COMMISSIONERS GOLD (CGU)
Commences Drilling at Flagship Gold Project
SPECULATIVE EXECUTIVE SUMMARY
Commissioners Gold (ASX Code: CGU) listed on the ASX on 18 October 2011 2 September 2011 as a company undertaking exploration at
six projects prospective for gold in the Lachlan Ford Belt Share Trading Info region in NSW. The company raised $2.54 million through ASX Code CGU the issue of ~12.5 million ordinary shares at 20 cents per Current Share Price (cps) 17.0 Trading Low /High (Since Listing) (cps) 17.0 - - $3.98 21.0 share and in less than one month after listing, and with a Mkt Captalisation (undiluted) $m 5.9 view to obtaining a re-estimated JORC resource for its ASX Listing Date 2 Sept 2011 flagship, the Cowarra Gold Project, CGU announced the commencement of its maiden drilling program at Cowarra, Issued Capital (m) targeting two lodes (Victoria and Ambassador). Total Ordinary Shares 34.6 Unlisted Options* 1.5 Cowarra’s resource is presently 500,000 tonnes @ 2.3g/t Total Diluted Securities 36.1 gold (Au) (~37,000 oz of contained gold). The Cowarra * Restricted until 2 September 2013 Project is a 50% joint venture with Capital Mining Ltd. Board of Directors* Christopher Battye Executive Chairman The main potential for Cowarra is to accumulate a series of Robert McCauley Managing Director small proximal small-tonnage medium-to-high grade gold Wesley Harder Non Executive Director deposits that, combined, could form a medium-sized Robert Waring Non Executive Director resource that would support a centrally-located processing * Further details on Page 23 facility. Historical gold production at Cowarra has averaged Major Shareholders grades of between 6 to 31g/t Au (see Table 3). It should Mr Christopher Battye 23.1% also be noted (refer section 2.6) that recent results from Mr Duncan Hardie 19.8% the rock chip samples obtained from the John Murray and Xiaodan Lin 3.6% Never Never groups of old workings returned grades as Jiting Xu 2.9% high as 33g/t Au and 27g/t Au respectively. McCauley Super Fund 1.9% The drilling program, comprising five diamond drill holes over 1,000 metres, has been designed to test for extensions of the Victoria and Ambassador lodes at depth, as well as an intervening target zone, the ‘Independent lode’, which was intersected in a hole drilled in the late 1980s and has not since been followed up.
Five diamond drill holes completed by Joint Venture partner Capital Mining in 2010, including two on the Victoria zone and one on the Ambassador zone, confirmed the presence of high-grade gold mineralisation at each of the lode horizons.
Important Disclosure The Victoria zone mineralisation remains open along Investors should be aware that strike to the north and at depth, with further drill Commissioners Gold Ltd is a testing needed to evaluate potential extensions to corporate client of Alpha and that Alpha will receive a consultancy fee the zone. from Commissioners Gold Ltd for The drilling at the Ambassador prospect has been compiling this research report designed to more accurately position blocks of high grade gold mineralisation known from historic mine development and also to test extensions of the Victoria lode and any intervening gold mineralisation at depth.
Dalton Gold Project
The Dalton Project contains three main groups of historic gold workings. Recent surface sampling at Dalton has confirmed that high-grade gold mineralisation is found in a number of separate shear structures along the main trend, which have increased the prospectivity of the Dalton area.
CGU’s strategy for the Dalton project involves further exploration (likely to include detailed mapping, rock chip and soil sampling and ground geophysics) in order to identify a number of small, high- grade deposits that would form the basis of small-scale open cut mining operation that could supply a central processing plant.
Initially, an RC drilling program (11 holes for 850 metres) is planned in order to target shear zones below old workings to a depth of 100 metres. This work will allow for follow-up diamond drilling to confirm the geological setting and widths of mineralisation.
Capital Structure and Funding Requirements
CGU has a tightly-held share register, underpinned by a significant cornerstone investor, a high representation of Director ownership of CGU shares and share restrictions, both ASX-imposed and voluntary.
In addition, the top five major shareholders comprise over 50% of the total shares on issue, while the top 20 shareholders comprise over 67% of the total shares on issue. As at 18 August 2011, CGU had 466 shareholders and none held an unmarketable parcel of securities.
Table 1: CGU Capital Structure and Restricted Shares Million Expiry Shares/Options on Issue Date Total Ordinary Shares 34.6 Unlisted Options - Exercise Price 25c 0.75 31-Dec-13 - Exercise Price 30c 0.75 31-Dec-15 Total Unlisted Options 1.50 Total Issued Securities 36.1
Restricted Shares Million Until Ordinary Shares - ASX-Imposed Restriction 2.5 22-Dec-11 - ASX-Imposed & Voluntary 9.9 02-Sep-13 …% of total shares on issue restricted 36%
Unlisted Options - Exercise Price 25c (exp 31 Dec 2013) 0.75 02-Sep-13 - Exercise Price 30c (exp 31 Dec 2015) 0.75 02-Sep-13
The funds raised in the IPO will allow CGU to carry out an extensive exploration program over a two year period as outlined in the prospectus.
