leviathan’s program at Bendigo North included an infill aircore of g/t Au from a depth of 104 metres within a broad zone of drilling program on the Tandarra prospect. The program continued mineralisation. to define encouraging gold-arsenic anomalism associated with The Bendigo North exploration program is seeking new gold sulphidic quartz veining and carbonate alteration in a number of holes deposits buried beneath unmineralised cover rocks along an on several widely spaced traverses. interpreted major crustal corridor, which includes the Ballarat and Regional vertical aircore drilling has targetted a number of these Bendigo goldfields. gravity features and confirmed several zones of quartz veining buried The target models are based on the Bendigo-style, nuggetty, beneath 40–90 metres of Murray Basin sediment cover. high-grade quartz reefs and Fosterville-style mineralised, Drilling identified anomalous gold in eastern and western zones sulphidic sediments. at Tandarra approximately 2.5 kilometres long by 500 metres wide. Exploration started in January 2006, with a gravity survey An infill aircore program on the western zone has returned a designed to identify prospective areas beneath unmineralised number of significant intercepts. Murray Basin cover. Some of the best intersections included 1m @ 8.0 g/t Au from 81m The survey successfully defined major NW–NNW trending within a zone of 19m @ 1.4 g/t Au from 74m. gravity features which are now being explored for their gold Another hole produced 4m @ 1.3 g/t Au from 70m while another content. hit 1m @ 24.7 g/t Au from 84m and 1m @ 160.0 g/t Au from 104m. Leviathan is conducting a broad scale regional exploration The mineralised zones are interpreted to be associated with program, designed to seek major new gold deposits in structurally controlled quartz vein systems located in the hanging extensions of the historical goldfields at Stawell, Ballarat and wall of the regional west-dipping Whitelaw Fault in a similar structural Bendigo covered by recently deposited sediments. This relatively position to the Bendigo goldfield. thin veneer of recent sediments may mask the potentially Leviathan reported that, “These results confirm the prospectivity mineralised gold bearing rocks below. of the Tandarra region to host significant Bendigo-style gold At its West Ballarat prospect, Leviathan is conducting mineralisation beneath shallow cover sediments.” a structural analysis of drill core from the Glenfine South mineralised shoot, which has identified additional targets on FOR MORE INFORMATION CONTACT: the east flank of the main Glenfine dome that was drilled in the December 2006 quarter. Graeme Sloan Managing Director Perseverance Corporation Phone: 03 5439-9000 Email: [email protected] 24 280000 282000 284000 286000

FOSTERVILLE REGIONAL JV Fosterville, Victoria EL 4554 Air Core drilling Program MIDDLETON ROAD

Tenement Area BAMAWM ROAD 5986000 0.05 to 1.0 Au (ppm) u Aircore Drilling Main Roads Aircore drilling results Roads STRATHALLAN ROAD from Fosterville Trends Regional JV, BAMAWM HALL ROAD September 2006 McPHEE TREND 5984000 MAIN TREND MAP LOCATION ECHUCA SINGER ROAD

EL 4554 LOCKINGTON Lockington Gold Fields discovery

Pacrim Energy / Gold Fields JV 5982000 Gold Fields 100km

Perseverance Corporation Ltd Pacrim Energy Fosterville Gold Mine VISE ROAD PRAIRIE-ROCHESTER ROAD BENDIGO 5980000 Fosterville regional gold exploration project

