Underground Mining Operations with Sustainable Gold Output
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2003 ANNUAL REPORT 2003 ANNUAL PERSEVERANCE Underground mining operations with sustainable gold output, profitability and life CORPORATE DIRECTORY 2003 ANNUAL REPORT DIRECTORS John Charles Quinn – Executive Chairman Christopher Linden Roberts - Exploration & Development Rodney John Robinson Robin John George SECRETARY Martin William Bouwmeester EXECUTIVE GENERAL MANAGER AUDITORS Graeme John Sloan Ernst & Young 120 Collins Street Melbourne Vic 3000 REGISTERED & CORPORATE OFFICE McCormicks Road Fosterville Vic 3557 BANKERS Telephone: (03) 5439 7244 National Australia Bank Facsimile: (03) 5439 7281 Cnr Queen & Mitchell Streets Email: [email protected] Bendigo Vic 3550 Web Site: www.perseverance.com.au SOLICITORS FOSTERVILLE MINE Clayton Utz McCormicks Road 333 Collins Street Fosterville Vic 3557 Melbourne Vic 3000 Telephone: (03) 5439 7244 Facsimile: (03) 5439 7281 SHARE REGISTRAR Email: [email protected] Computershare Registry Services Central Plaza One 345 Queen Street Brisbane Qld 4000 SECURITIES QUOTED Australian Stock Exchange Limited Home Exchange - Melbourne ASX Code - PSV life and gold with with output, output, mining operations sustainable sustainable profitability profitability Underground Underground PERSEVERANCE 2003 ANNUAL REPORT CONTENTS Year at a Glance 2 Chairman’s Statement 3 Fosterville Gold Project 4 Ore Reserves and Mineral Resources Statement 8 Sustainability 11 Schedule of Tenements 12 Corporate 13 Directors’ Report 16 Corporate Governance Statement 20 Independent Audit Report 21 Statement of Financial Position 23 Statement of Financial Performance 24 Statement of Cash Flows 25 Notes to the Financial Statements 26 Directors’ Declaration 46 Shareholder Information 47 Perseverance Corporation Limited and its Controlled Entities A.B.N. 13 010 650 049 Printed on 100% Recycled Paper PERSEVERANCE 2003 ANNUAL REPORT PAGE 1 life and gold with with output, output, mining operations sustainable sustainable profitability profitability Underground Underground YEAR AT A GLANCE PROJECT FOSTERVILLE GOLD PROJECT DEVELOPMENT IN VICTORIA PRINCIPAL EXPLORATION ACTIVITIES RESOURCE DRILLING OF THE CENTRAL AREA OF THE FOSTERVILLE MINING LEASE AND FEASIBILITY STUDIES RESOURCES 1.84 MOZ CENTRAL AREA RESOURCE AT 4.5 G/T AU MINING RESERVES 0.91 MOZ CENTRAL AREA RESERVE AT 4.7 G/T AU BANKABLE FEASIBILITY STUDY OUTCOMES INTEGRATED OPEN CUT UNDERGROUND MINE 110,000 OZ PA AVERAGE PRODUCTION 7.5 YEAR INITIAL RESERVE MINE LIFE WITH ADDITIONAL RESOURCES $321/OZ PRODUCTION CASH COSTS STARTUP CAPEX $75M PROJECT DEVELOPMENTS GOLD FIELDS LIMITED BIOX® PROCESS SELECTED MINING AND TREATMENT STUDIES COMPLETED NEW MINERALISED SHOOTS IDENTIFIED WIDESPREAD SULPHIDE MINERALISED SYSTEM CONFIRMED FUNDS RAISED $2.2M AUGUST 2002 ON EXERCISE OF OPTIONS $3.7M OCTOBER 2002 BY PLACEMENT ENVIRONMENT & REHABILITATION COMPREHENSIVE SITE MONITORING WITHOUT ISSUES 40 HECTARES OF LANDFORMING AND PLANTING WITH OVER 16,000 NATIVE PLANTS OH&S UPGRADED SAFETY PROGRAMME WEEKLY SHARE PRICE 01/07/02 - 30/06/03 SHARE PRICE DATE PAGE 2 PERSEVERANCE 2003 ANNUAL REPORT life and gold with with output, output, mining operations sustainable sustainable profitability profitability Underground Underground PERSEVERANCE 2003 ANNUAL REPORT CHAIRMAN’S STATEMENT Fellow Shareholders, Gold production is expected to average structures within the principal mining As foreshadowed in my Statement last in excess of 110,000 ozs per annum at lease. The remaining 85% of these fault year, your Board raised $3.74M by The year just completed has been one of a weighted average cash cost of $321 structures are geologically similar to the means of a placement of 27.7M ordinary exciting times and significant achievement per ounce over the initial mine life. area tested to date and have for the Company and its shareholders. fully paid shares at 13.5 cents per share We remain very confident that we can comparable gold endowments in the in October 2002. These funds, most of In the first half of the year we completed materially extend resources and mine oxide horizon. It is instructive that which had been expended by the date of an important in-fill drilling programme, life when financial resources permit with recent interrogation of the drilling data this report, were essential to enable the which resulted in a revised high grade obvious benefits to the total cost of gold base generated during the oxide mining Company to maintain the momentum of sulphide resource estimate of 6.05 production per ounce. phase has disclosed tangible evidence the Fosterville Sulphide Project. Funding million tonnes grading 5.9 grams of of high grade sulphide intersections The Board has determined that the remains a priority issue for the Board, gold