Some Skin in the Game
There is a strong alignment of interests between shareholders and the Board of Directors, whose combined holdings represent approximately 27% of the total shares on issue. The major shareholder is Mr Christopher Battye, the Executive Chairman of CGU, with 8 million shares (or 23% of the total shares on issue).
Mr Battye, along with the Managing Director, Mr Robert McCauley, who owns 2.3% of the total shares on issue and well as 1.5 million unlisted options, are the driving forces underpinning CGU’s current exploration strategy. Mr Battye founded CGU in 2005 and was instrumental in identifying the current project portfolio, while Mr McCauley, who was appointed Managing Director of CGU in February 2011, was previously the founding CEO of Capital Mining Ltd (from 2006 to 2010) and has a solid understanding of CGU’s flagship project, Cowarra, having overseen the acquisition of Cowarra in Commissioners Gold (CGU) Page 2 of 24
2009 and subsequently, exploration at Cowarra in 2010 after securing a farm-in agreement with CGU. Mr McCauley remains a Non Executive Director of Capital Mining Ltd.
Strategic Cornerstone Investor
The second major shareholder is Mr Duncan Hardie with 19.7%. Mr Hardie is the founder and Chairman of Hardie Holdings, a privately owned, Sydney-based company formed over 20 years ago and wholly owned by interests associated with Mr Hardie. Hardie Holdings has a wide and varied property and asset portfolio, predominantly in the eastern states of Australia. The property and asset portfolio include both passive and active interests in residential, industrial and commercial land, tourism, energy, conservation, major developments and infrastructure.
More recently, Mr Hardie’s interests have included investment in resource companies, to the point where the majority balance of Mr Hardie’s interests have now transformed from property to resources. In 2005, Mr Hardie, through Hardie Energy, began to move into energy and energy- related infrastructure, including initial studies for the Queensland to Hunter Gas Pipeline feasibility and route selection.
By 2008, Hardie Energy was actively involved in numerous energy projects across Australasia. In 2010, Hardie Resources opened office in Boroko, Papua New Guinea (PNG) and is now operating from offices in Wellington, New Zealand. Hardie Resources’ current interests include exploration for petroleum in Australia, exploration for coal, gold and coal seam gas and oil in New Zealand and coal in PNG.
Investment Appeal Underpinned by Strong Fundamentals for Gold
Recent strength in the gold price is being underpinned by increased global risk, US dollar weakness, growing inflationary fears, downgrade in US debt and continuing sovereign debt risks in Europe. This has been supported by Central Banks reversing activities from being sellers for most of the past 15 years to net buyers more recently, and is supported by the Federal Reserve’s stated desire to keep interest rates at super-low levels in the medium term.
Investment Bank UBS expects the gold price to be higher in the first six months of 2012, but forecasts it to average at $US2,075/oz for the year – around about three times its price just three years ago. UBS recently increased its 2013 forecast to $US1,725/oz, from $US1,200/oz, and lifted its long-term forecast 18% to $US1,100/oz.
Factors that will support the gold price over the medium term include (i) strong investment demand reflecting a flight to hard assets in the current global economic turmoil, (ii) negative real interest rates in the US and Europe, (iii) ongoing weakness in the US dollar, (iv) central bank buying from China, Mexico, Thailand, Korea and other emerging markets, (v) flat/declining global gold production and (vi) quantitative easing or “printing money” policies of the central banks of the US, Britain and Europe.
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1. PROJECT SUMMARY
Table 2 outlines the summary of CGU’s project portfolio. The key areas of priority are the Cowarra, Dalton and Oberon projects. As CGU is effectively managing a portfolio of projects, it is likely that the company will focus its exploration and development activities on the above three projects and, in order to do so, may seek farm-in arrangements for the Mongarlowe, Corang and Muttuma projects (all currently 100% owned by CGU).
Table 2: Summary of Commissioners Gold's NSW Projects Tenement Date Area CGU Equity Project Number Granted (km 2) (%) Cowarra* EL 5939 30 April 2002 33 Earning 50-85% Oberon** EL 7702 9 February 2011 23 Earning 70% Dalton EL 6922 24 October 2007 116 100% Mongarlowe EL 6919 24 October 2007 101 100% Corang EL 6921 24 October 2007 139 100% Muttama EL 6920 24 October 2007 93 100%
* Held by Capital Mining Ltd ** Held By Central West Gold NL Source: CGU
1.1 Significance of the Lachlan Ford Belt
The Lachlan Ford Belt is considered to have good potential for gold and base metal porphyry systems and is one of five Palaeozoic orogenic belts that together form the larger Tasman Orogen along the eastern margin of Australia.