5978000

A line drawn east to west across central Victoria, CUNNINGTON ROAD just north of Bendigo, will give a pretty close 0 2 km approximation of the point where many of the O’DONNELL ROAD State’s richest gold bearing structures plunge 5976000 and disappear beneath the sediments of the Murray Basin. LEES TREND Until recently, this edge of the sediment cover DIGGORA ROAD marked the boundary beyond which most explorers 5974000 would not venture, fearing that the cost of exploring blindly beneath the Murray Basin might be too high and a bit too risky. But new exploration tools, a rapidly increasing understanding of the geology of northern Victoria The assay results from vertical air core and some early success in exploration under drilling completed in 2006 produced gold cover is driving a major new push to find new gold values, in mostly deeply weathered or deposits in this area. oxidised sandstone basement rocks, to One of the most promising ‘under cover’ ventures 0.94 g/t Au over 3 metre intervals from the is the Lockington project-operated by Gold Fields Australasia where drilling has already revealed some McPhee Trend and to 0.8 g/t Au over 3 high grade gold intersections, creating hopes that metres from the Main Trend (as part of a the discovery could eventually lead to the opening 6 metre intersection averaging 0.5 g/t Au). of a major new goldmine. Gold Fields and locally listed company, Pacrim Energy Ltd, are also exploring in the area north of the Fosterville mine near Bendigo, operated by over intervals from three metres to 27 metres, indicating Perseverance Corporation, where some highly encouraging a significant halo to the mineralisation. results have been returned from preliminary drilling. A report by Pacrim to the Australian Stock Exchange said that the Last year, Gold Fields Australasia, a subsidiary of the Gold Main Trend has been defined over a strike length of 1.6 kilometres Fields (South Africa) group, located a ‘mineralised horizon’ in two with a halo width of 400 to 700 metres and the McPhee and Palmer holes within a three kilometre-long gold in bedrock anomaly. Trends have been defined over a strike length of 800 metres, with Gold Fields has since revealed that grades of up to 19 g/t gold halo widths from 150 to 200 metres. have been returned from diamond drilling and results suggest The latest air core drilling was designed to delineate the extent the presence of a very strong mineralising system. of the mineralisation and provide sufficient data for the planning of Gold Fields can earn a 75% interest in the Pacrim Energy joint potential diamond holes to test for possible bedrock mineralisation venture project adjacent to the Lockington project by spending at depth. a further $1.4 million by October 2007, bringing their total Pacrim Energy managing director, Rod Foster, said the results expenditure to $2.5 million. were, ‘highly encouraging as the dimensions of the mineralised Gold Fields’ Lockington discovery is believed to relate to the trends being defined may represent significant zones of a similar Fosterville trend, the structure that hosts the Fosterville mine. style to the Fosterville gold mine.’ In late 2006, Gold Fields and Pacrim resumed air core drilling FOR MORE INFORMATION CONTACT: on their Fosterville regional project to test between the Lee’s Trend and the Main Trend targets, which would represent an Rodney Foster Managing Director eight-kilometre strike length if continuity was established. Pacrim Energy Ltd. Results from an earlier program of air core drilling in October Phone: 03 5333 3200 2006 revealed elevated arsenic or antimony values in 12 holes Email: [email protected]

25 DISCOVERY JOURNAL MARCH 2007 Discoveries under cover and extensions to sulphide mineralisation beneath oxide open pits has taken the gold resource base at Perseverance Corporation’s Fosterville mine to more than three million ounces.

Perseverance Corporation Australia’s second biggest domestic gold producer

The 500,000 ounce or 21 per cent addition to the resource The resource upgrade included the recently discovered base was achieved in the 2006 financial year and served to Wirrawilla deposit towards the southern end of the Mining confirm Fosterville, 20 kilometres east of Bendigo, as one of Licence and the Farleys deposit, located towards the Australia’s exploration success stories. northern end. Four years ago, Fosterville’s life as a small time producer from Wirrawilla – geological interpretation work led to its oxide scratchings had come to an end, and initial exploration of discovery 250 metres below surface – has been traced by the deeper sulphide mineralisation had established a resource broad-spaced drilling for more than 800 metres while at base of 1.7 million ounces. Farleys, mineralisation has been extended some What is more, there were no reserves. Now a one million ounce 200 metres north of the previously mined Farleys oxide reserve remains in place despite the depletion from mining of the open pit. Falcon and Ellesmere open pits. And for the first time in recent Perseverance is now well into its second year of what history, underground mining has returned to the historic goldfield. it calls the ‘new mining era’ at Fosterville. However, the It is underground that Fosterville’s long-term future lies. company acknowledges that the first year of operation Perseverance chairman, John Quinn, believes the company suffered some teething problems. controls “one of the most prospective goldfields in the country”. “We encountered ground condition problems in the open pits which delayed mining operations somewhat,” “We have only just scratched the surface of our Mr Quinn told shareholders at the group’s annual 50 kilometres of prospective holdings but have already meeting. identified more than three million ounces of gold,” “More importantly, gold recoveries in both the flotation Mr Quinn said. and CIL circuits were below expectations. The mine and treatment plant issues resulted in production being below Perseverance managing director, Graeme Sloan, explained that initial expectations and contributed to costs above target. the 21 per cent increase in the resource base was a consequence Notwithstanding these challenges, Fosterville produced of exploration drilling success within the Fosterville Mining a respectable 91,000 ounces of gold in its first year,” Licence. As a result, it did not include any contribution from Mr Quinn told shareholders. drilling off the Mining Licence, most notably the recent success Mr Sloan said that while the first year of operations had at Russells Reef, 4 kilometres south of the Fosterville plant. not been without its challenges, it was also a year of many Fosterville’s total resource now stands at 32.02 million tonnes ‘firsts’. grading 2.9 grams of gold a tonne (3.02 million ounces). “For instance, we have mined over 10 million tonnes Fosterville’s ore reserve stands at 7.26 million tonnes grading of material from open pits, producing 91,000 ounces of 4.3 g/t Au (1 million ounces). gold. We commenced underground mining, a historic Exploration has focussed on resource additions to the north occasion, given the last time this type of mining occurred and south of the central area of the Mining Licence rather than in the area was around 70 years ago and then only delineation drilling to expand reserves. to very shallow depths. We recorded no significant “The success of the exploration program further confirms the environmental incidents for the year,” Mr Sloan said. company’s long held belief in the underlying potential of the “We have also achieved 230 days without a Lost Time Mining Licence area and its surrounding Exploration Licence that Injury, a good effort but somewhat over shadowed by the covers 50 kilometres of the highly prospective Fosterville Trend,” surface mining team which has achieved over 970 Lost Mr Sloan said. Time Injury free days, a tremendous achievement,” he added.