per tonne containing 1.15 million which have never been followed up Bankable Feasibility Study indicates which is determined to put Perseverance ounces. This resource was published with systematic exploration. We are also that a viable mining operation can be on a sustainable financial footing. in January this year. The in-fill drilling mindful that the Exploration Licence, established at Fosterville and is currently program added 31% to our gold inventory which surrounds the mining lease, has We were fortunate to secure the services engaged in discussions on appropriate without any compromise in grade. similar structures carrying gold in both of Mr Graeme Sloan in December 2002. funding arrangements with prospective the oxide and sulphide horizons. Graeme, a mining engineer with 30 Concurrent with the infill drilling, financiers. years experience, was recruited from we accelerated and extended the It is my personal conviction that Whilst the Company’s financial resources AurionGold where he was General metallurgical testing program with Perseverance has only just scratched did not permit the maintenance of a Manager of the Henty Gold Mine in emphasis on comparing alternative the surface at Fosterville and that an significant exploration program in the Tasmania. He assumed responsibility oxidation processes, which are the adequately funded and persistent second half of the fiscal year, the work for the Company’s feasibility activities cornerstone of refractory ore treatment. exploration program will greatly reward that was possible continues to point to and will lead the proposed Fosterville After detailed analysis, the Company shareholders. decided upon the well proven Gold the potential for Fosterville to become development and mining operations. Fields Limited BIOX® technology. a world class goldfield. The Company has also made notable He has been ably supported by the progress on a number of other fronts in A licence agreement was negotiated We were successful in extending the small but dedicated staff, who continue the last year. The oxide heaps continued entitling Perseverance to use this Phoenix orebody some 400 metres down to deliver quality outcomes with limited to produce small amounts of gold during technology and securing Gold Fields’ plunge from the limits of the January financial resources. the year. The Company discontinued technical support. Resource model. The Phoenix remains cyanide addition in September 2002, but Your Board’s attention is now firmly A Preliminary Feasibility Study of a open down plunge and in time, further continued to irrigate the heaps to flush focussed on securing a financial mine development concept was also drilling will be required to follow this residual reagents and salts from the package which balances the immediate completed in January. This study gave prolific ore zone. Limited initial drilling system. Records suggest that a requirement of financing the proposed sufficient encouragement for your Board has pointed to a new shoot, dubbed the significant amount of gold at low grades Fosterville mine development and our to commit to a full scale Bankable Condor, south of the Daley’s Hill oxide is retained in these heaps and determination to maintain the Feasibility Study, which was completed pit. This area also cries out for more consideration continues to be given as momentum of drill testing this very at the end of August. drilling. to means by which some of this metal important mineral field. Central to our The Bankable Feasibility Study was Within the Central Area, there is might be economically recovered. deliberations is maximising the value predicated on an initial mineable reserve evidence that the Ellesmere ore body of your investment in this Company. Rehabilitation of areas disturbed during of 6.1 million tonnes of ore at a grade of extends for at least 350 metres beyond We anticipate that we will be in a oxide mining operations continued. 4.7 g/t Au containing 910,000 ounces the present resource shell. The Harrier position to elaborate on progress of this Notwithstanding the severe drought of gold. This mineable reserve together Shoot, which is located very close to the essential next stage of your Company’s conditions, we were pleased with the with inferred resources yet to be drilled proposed underground mine portal, is survival and growth rates of the more progress by the time of the Annual to reserve standard, indicates a mine life a priority target and we are optimistic than 16,000 seedlings planted in 2002. General Meeting. approaching ten years. about the Kestrel structure, which lies below the Phoenix shoot and plan to Contracts have now been entered into Sincerely, The Study proposes an integrated open drill this shoot when funds permit. for the disposal of non-core assets and pit and underground