The majority of the exposed portion of the Lachlan Ford Belt extends from NE Tasmania through Victoria and into NSW, where it underlies a large proportion of the central part of NSW. In NSW, the boundaries of the Lachlan Ford Belt are obscured by a number of younger sedimentary basins, in particular the Great Artesian Basin in the north, the Murray Basin in the SW and the Sydney and Gunnedah Basins in the east.
Many of the major porphyry and porphyry-related mineral deposits in the eastern portion of the Lachlan Ford Belt (where CGU’s projects are located) appear to be controlled by the intersection of the Lachlan Traverse Zone and a package of north-north westerly trending structures.
The Lachlan Ford Belt hosts a number of world-class mineral deposits, including Newcrest Mining's Cadia/Ridgeway near Orange in Central Western NSW. The Lachlan Ford Belt has over 40 million ounces of gold in new projects developed since the 1980s, but remains substantially unexplored in terms of modern day technology.
The Forest Reefs JV (Jervois Mining) exploration license is located 6-7 kilometres east of the important gold/copper mining centre at Cadia and covers part of the Lachlan Ford Belt.
A significant high-grade resource exists at Woodlawn (Tri Origin Minerals Ltd), which is located around 30 kilometres south of Goulburn and 200 kilometres SW of Sydney, where 13.8 million tonnes of high grade ore from the main Woodlawn mine and satellite pits were processed during the period 1978 to 1998.
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Figure 1: CGU Project Locations within the Lachlan Ford Belt
Source: CGU Prospectus
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2. FLAGSHIP PROJECT – COWARRA GOLD (EL 5939)
2.1 Overview
The Cowarra Project is a 50% joint venture with Capital Mining Ltd and is located approximately 100 kilometres south of Canberra and 40 kilometres north of Cooma. Access from Cooma is by the sealed Monaro Highway to the village of Bredbo and then ~16 kilometres by an unsealed dirt road to the historical Cowarra mine site.
The project area, comprising an area of 33km2, consists of the historic Cowarra gold mine and a number of nearby workings.
Commissioners Gold is farming into the project under an agreement with Capital Mining in which CGU is the project manager and will earn its initial 50% interest by spending $0.5 million on the Cowarra Project over 2½ years. CGU can earn up to 85% for an additional expenditure of $0.35 million.
Figure 2: Drilling at Cowarra Project (September 2011)
Source: CGU
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2.2 Historical Exploration and Production
Historical gold production in the Cowarra area includes 50,000 oz of gold up to 1921. From 1935 to 1942, BHP operated a 4-level underground mine on the Victoria Zone that produced almost 15,000 oz of gold from 55,000 tonnes of high-grade ore (average 8.5g/t Au).
The mine was then closed due to labour shortages and re-opened by Horizon Resources in 1984. Horizon produced an extra 19,000 oz of gold from 95,000 tonnes of ore (average 6.3g/t Au) from underground and small open cut mines up until closure in 1988.
EL 5939 was originally granted for two years in April 2002 to Atlas Resources P/L and was subsequently renewed for further 2-year periods. In 2009, Capital Mining exercised its option to acquire a 100% interest in EL 5939 from Atlas Resources and identified a number of regional prospects, generally indicated by the presence of historical exploration pits and shallow workings, within EL 5939 (Firestone Ridge and Back Creek) and within the magnetic corridor to the south of the Cowarra mine area.
Subsequent geological mapping and sampling programs completed by Capital Mining confirmed the presence of anomalous gold values.
In November 2010, Capital Mining announced a farm-in agreement with CGU, in order to accelerate the exploration of gold targets at Cowarra, as well as to test for extensions to the mineralisation at depth and to delineate drill targets in a narrow structural corridor which encloses the known mineralisation.
Table 3 on page 8 outlines a summary of the historical exploration and production at Cowarra.
2.3 Mineralisation
Gold mineralisation at Cowarra is open along strike and at length aver a large portion of the project area and is hosted by sulphide-rich lodes developed within a prominent shear structure that can be traced along strike for over 17 kilometres, which include at least five main sub- parallel shear zones multiply deformed Ordovician sediments traceable over a distance approximately 2.2 kilometres in the immediate vicinity of the Cowarra mine.
The shear zones vary from 150 metres to two kilometres in length and carry narrow, sinuous sulphide and quartz-sulphide veins in a system that extends over an area 3x1km at the Cowarra mine. Historic production from the mine was at relatively high grades of around 8g/t Au by BHP in the 1940's and 5-13g/t Au by Horizon Pacific Ltd in the 1980's.
Un-mined ore remains in some shoots and results from Atlas' drilling in 2004-5 were encouraging. These included:
6.5m @ 6.2g/t Au from 39 metres in CRC001 - Victoria Lode; 4.0m @ 5.6g/t Au from 41 metres in CRC003 - Victoria Lode; 5.0m @ 11.2g/t Au from 64 metres in CRC022 - Victoria Lode; 2.0m @ 14.4g/t Au from 8 metres in CRC007 - Princess Lode; 4.0m @ 10.8g/t Au from 69 metres in CRC029 - Democrat Lode.