26 Discoveries under cover and extensions to sulphide Perseverance managing director, Graeme mineralisation beneath oxide open pits has taken the Sloan, explained that the 21 per cent increase in the resource base was a gold resource base at Perseverance Corporation’s consequence of exploration drilling success Fosterville mine to more than three million ounces. within the Fosterville Mining Licence.

t Fosterville Mine Underground works and open pit

“Importantly, these achievements have been secured in an environment that has seen rising costs, an increasing skills shortage, long lead times and rapidly escalating prices on most equipment. Cost pressures will continue to dominate our business and must remain a strong operational focus,” Mr Sloan added. For 2007, the company has set a target of improving overall gold recovery to 87 per cent, as well as sourcing about 25 per cent of gold production from underground ore positions. Perseverance’s takeover of the Stawell gold mine operator, Leviathan Resources, has grown the total resource base to 3.8 million ounces and its reserve base to 1.4 million ounces. (See ‘Merger and acquisitions in the Victorian Resources Sector’ story on page 8). A feature of the $46 million takeover was that, while Stawell will face a limited life unless there is exploration success, Fosterville’s potential life has continued to lengthen. As a result, Perseverance expects that as Stawell comes to an end over the next three years, its personnel, plant and equipment will be transferred to Fosterville. That changeover would coincide with Perseverance’s plan to increase underground output and the treatment plant capacity at the Fosterville mine. In the meantime, the combined group will rank as Australia’s second biggest domestic gold producer with annual output of more than 200,000 ounces.

FOR MORE INFORMATION CONTACT: Graeme Sloan Managing Director Perseverance Corporation Phone: 03 5439-9000 Email: [email protected]

27 DISCOVERY JOURNAL MARCH 2007

Nexus Energy Set to develop Longtom gas field in Bass Strait

Nexus Energy told the Australian Stock Exchange in December 2006 that Apache had confirmed it would not exercise its right to buy-back into the project. Under a prior agreement, Apache decided not to participate in drilling the Longtom-3 appraisal well that successfully tested gas and condensate in September 2006. But Apache retained a right to reclaim its interest in the field in exchange for an agreed back-in fee and a penalty fee worth six-times that amount. Managing Director, Ian Tchacos, said Nexus was making good progress at the field. “We anticipate being in a position to approve the Longtom gas development, once the funding arrangements are in place and an independent reserves estimate has been completed supporting the q Ocean Patriot drilling rig for Longtom 3 contracted volumes,” he said.

With development to occur in 2007, first Longtom gas production is expected to start in the second half of 2008. Gas from the field will be produced via subsea wells linked by pipeline to the Santos-owned and operated Patricia-Baleen gas facility.

