mandalay resources corporation | costerfield mine

mandalay resources corporation | costerfield mine

The Costerfield operation is located in Victoria, Australia, within the Costerfield mining district, approximately 10 km northeast of the town of Heathcote, Victoria. Purchased in 2009, Mandalay Resources immediately restarted capital development and mining. By 2013, through extensive improvements and investments in mining and processing methods, the processing plant's capacity was expanded to approximately 13,000 tonnes per month from 5,000.

The Augusta mine has been operational since 2006 and was the sole ore source for the Brunswick processing plant until December 2013, when ore production started from the Cuffley deposit located approximately 500 m to the north of the Augusta mine workings. The Brunswick deposit is being mined in conjunction with the Youle deposit, which produced its first ore in August 2019. Mandalay Resources expects Youle to be the sole ore source by the third quarter of 2020.

The mining method employed is long-hole stoping with cemented rock fill. Ore is accessed by a primary spiral ramp. Level spacing is at 10 m centers and horizontal development is advanced in a minimum of 1.8 m wide drives in both directions of the deposit. Levels are then mined out on retreat with long hole stopes drilled to a minimum width of approximately 1.5 m. The stopes are subsequently backfilled with cemented rock fill to supply stability, reduce dilution, and allow for mining above and below developed levels.

Ore is trucked on the surface from the Augusta mine portal to the Brunswick processing plant, where it is stockpiled and blended into the processing circuit. Costerfield is currently planning a second mine portal at Brunswick. The circuit includes primary mobile crusher, primary and secondary ball mills, rougher, scavenger, cleaner flotation, gravity circuit, and filtering. Gravity gold concentrate is sold to a refinery in Melbourne, Victoria, and gold-antimony flotation concentrate is trucked to the port of Melbourne and shipped to a smelter in China.

The Costerfield gold-antimony vein district, of which the Augusta Lodes are part, is located on the northern end of the Darraweit Guim Province. Stratigraphy in this area comprises a thick sequence of Lower Silurian to Lower Devonian shelf and flysch sedimentary rocks, dominated by turbiditic siltstone, with minor sandstone and argillite. These rocks form the Murrindindi Supergroup. At the base of the Supergroup is the Costerfield Formation, which is conformably overlain by the Wappentake (sandstone/siltstone) and Dargile (mudstone) Formations, the McIvor Sandstone and the Mount Ida Formation (sandstone/mudstone).

The gold-antimony veins in the Costerfield district are hosted within the Silurian Costerfield Siltstone unit. Within the district, four north-northwest trending zones of mineralization have been identified. They are, from the west:

Veins at Costerfield typically comprise quartz (laminated to brecciated) and sulphides. The dominant sulphide mineral is stibnite (Sb2S3). In addition to stibnite, arsenopyrite and pyrite occur in minor amounts.

Ore shoots in the veins are typically 0.25 1.0m thick and extend for 200m or more along strike. They are typically displaced by flat faults so that they appear flat-bottomed. However, as with the Cuffley Lode, the Company is having success finding the offset parts of ore shoots below the flat faults; the deepest intercept in the district, approximately 500m below surface in the Cuffley Lode, is also one of the highest-grade intercepts.

The Brunswick vein lies approximately 600 m northwest of the northernmost point of the Cuffley Lode. The lode is sub-vertical and occurs over a strike length of approximately 450 m, with a down-dip extent of approximately 200 m and an average true thickness of approximately 1.28 m. Exploration drilling has identified mineralization to the south and at depth below the known Brunswick Lode. Mineralization is broken into two zones of mineralization below the Brunswick Lode, called the P-K domain and Brunswick Deeps. The P-K domain is capped by the shallow west-dipping Penguin Fault, and extends to the Kiwi Fault. The Brunswick Deeps zone is defined by the west-dipping Kiwi Fault and Adder Fault. Similar in nature to Cuffley and N-Lodes, the mineralization in the two domains is generally confined to sub-vertical quartzstibnite veins.

The Youle deposit extends below the historical Costerfield, Minerva and Bombay group of mines located approximately 1.2 km northeast of Brunswick. Mineralization was identified in 2011, in drill hole MB012, which struck the down-dip continuation of the vertical Kendall Lode, offset westward over the west-dipping No. 3 thrust fault. In 2016, drill hole BC006W1 revealed the existence of a high-grade northnorthwest striking, west-dipping lode structure, Youle. The Youle Lode dips at a shallower angle to the mineralized lodes in Augusta and Cuffley and has been identified as the down-dip continuation of the vertical Kendall Lode offset westward over the west-dipping No.5 thrust fault.

Youle has thus far demonstrated consistent structural and grade continuity over much of its extent. The Youle Lode has a strike length of 600 m (width of 150 m) and ranges in true thickness between 0.16 m and 1.37 m. Similar to the Augusta and Brunswick Lodes, mineralization is confined to quartzstibnite veins.

At Costerfield, Youle depth extension drilling was ongoing throughout Q4 2020 and will continue through 2021. Drilling also focused on the extension of the Minerva veining that sits above Youle. Two drill programs at the Browns prospect commenced following results from previous drilling (see press release dated June 22, 2020). The Swallowtail program is exploring a Youle style environment below the Browns historic mine and the Bogong program is investigating a parallel mineralized horizon. These programs will continue into Q1 2021. As well as the continuing programs, drilling of the Cuffley Deeps Resource and the underlaying Fox Fault prospect are due to commence in Q1 2021.

As at December 31, 2020, Mandalays total Proven and Probable Mineral Reserves totalled 799,000 ounces of gold and 21,900 tonnes of antimony, compared to 752,000 ounces of gold and 17,800 tonnes of antimony at yearend 2019, a 6% and 12% increase, respectively year-on-year. These Mineral Reserves were added at an exploration cost of $23.24 per gold equivalent ounce.

Chris Davis, Vice President of Operational Geology and Exploration at Mandalay Resources, is a Charted Professional of the Australian Institute of Mining and Metallurgy (MAusIMM CP(Geo)), and a Qualified Person as defined by NI 43-101.

The Mineral Resource estimate was carried out under the supervision of Danny Kentwell, FAusIMM, an employee of SRK Consulting and independent of Mandalay. He is a Qualified Person for the purpose of National Instrument 43-101. The Mineral Reserve estimate was carried out under the supervision of Anne-Marie Ebbels, MAusIMM CP(Mining), an employee of SRK Consulting and independent of Mandalay. She is a Qualified Person for the purposes of NI 43-101.

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