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Table 3: Summary of Historical Exploration and Production at Cowarra Period Operator Ore Ore Grade Production Activities Undertaken Tonnage (g/t Au) (oz Au)
1860s - 1921 Various N/A 31.0 49,830 Likely a combination of alluvial and underground
1935 - 1942 BHP 54,971 8.3 14,589 Exploration resulted in development of a 4-level underground mine on Victoria Zone. Production commenced in 1940, mainly from 2-level, with limited stoping on 3-level. Gold recovered by both gravity and cyanidation; initial recovery of 78% increased to 93%.
1952 - 1984 Various Nil Nil Nil Mapping, geochemical sampling, ground geophysics and a number of feasibility studies were completed.
1984 - 1992 Horizon 95,000 6.3 19,305 50ktpa CIL plant constructed in 1986 Resources (after feasibility studies); Underground mining at BHP’s underground mine (re- opened), which ceased in 1988.
Exploration drilling (from surface and underground) on the Victoria zone and from surface on the Ambassador, Prime Minister and Vanderbilt zones.
1998 - 2005 Atlas Nil Nil Nil 32 RCP drill holes to evaluate the Victoria zone above1-level and also Resources along Princess zone. The drilling results from this program are the basis for the current resource estimates. Stream sediment sampling delineated a gold anomaly north of the mine, while a soil sampling survey delineated the Back Creek prospect south of the mine. Structural mapping and geophysical interpretation indicated several NW-trending cross cutting faults offsetting possible extensions of the Victoria and Princess zones.
Total Gold 83,535
Source: CGU Prospectus
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2.4 Resource Estimate
Capital Mining commissioned resource consultants Derwent Geoscience P/L to undertake an open pit resource estimate of the Victoria zone, based on previous fieldwork, historical mining (levels 1-4 underground plans and underground diamond drill holes) and drilling by Atlas. Of the 32 holes drilled by Atlas, 16 holes (with intercepts above the lower cut- off grade of 1g/t Au were utilised in the resource estimate.
The mineral resource estimation was completed in October 2009, returning total Inferred1 Resources of around 500,000 tonnes at an average grade of 2.3g/t Au (~37,000 oz of contained gold). The resulting resource has been subdivided as follows:
Victoria
B lode - 206,000t @ 2.2g/t Au C lode - 64,000t @ 2.1g/t Au F lode - 39,000t @ 2.3g/t Au X lode - 95,000t @ 2.5g/t Au
Princess Lode - 97,000t 2.4g/t Au
The Victoria zone mineralisation remains open along strike to the north and at depth, with further drill testing needed to evaluate the potential extensions to the zone.
Subsequent to the mineral resource estimation, Capital Mining completed five diamond drill holes in 2010, two each on the Victoria and Princess zones and one on the Ambassador zone, which has essentially confirmed the presence of high-grade gold mineralisation at each of the lode horizons. Reprocessed airborne magnetic data indicates the Cowarra lodes are located within a narrow, North-South trending magnetic corridor this is intersected by a number of SW trending structures, one of which passes directly underneath the Cowarra mine workings.
1 The resource was classified as Inferred due to the wide spacing of the available analytical data, the lack of down- hole surveys for the RC percussion drilling and poor definition of the location and volumes of stopes below 1-level. Commissioners Gold (CGU) Page 9 of 24
Figure 3: Outline of Prospects within Cowarra
Source: Capital Mining Ltd
2.5 Other Defined Prospects and Targets within EL 5939
Beyond the main Victoria line of lode (on which the Cowarra underground mine was established), several other nearby zones also hold potential for mineral resources, including the Princess, Democrat, Prime Minister and Vanderbilt zones. These deposits are the subject of planned drilling programs.
EL 5939 also contains exploration targets at Back Creek (gold anomaly in soils), Firestone Ridge (gold in rock chips) and the JMT prospect (gold anomalies in stream sediments and soils). Follow-up exploration Commissioners Gold (CGU) Page 10 of 24
programs will be undertaken on these prospects to define drilling targets.
2.5.1 Princess Zone
The Princess Zone is located immediately south and about 50 metres into the structural footwall of the C lode at Victoria. None of the drilling at Victoria extended far enough to intersect the Princess Zone, although one hole drilled by Capital Mining is interpreted to have possible intersected the Victoria lode above the Princess lode.
One hole drilled by Atlas on the northern side of this horizon returned an intercept of 9 metres @ 3.8g/t Au and a surface rock chip sample 40 metres to the north of the hole returned 2 metres @ 5.72g/t Au.
Given the proximity to Victoria, the Princess Zone is considered a high priority drill target.
2.5.2 Democrat Zone
The mineralisation at the Democrat Zone is interpreted to be open along a 400-metre strike length, with the zone not tested below a vertical depth of 60 metres. Historical production records indicate an average width of 0.9 metres and grades ranging between 4.7g/t Au and 6.2g/t Au. Two of the three RC percussion drilling holes drilled by Atlas along the strike length returned significant intercepts of 4 metres @ 10.83g/t Au and 5 metres @ 2.3g/t Au.