A gas sales agreement signed with Santos a year ago will see up to 450 petajoules (PJ) of Longtom gas processed at this facility, near Orbost in south-eastern Victoria. Santos has also agreed to On test, the lower reservoir section flowed purchase the first 350 PJ at defined prices. at a stabilised rate of 18-19 million cubic The development of Longtom will see Nexus become the feet of gas per day (MMcf/d) over a 12 third new producer to come into play in Bass Strait in the past hour period. 50 years. BHP Billiton and ExxonMobil have had a stranglehold The upper reservoir section did not flow on the oil and gas-rich reserves off Victoria’s south-east coast gas to surface after the failure of a sub- since the 1960s. They have been joined by Anzon and Beach surface valve in the well bore. However, Petroleum, who first sold oil from the Basker-Manta oil project in a core cut from the well confirmed an January 2006. excellent upper reservoir section highly The Longtom gas field was discovered by BHP Billiton in 1995 capable of flowing gas. but was considered non-economic. The Longtom-3 well, drilled in The Longtom-1 discovery well intersected a 386 metre gas September 2006, confirmed the column in the Emperor formation which was confirmed in the commercial potential of the Longtom field Longtom-2 appraisal well drilled by Apache in late 2004. when an estimated flow rate of over 75 MMcf/d was recorded Longtom-2 encountered its own 400-metre gas column in five during the second production test over the lower reservoir separate reservoir zones. sections. A test of the upper reservoir sand, which did not flow in Longtom-2, was also shown to be capable of flowing gas. 28 Nexus Energy will retain a 100 per cent stake in the Longtom gas project after joint venture partner, Apache Energy, officially decided to withdraw its interest from the field which lies in offshore permit VIC/P54.

t Longtom, Bass Strait

A second objective in the VIC/P54 permit is the Longtom Upper prospect, a lead which represents a possible extension to the Longtom field containing up to 250 billion cubic feet (bcf) of additional gas which will be tested by a future exploration well. The best estimate of the contingent resource at Longtom to date is 438 bcf. Once developed, this $175 million project will stand as an example of a small gas field (which could have been too p Patricia-Baleen gas processing facility. Image taken by Matt Irwin small to be developed Longtom-3 was tested through as a stand-alone greenfield project) being developed accessing a production completion unit existing infrastructure, thereby minimising environmental leaving the well ready for impacts. This project will also increase the security and production without requiring competitiveness of gas supply in addition to extending the life of any further rig intervention. The the Patricia-Baleen facility by about 10 years. Longtom-3 appraisal well was FOR MORE INFORMATION CONTACT: part of a sole risk appraisal Ian Tchacos program operated by Nexus. p Longtom 3 subsea control panel Managing Director From deepest to shallowest, Nexus Energy Ltd the gas bearing reservoir units in the Longtom field are named Phone: 03 9660 2500 the 100, 200, 300, 400 and 500 sands. The reservoirs appear Website: www.nexusenergy.com.au to be connected to a series of vertically separate, but laterally connected, common aquifers.

29 DISCOVERY JOURNAL MARCH 2007 A new offshore gas field in the Otway Basin will be developed at a cost of around $140 million, to supply gas into the rapidly expanding South-Eastern Australian gas market, confirming Victoria’s role as the major gas distribution hub on the eastern seaboard.

Henry Gas Field Commitment to start FEED work on Henry gas field

Australian Worldwide Exploration Limited (AWE) has revealed p Laying casino pipelay in 2005. Henry plans for the Santos/AWE/Mitsui joint venture to begin gas will flow through the same pipeline. Front End Engineering and Design (FEED) work for the u Concrete mats placed on top of the development of the Henry gas field in permit VIC/P44 in the gas pipeline to ensure it does not move offshore Otway Basin. The Henry field is 8.5 kilometres north on the sea floor. of AWE’s 25 per cent owned Casino gas field, which started commercial production in early 2006. The Casino field joined the BHP While the FEED study will primarily focus on the development Billiton-operated Minerva project as a of the Henry gas field, it will also include the design of a significant gas producer in the region. This will be bolstered further in 2007 pipeline and umbilical that will allow the tie-in of the adjacent when the Thylacine gas field (located Martha gas field and any future discoveries at the nearby gas in offshore Tasmania) comes on line, prospects, Netherby and Pecten East, which plan to be drilled bringing the $1.1 billion Woodside in late 2007. Otway gas project into operation. AWE has also participated in the The preliminary cost for the development of the Henry gas development of the $750 million field has been estimated at $140 million, but the FEED studies BassGas project launched in 2006 will more accurately define the cost estimates ahead of which accesses gas from the Yolla project sanction. gas field located in offshore Tasmania. The Henry FEED study is planned to be completed by This project is feeding additional September 2007, with first gas production currently forecast for gas into the natural gas network for the first quarter of 2009. Victoria, South Australia, NSW Commenting on the FEED decision, AWE’s managing director and Tasmania. Bruce Phillips said, “The decision to proceed to FEED at Henry Later this year, the Woodside confirms our belief that the offshore Otway Basin will be a long life Otway gas project will be brought project for AWE. The Henry development will integrate with the into production, marking the most $200 million Casino gas project and the FEED work is designed intensive burst of offshore petroleum to provide added flexibility to incorporate any future discoveries developments in Victoria since the made in the area. This in turn will allow AWE and its co-venturers discovery of the Bass Strait oil and to provide better service for their gas customers and the gas fields in the 1960s. broader community.” The offshore Otway Basin has The VIC/P44 and Henry gas field joint venturers are Santos Ltd produced a bonanza of new gas (the operator) with 50 per cent, and AWE and Mitsui each with a discoveries for Victoria. It has become 25 per cent interest. eastern Australia’s newest source of The Henry field is a satellite discovery to the large Casino gas large volumes of gas. field, which is a main plank in the rapidly expanding gas hub near A surge in offshore exploration has Port Campbell. led to a far greater understanding of the region’s oil and gas potential, and drilling success rates are improving, reducing the high cost of offshore wildcat drilling. 30 Together, all these fields form the largest offshore development in Victorian waters since the heyday of the offshore developments in Bass Strait in the 1970s.