CGU plan to undertake an IP survey and further drill testing.
2.5.3 Vanderbilt Zone
The Vanderbilt zone has been identified over a 100-metre strike length and remains open to the north and at depth. Two of the three RC percussion drilling holes drilled by Atlas to evaluate the shallow potential returned significant intercepts of 5 metres @ 4.26g/t and 4 metres @ 2.13g/t; the third hole intersected a void and was abandoned due to high water inflows.
Although considered a low priority drill target by CGU due to its current short strike length, further detailed mapping and sampling is planned.
2.5.4 Back Creek Prospect
The Back Creek Prospect is located 2-3 kilometres south of the Cowarra mine and based on a gold-in-soil anomaly delineated by a previous explorer. Encouraging results from selected rock chip sampling include a float rock sample of sandstone yielding 0.53ppm Au and a 2 metre composite rock chip of altered sediment from an old prospecting trench returning 1.53ppm Au.
As the soil anomaly at Back Creek is characterised by very limited outcrop. Further exploration is likely to include a line of shallow rotary air blast or RC percussion drilling across the centre of the soil anomaly in order to clarify the geology.
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2.5.5 Firestone Ridge Prospect
Mapping and rock chip sampling by Capital Mining indicated the area is predominantly underlain by variably altered slate with two zones of mineralisation noted along the western and eastern margins of the corridor. Rock chip grab and channel samples collected from the Firestone Ridge (a 750m x 50m wide zone) yielded anomalous gold results. Of the 52 samples collected, 10 samples returned values of >1g/t Au, with the highest value of 18.3g/t Au obtained from a shallow pit located around 1.75 kilometres south of the Polar Star Prospect.
CGU are planning detailed exploration, including RC percussion drilling.
2.5.6 JMT Prospect
The JMT Prospect is located in the northern part of EL 5939. Surveys completed by Atlas returned peak values of 40.57ppb Au and 20.55ppb Au, respectively. A single rock chip sample of mineralised float yielded 6.63ppm. Follow up work includes grid soil and rock chip sampling.
2.6 Results from Recent Fieldwork
Results from a rock chip sampling program completed in the June 2011 quarter, which covered a 2.8 kilometre long strike segment of the well defined mineralised corridor to the north of the Cowarra mine, were particularly encouraging. Highest grades of 33.8g/t Au and 27.8g/t Au were obtained from quartz‐sulphide vein and gossan samples collected from the John Murray and Never Never groups of old workings, respectively.
In total, 105 samples were collected for analysis from old workings, spoil dumps and bedrock exposures at the Never Never, Ironclad and John Murray prospects. A high proportion of the samples (i.e. 28%) had in excess of 5g/t Au and a group of 39 anomalous samples from the John Murray’s workings, which averaged 8.1g/t Au, was highlighted as an area for follow up by drilling.
This work, undertaken in the northern part of the Cowarra exploration tenement, follows on from similar detailed mapping and sampling work which was completed in 2010 and which led to the generation of drill targets at the newly defined Firestone Ridge prospect in the southern part of the Exploration License.
2.7 Assessment of Future Processing Options
There are a number of factors underpinning the potential for Cowarra to accumulate a series of small proximal small-tonnage medium-to- high grade gold deposits that, combined, could form a medium-sized resource that would support a centrally-located processing facility.
1. Most of the drilling to date has targeted shallow mineralisation, with good potential for expansion of the Victoria mineralised lodes both along strike and at depth. 2. There is remaining higher-grade material within the previously- developed Cowarra underground mine that could be available for future extraction. 3. A number of unexplored zones are believed to be close to the Victoria zone with resource potential that warrant drill testing.
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The two main players alongside CGU’s Cowarra Project are Cortona Resources Ltd and Capital Mining Ltd and developments at both companies with respect to establishing processing facilities provide CGU with a couple of options in relation to their plan to build up their current resource to a scale that would justify a processing facility.
Option 1: Cortona Resources: Progressing towards Production at Dargues Reef Gold Project
In early September 2011, Cortona Resources announced that it received final approval from the NSW Planning Assessment Commission to develop the underground Dargues Reef Gold Project. The Dargues Reef Gold Project is located 60 kilometres east of Canberra and is in close proximity to CGU’s Cowarra Project.
Figure 4: Outline of Prospects within Cowarra
Source: Cortona Resources Ltd, Alpha Securities
Cortona Resources now has all the permits and key contractors in place for construction, mining and processing to enable for the project to be developed. Construction is set to commence in the 1st quarter of calendar 2012, with first production targeted before the end calendar 2012.
Once commissioned, the Dargues Reef operation is expected to produce at an initial 50,000 oz per annum, at a cash cost of around ~A$715/oz over an initial 6 years. The 330,000 tonnes per annum plant will be constructed under a fixed price contract with an attached bonus scheme for early delivery. The processing plant will be designed for +95% recoveries with ~50% of the gold expected to be recovered onsite via the gravity circuit. The remaining gold in concentrate is to be trucked around 400 kilometres to the nearby London Victoria gold mine near Parkes for further processing.
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Option 2: Capital Mining’s Plan for Open Cut Mining at Chakola
Capital Mining has established a significant gold, copper, silver, lead and zinc resource at its Harnett prospect within the Chakola project area, which is located only 20 kilometres from CGU’s Cowarra Project. (See Figure 5).
A proposal to develop a shallow open cut mine on the deposit with a 5- 7 year mine life has been prepared and an Environmental Impact Statement is under assessment.
Capital Mining has a current Development Application for the development of a gold and base metal mine at Chakola. In April 2011, Capital Mining received a 12-month extension from the Cooma‐Monaro Shire Council to this Development Application, which is allowing Capital Mining to carry out additional baseline environmental studies. In the June 2011 quarter, a leading industry consultancy was appointed to oversee the collection of the information required to supplement the EIS. Capital Mining is presently refining and upgrading both mine concept plans and community consultation.
Economic modeling of the Harnett deposit using its current resource estimate and updated cost estimate yielded positive NPV and IRR results.
Figure 5: Proximity of Chakola to Cowarra
Source: Capital Mining Ltd Commissioners Gold (CGU) Page 14 of 24
3. OBERON GOLD PROJECT – EL 7702
3.1 Overview
The Oberon Project covers an area of 23km2 and is located approximately 4 kilometres immediately north of the NSW central western town of Oberon. Access to Oberon from Bathurst (located approximately 50 kilometres NW of Oberon) and Sydney is by sealed highways. Within the project area, access is via a number of sealed public roads and a network of unsealed forestry and farm tracks.
The project area consists of a recently-granted license EL 7702 currently held by Central West Gold NL. CGU is earning a 70% interest in the project by funding exploration. The new Exploration License replaces the previous EL 6016, with additional units to the west and south of the main target, the Black Bullock prospect, located in the NE portion of EL 7702.
The additional units comprise a number of small historical gold workings, including Lucks-all Reef, Malloy’s Reef, Faugh-a-Ballah Reef and Lambert & Davis – and are all located adjacent to a regional N-NW trending fault zone, the Western Fault Zone.
Figure 6: Geological Plan for Oberon Project
Source: CGU Prospectus
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3.2 Historical Exploration and Production
Black Bullock has been tested for gold by previous drilling (mostly RC drilling) and IP surveys. Historical mining at Black Bullock is reported as producing approximately 4,700 tonnes @ 22g/t Au and 120g/t silver (Ag) between 1896 and 1905. Since the early 1980s, there has been detailed extensive exploration around and within the project area, mainly around the Black Bullock and Mt Gossan gold workings.
Exploration activities have included geological mapping, soil and rock chip sampling and IP surveys. Historical soil and rock chip sampling identified three priority targets, known as the Mine Zone, Trig Zone and West Ridge Zone (assumed to be the same as the North West Ridge Zone, which was one of six locations where several pits, shafts and adits have been developed).
Previous explorers , excluding Central West Gold NL, drilled 84 RC percussion holes and six diamond core holes, with numerous holes intersecting comparatively wide zones of anomalous gold (>0.20g/t Au) containing occasional narrow, but discountiuous, intervals (> 1g/t Au).
3.3 Recent Exploration and Future Potential
Exploration by Central West Gold NL consisted of assessment and re- interpretation of all available data generated by prior exploration. This process identified two main zones of interest:
1. The Eastern Zone, containing the Black Bullock workings and the Trig area of mineralisation and 2. The Western Zone, containing the Mt Gossan and North West Ridge area of mine workings.
Follow-up work included detailed mapping, rock chip sampling, reprocessing and remodeling of the available IP data and the drilling of four RC percussion holes. CGU also completed in 2010 (as part of its JV commitment) three RC percussion holes to further evaluate the known areas of mineralisation. While the drilling did not intersect any significant results, the overall planned drilling program was not completed, as a 6-hole program was planned. A fourth hole was abandoned because of drill availability difficulties.
Accordingly, the Black Bullock prospect has not been comprehensively evaluated, with a number of other prospects within the project area requiring exploration. Additional work by CGU to fully evaluate Black Bullock is likely to include:
Completion of the originally-planned drilling program undertaken in 2010 (i.e. a further two holes) to test the western IP anomaly.
Detailed structural mapping (not yet been undertaken to date), with a view to defining further drilling targets.
Soil sampling programs to test for mineralisation along strike and to the west of the Black Bullock zone. Mapping associated with the sampling programs is likely to be concentrated along the N-NW trending Western Fault Zone that appears to have a close relationship with a number of the historical gold occurrences in the area.