t Control room for the gas pipelay vessel installing the casino pipeline that will also carry Henry gas.

Santos Ltd’s Casino discovery and the two adjacent commercial gas discoveries Henry and Martha, have dramatically changed the petroleum industry’s understanding of the prospectivity of the Otway Basin. The original Casino discovery well in 2002 was a follow-up to a well drilled by Shell in 1967 called Pecten-1, which sought oil but found gas instead. The gas reservoir in the original Pecten-1 well was poor but Santos has applied the knowledge gained from the original well to develop a new theory about the formation of gas in the region. Now the Pecten High structure is recognised as a complex series of tilted half-grabens (ancient depressions), formed as a result of an ancient geological event which created giant valleys that later filled with sediments and ultimately trapped natural gas reserves

FOR MORE INFORMATION CONTACT: Bruce Phillips Kathryn Mitchell, Australian Worldwide Exploration Limited Public Affairs Manager, Santos Ltd Phone: 02 9460 0165 Phone: 08 8218 5260 Email: [email protected] Email: [email protected] Website: www.awexp.com.au Website: www.santos.com.au

31 Mineral Exploration Tenements

New applications and grants during September–December 2006

N Granted Applications Current

0 50 100 Kilometers TENEMENT UPDATE

Exploration Licence Applications Exploration Licences Granted

Tenement Primary Ownwer Application Date Tenement Primary Owner Application Date Grant Date EL4999 GBGM Wilson Hill Ltd 28/9/06 EL4533 Horizon Energy & Resources Pty Ltd 29/11/00 4/10/06 EL5001 Swancove Enterprises Pty Ltd 5/10/06 EL4541 Ironbark Mining Pty Ltd 14/12/00 1/11/06 EL5002 Goldalot Pty Ltd 13/10/06 EL4541 Ironbark Mining Pty Ltd 14/12/00 1/11/06 EL5003 Ballarat West Goldfields Pty Ltd 19/10/06 EL4669 Goldsearch Ltd 4/6/02 6/9/06 EL5004 Peter S Forwood 3/11/06 EL4677 Target Mineral Exploration Pty Ltd 4/7/02 16/11/06 EL5005 Pacific Minerals Pty Ltd 3/11/06 EL4699 North Ballarat Pty Ltd 6/9/02 6/9/06 EL5006 St Barbara Ltd 6/11/06 EL4701 Providence Gold & Minerals Pty Ltd 18/9/02 16/11/06 EL5007 St Barbara Ltd 6/11/06 EL4744 Synergy Metals Ltd 16/5/03 29/11/06 EL5008 St Barbara Ltd 6/11/06 EL4814 Perseverance Exploration Pty Ltd 19/3/04 4/10/06 EL5009 St Barbara Ltd 6/11/06 EL4816 Perseverance Exploration Pty Ltd 30/3/04 4/10/06 EL5010 St Barbara Ltd 6/11/06 EL4883 Perseverance Exploration Pty Ltd 25/5/05 4/10/06 EL5011 St Barbara Ltd 6/11/06 EL4934 Oroya Mining Ltd 6/1/06 17/10/06 EL5012 St Barbara Ltd 6/11/06 EL4935 Oroya Mining Ltd 10/1/06 1/11/06 EL5013 St Barbara Ltd 6/11/06 EL4941 Panaegis Gold Mines Ltd 27/1/06 4/10/06 EL5014 St Barbara Ltd 6/11/06 EL4947 Oroya Mining Ltd 20/3/06 4/10/06 EL5015 St Barbara Ltd 6/11/06 EL4948 Oroya Mining Ltd 20/3/06 4/10/06 EL5016 Niplats Australia Ltd 30/11/06 EL4951 Bemax Resources NL 27/3/06 1/11/06 EL5017 Uranium Oil & Gas Ltd 30/11/06 EL4956 Alan Geral Marlow 6/4/06 1/11/06 EL5018 Uranium Oil & Gas Ltd 30/11/06 EL4964 Bruce Myles 7/4/06 4/10/06 EL5019 Uranium Oil & Gas Ltd 30/11/06 EL4976 Alan Geral Marlow 13/6/06 20/9/06 EL5020 