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Both the North West Ridge and Trig zones are open along strike. The possible continuation of the North West Ridge zone has not been drilled. In addition, the Central zone of IP anomalism has been intersected by only two holes and the SE zone of anomalism (which is highly conductive) has not yet been drilled.
Extending the IP survey and carry out drilling to delineate resources.
Figure 7: Geological Plan for Oberon Project
Source: CGU Prospectus
4. DALTON GOLD PROJECT – EL 6922
4.1 Overview
The Dalton Project (EL 6922) is located immediately adjacent to the village of Dalton, approximately 50 kilometres west of Goulburn in central NSW. The historical Coronation and Dalton group of gold workings occur along the flank of a prominent N-S trending ridge crest that does not appear to be used for farming purposes.
The project area is readily accessible by sealed public roads, with a number of unsealed tracks provided access within the project area. Some parts of the project require four wheel drive vehicles in order to gain access.
The majority, possibly all, of the historical gold workings within EL 6922, which represent the priority exploration targets for CGU are on private land and not subject to a Native Title Claim that cover 42% of EL 6922.
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Prior exploration indicates the known gold mineralisation, which is closely associated with regionally northerly-trending structures, has a positive correlation with anomalous values of arsenic. Known gold mineralisation within EL 6922 is associated with distinct, narrow shear zones. The presence of significant sulphides associated with the gold mineralisation indicates that detailed geophysical surveys may be useful in locating non-outcropping extensions to the known lodes.
4.2 Historical Exploration and Production
Three groups of workings occur with EL 6922: the Jerrawa Creek Group in the west, the Dalton Group in the southern central portion of the tenement and the Coronation Group in the central eastern portion of the tenement. Production records are available; however these were likely incomplete as the mines are understood to have ceased operations due to a number of factors.
Earlier exploration, partly focused on the base metal potential of the area, involved regional geophysical and geochemical surveys as well as regional mapping. Prior gold exploration over EL 6922 included:
From 1970 to 1971, Waitovu Investments P/L (in a JV with Horizon Exploration Ltd) explored EL 369 for base metals and gold mainly utilising airborne geophysical surveying and regional mapping. The three mines in the Coronation Group (Coronation, Budget and Big Mines) were considered noteworthy on the basis of historical production.
From 1983 to 1986, Nationwide Resources P/L (in a JV with Nicron Resources and Petrocarb Exploration NL) undertaook detailed gold exploration on the Coronation Group of mines, including detailed mapping, grid soil geochemical sampling, some rock chip sampling and percussion drilling.
Detailed mapping and sampling undertaken in 1988 by a consultant at the Dalton Mine.
4.3 Recent Exploration
CGU acquired EL 6922 in October 2007 and subsequently renewed the tenement in October 2009 for approximately 50% of its original size. The historical mine workings are still contained within the reduced tenement. Limited rock chip sampling along the Dalton line of workings in 2009 collected 20 samples, four of which yielded gold values above 1g/t Au. The highest gold value obtained was 29.3g/t Au.
During 2010, CGU completed soil geochemical programs, with associated geological mapping, over three areas within EL 6922. The surveys were undertaken using an X-ray Flourescent (XRF) analyser along E-W orientated soil line spaced 200 metres apart, with station intervals of 100 metres along the lines. The XRF geochemical program confirmed the anomalous gold associated with the Dalton line extends over a strike length of over 800 metres, possibly extending to the Coronation Group.
CGU plan to undertake further exploration of this zone (likely to include detailed mapping, rock chip and soil sampling and ground geophysics) in order to identify a number of small, high-grade deposits that would form the basis of small-scale open cut mining operation that could supply a central processing plant. Commissioners Gold (CGU) Page 18 of 24
Figure 8: Geological Plan for Dalton Project
Source: CGU Prospectus
Commissioners Gold (CGU) Page 19 of 24
5. MONGARLOWE-CORANG PROJECT – EL 6921
This project is located approximately 230 kilometres SW of Sydney and about 40 kilometres SE of Goulburn and consists of two non- contiguous granted exploration licenses: EL 6919 (Mongarlowe) and EL 6921 (Corang). Previous mining and exploration within the Mongarlowe-Corang project area has been predominantly focused on the numerous occurrences of alluvial gold accumulations. It should also be noted that the Mongarlowe Project is only 10km from the highly prospective Majors Creek Goldfield (see Figure 9).
A number of quartz vein-hosted gold occurrences (Highlighted in Figure 9) are known from within the current project tenements largely in two areas:
1. The Southern Group, comprising the Rise and Shine, Alma May and Day Dawn group of mines within EL 6919 and 2. The Northern Group, comprising the Mantons, Jasper Valley and Kangaroo Reefs area in the northern portion of EL 6921.
Figure 9: Geological Plan for Mongarlow-Corang Project
Source: CGU Prospectus Commissioners Gold (CGU) Page 20 of 24
Exploration to date has been limited to EL 6919 and involved an RF soil sampling program over possible extensions of the Rise and Shine lode system. Historical records indicate that mineralisation at Rise and Shine is closely associated with moderate-to-high levels of arsenic. Arsenic levels determined by XRF analysis can be used as a pathfinder indicator to gold mineralisation and have found several discrete anomalies outlined over a NE strike length of around 800 metres.
Accordingly, CGU are likely to continue the XRF soil program, along with mapping and a ground electromagnetic survey in the Rise and Shine region in order to identify and refine drilling targets.
6. MUTTAMA PROJECT – EL 6920
The Muttama project, located around 18 kilometres SE of Cootamundra in NSW consists of a single exploration license, EL 6920. Access to the project area by vehicle is available from Cootamundra and Gundagai by a combination of sealed and gravel public roads and by unsealed farm tracks within the tenement.
The license area includes the historic Muttuma goldfield, and is located between Cortona Resources’ Christmas Gift and Booths Reward projects. Cortona have reported significant gold intersections from exploration surrounding Booths Reward workings in 2005/2006, including:
1 metre @ 97.35g/t Au from 142 metres, 0.6 metres @ 27.6g/t Au from 121 metres and 3 metres @ 9.1g/t Au from 69 metres.
Cortona have also reported significant RC drill intersections at Christmas Gift, including:
7 metres @ 7.97g/t Au from 55 metres, 5 metres @ 4.33g/t Au from 66 metres and 8 metres @ 6.9g/t Au.
To date, the only work undertaken by CGU in the Muttuma area consists of a review of the historical exploration data, with particular emphasis results for geochemical surveys undertaken by previous explorers; liaison and access negotiation with land owners and some very limited rock chip sampling during a recent site visit.
Follow up work by CGU is likely to involve data interpretation with a view to identifying structural zones representing targets for more detailed evaluation by ground follow-up geophysical and geochemical surveys.
Commissioners Gold (CGU) Page 21 of 24
Figure 10: Geological Plan for Muttama Project
Source: CGU Prospectus
Commissioners Gold (CGU) Page 22 of 24
7. BOARD OF DIRECTORS
INTEREST DIRECTOR BACKGROUND IN CGU
Mr Battye provided the impetus in founding Commissioners Gold Limited in 2005, being instrumental in identifying the company’s key project acquisitions, with the assistance of Geo's Mining.
Christopher Battye 8m ord shares Since being admitted as a Solicitor in 1984, Mr Battye Executive Chairman has worked for a major CBD law firm, as well as regionally in Bathurst and Ballina. In the late 1980s, he purchased one of Sydney's oldest practices, transforming it into a low cost high volume retail conveyancing business with five outlets, a model he has repeated at Chatswood, NSW (The Conveyancing Shop).
Mr McCauley was appointed Managing Director of Commissioners Gold Limited in February 2011. He was 800,000 ord shares the founding CEO (2006-2010) of Capital Mining Unlisted options: Limited and was instrumental in Capital Mining’s 750,000 @ 25c exp successful capital raising and debut on the ASX in 31 Dec 2013 March 2007. He is currently a Non Executive Director Robert McCauley 750,000 @ 30c exp of Capital Mining.
Managing Director 31 Dec 2015 Mr McCauley is a Chartered Surveyor and Management (Both options Consultant with over 30 years experience in the restricted until mining, engineering and construction industries with 2 September 2013) companies such as Worsley Alumina Pty Ltd, Sir Alexander Gibb & Partners, BHP Ltd and Boral Limited. Projects include Boddington Gold Mine(WA); Monasavu Hydro Electric Scheme, Fiji and the North West Shelf Liquefied Natural Gas Project (WA).
Mr Harder is a former gold analyst with Jackson Ltd Stockbrokers and has also worked as a gold, mining and Resource Analyst with stockbrokers Ord Minnett and Frank Renouf. He has also worked as a field exploration geologist for some 15 years in Australia 450,000 ord shares and its near neighbours including Sumatra, Irian Jaya (200,000 ord in Indonesia, New Britain and mainland Papua New Wesley Harder shares under Guinea, Solomon Islands and Fiji. Non Exec Director escrow for 24 His work in Australia has included searching for a months) range of mineral commodities including gold, copper, uranium and coal for major companies such as Placer Prospecting, Newmont Mining Inc., and Pancontinental Mining Limited. He was a founding Director and CEO of Zinico Resources NL and its successors for a period of seven years and has conducted his own consultancy firm for many years.
Mr Waring has over 30 years experience in financial accounting and company secretarial roles, principally in the resources industry. He is a company secretary Robert Waring 30,000 ord shares for several public companies listed on the ASX and was Non Exec Director a director of an ASX-listed exploration company for 15 years. Robert has specialist skills in the preparation of company prospectuses, due diligence work and financial assessment of projects and companies.
Commissioners Gold (CGU) Page 23 of 24
DIRECTORY – ALPHA SECURITIES
Corporate George Karantzias [email protected] 0401 670 620
Research Analyst John Haddad [email protected] 0407 219 222
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