Panaegis Gold Mines Ltd 5/12/06 EL4977 Goldalot Pty Ltd 26/6/06 4/10/06 EL5021 Highlake Resources Pty Ltd 8/12/06 EL4978 Goldalot Pty Ltd 26/6/06 4/10/06 EL5022 Goldalot Pty Ltd 11/12/06 EL4982 Castlemaine Goldfields Ltd 14/7/06 4/10/06 EL5023 Sierra Minerals Ltd 13/12/06 EL4986 Leviathan Resources Ltd 2/8/06 17/10/06 EL5024 Mutiny Gold Ltd 18/12/06 EL4988 Swancove Enterprises Pty Ltd 10/8/06 16/11/06 EL5024 Mutiny Gold Ltd 18/12/06 EL4990 Swancove Enterprises Pty Ltd 10/8/06 16/11/06 EL5025 Goldalot Pty Ltd 22/12/06 EL4991 Swancove Enterprises Pty Ltd 10/8/06 16/11/06 EL5026 Fiddlers Creek Gold Mining Co Pty Ltd 27/12/06 EL4992 Ironbark Mining Pty Ltd 10/8/06 1/11/06 EL4992 Ironbark Mining Pty Ltd 10/8/06 1/11/06 EL4994 Panaegis Gold Mines Ltd 22/8/06 1/11/06 EL5000 Iluka Resources Ltd 28/9/06 29/11/06 Complete mineral, petroleum and extractive tenement details 32 are available from www.dpi.vic.gov.au/minpet/geovic [email protected] T: (613)96584422 and ExtractiveOperations Manager, Minerals [email protected] T: (613)96584439 and Petroleum Tenements Manager, Minerals [email protected] T: (613)96584457 and Petroleum Regul Directo Minerals andPetroleum Regulation [email protected] T: (613)96584536 Manager, GeoscienceStrategy geoffery.o’[email protected] T: (613)96584538 Manager, EnergyGeoscience [email protected] T: (613)96584531 Manager, Resources peter.o’[email protected] T: (613)96584525 Manager, MineralsGeoscience [email protected] T: (613)96584501 Manager, GeoscienceInformation [email protected] T: (613)96584562 Director, GeoScienceVictoria GeoScience Victoria [email protected] T: (613)96584411 Executive Director, MineralsandPetroleum Executive [email protected] T: (613)96584454 Tenements RegistrationOfficer Business Centre Minerals &Petroleum [email protected] F: (613)96584760 T: (613)96584440 Melbourne VictoriaAustralia3001 16th Floor, 1SpringStreet(GPO Box 4440) Information atDPI Minerals andPetroleum Division Dr

Doug Sceney John Mitas George Buckland Phil Roberts Larry Stewart Paul McDonald Peter O’Shea Alan Willocks Kathy Hill Dr. RichardAldous Kim Ricketts Department ofPrimaryIndustries Geoff O’Brien r, Minerals

ation

[email protected] T: (613)96584433 Manager, SustainableDevelopment Communications Adviser Corporate Communications [email protected] T: (613)96584458 Director, NaturalResourcesPolicy Policy Development [email protected] T: (613)96584571 Manager, InformationDevelopment Information andDevelopment [email protected] T: (613)96584739 Manager, CoalDevelopment [email protected] T: (613)96584407 Minerals DevelopmentManager [email protected] T: (613)96584406 Petroleum DevelopmentManager [email protected] T: (613)96584402 Minerals DevelopmentManage [email protected] T: (613)96584405 and Technology Director, BusinessDevelopment and Technology Business Development [email protected] T: (613)96584414 Safety andEnvironment Manager, Petroleum Operations [email protected] T: (613)96584081

Terry McKinley Damia Ettakadoumi Jennifer Wolcott Manny Hemman Sean Rooney Kathy Friday Geoff Collins Roger Buckley Cliff Kavonic

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