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Report on Activities for the Quarter ended 30 June 2005
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HIGHLIGHTS
- Beaconsfield Gold will receive $6.3 million from an agreed settlement by professional indemnity insurer.
- Beaconsfield Gold had $6.8 million in effective cash at 30 June 2005, excluding insurance settlement.
- Beaconsfield Mine Joint Venture (BMJV) gold production for the 2004/05 year was 125,795 ounces from record annual mill throughput of 240,685 tonnes at an average head grade of 17.0 g/t gold and a near-record average gold recovery of 95.8%.
- BMJV gold production for the quarter was 26,865 ounces (29,219 ounces previous quarter). 55,604 tonnes of ore were milled (64,325 tonnes previous quarter) at an average head grade of 15.6 g/t gold (14.9 g/t previous quarter). Ore supply continued to be affected by stope sequencing underground resulting in a shortage of available high tonnage, high grade stopes, particularly during April. This position turned around in June and improved production has carried into July.
- BMJV direct operating expenditure per tonne milled was A$201 per ounce (A$166 previous quarter). Direct operating expenditure was A$417 per ounce (A$366 previous quarter) versus gold revenue for Beaconsfield Gold of A$576 per ounce (A$569 per ounce previous quarter). Higher unit costs mainly reflect lower production from a largely fixed cost operation.
- Beaconsfield Gold cash flow from its 48.49 % direct interest in the BMJV was $1.1 million for the quarter ($2.1 million previous quarter) and $8.5 million for the 2004/05 year.
- BMJV resources at 30 June 2005 were estimated at 936,000 tonnes at 16.4 g/t for 495,000 ounces of gold. Reserves total 605,000 tonnes at 14.7 g/t for 285,000 ounces.
- An extensive RC drilling program that commenced late in the quarter at Beaconsfield Gold's wholly owned North Pease Creek property, 4 km north-west of the Beaconsfield Mine, is continuing. Assay results are awaited.
- Beaconsfield Gold has secured an option to acquire 100% of the 370 sq km polymetallic Stavely property in western Victoria that has excellent already defined gold and polymetallic targets.
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SUMMARY OF KEY PERFORMANCE INDICATORS FOR
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12 MONTHS ENDING 30 JUNE 2005
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BEACONSFIELD MINE JOINT VENTURE
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239,373 tonnes
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240,685 tonnes
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17.0 g/t gold
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131,434 ounces
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- Gold Recovery (excluding changes in gold in circuit)
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95.8 %
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125,795 ounces
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65,699 ounces
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- Bacterial Oxidation Leach Gold Produced
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60,096 ounces
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- % of Gold Produced by Gravity Means
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52 %
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- Direct Operating Expenditure:
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$43.9 million
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$182/tonne milled
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$349/ounce produced
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- Capital Expenditure (including ore reserve drilling):
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$9.0 million
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$37/tonne milled
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$71/ounce produced
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- Direct Operating plus Capital Expenditure:
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$52.9 million
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$219/tonne milled
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$420/ounce produced
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- Effective BMJV Cash at 30 June 2005
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$3.7 million
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BEACONSFIELD GOLD NL (48.49% DIRECT INTEREST)
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60,998 ounces
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$34.1 million
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$559/ounce produced
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- Share Direct Operating plus Capital Expenditure
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$25.6 million
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- Cash Flow before corporate costs:
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$8.5 million
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$139/ounce produced
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- Total Effective Cash at 30 June 2005
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$6.8 million *
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- Convertible Notes (0.667 million at $0.30 each)
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$0.2 million
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* Total Effective Cash includes $1.1 million proceeds of 30 June gold delivery received early July and $1.8 million cash advanced to the BMJV but excludes pending cash ($3.15 million) from the in-principle settlement with the BBR insurer.
1. BEACONSFIELD MINE JOINT VENTURE (BMJV)
(Beaconsfield Gold Direct Interest 48.49%)
The participants in the unincorporated BMJV, which operates the Beaconsfield Mine at Beaconsfield in north-east Tasmania, are the Allstate group with a 51.51% interest and the Beaconsfield Gold group with a 48.49% interest. Allstate is Manager of the BMJV, and the BMJV Mine Manager and all personnel reporting to him are employed by Allstate.
Joint Administrators were appointed to Allstate on 8 June 2001 and became Joint Deed Administrators when Allstate creditors approved a Deed of Company Arrangement in late 2001.
1.1 OPERATING PERFORMANCE
Gold production from the Beaconsfield Mine was 26,865 ounces, 8% less than for the March 2005 quarter (29,219 ounces). Despite a 5% improvement in milled head grade, ore supply continued to be affected by stope sequencing underground, which resulted in a shortage of available high productivity stopes, particularly in April. This position was turned around in June, and improved production has continued into July.
Advance for the mine access decline totalled 142 metres, with the decline face at a depth below surface of 1,070 metres at 30 June 2005. The decline/waste development layout and the modified ½ Upper/Avoca mining method continues to provide benefits to the operation.
51,434 tonnes of ore grading 16.9 g/t gold were mined during the quarter (March quarter 2005: 52,954 tonnes at 17.2 g/t).
Production Summary
The Hart shaft continues to perform well with 56,548 tonnes of ore and 620 tonnes of waste (total material 57,168 tonnes) hoisted during the June quarter. A further 32,255 tonnes of waste rock were utilised underground as stope backfill during the quarter. The high rate of waste rock backfill placed was a reflection of the stope sequencing requirement during the quarter. Significant haulage efficiencies and savings are achieved by utilising mine waste rock as backfill.
55,604 tonnes of ore grading 15.6 g/t gold were milled (March 2005 quarter: 64,325 tonnes at 14.9 g/t) to produce 26,865 ounces of gold. Lower throughput was the result of lower ore supply from the mine due to stope sequencing problems in the first half of the quarter. 823 ounces were recovered from the reprocessing of stored leach tails material. Recovery to bullion was 96.6%.
1.2 EXPENDITURE
Operating, Capital and Total Cash Expenditure
Direct operating expenditure was $11.202 million, 4.6% higher than for the March 2005 quarter ($10.705 million). In terms of cost per tonne milled, the June 2005 quarter figure of $201 per tonne was 21% higher than the March 2005 quarter figure of $166 per tonne, due principally to the 14% lower mill throughput in the June quarter.
Capital expenditure was $2.532 million (March 2005 quarter: $1.995 million). The main abnormal capital expenditure activity continued to be the extensive ore reserve diamond drilling program, which made up 28% of the capital costs for the quarter.
1.3 UNDERGROUND DRILLING OF THE TASMANIA REEF
The current underground diamond drilling program (F series) commenced in December 2003 and is expected to be completed in October 2005. Assay results received during the June quarter, which have not previously been reported, are detailed below.
Further to the above, the following are one-off intercepts during the quarter of mineralisation that cannot yet be related to any other identified structures in the mine:
Drilling continued from both Middle East Trevor cuddies in the hangingwall on the 870 metre level, targeting the Tasmania Reef in the 840E Zone, the F21 Zone and the Deep Zone below F21.
A total of 5,435 metres were drilled during the June quarter, bringing total drilling to date to approximately 28,000 metres.
The attached long section shows the location of the three zones targeted by underground drilling during the quarter
1.4 ORE RESERVES / RESOURCES
1.4.1 As at 30 June 2005
The reserves and resources for the Tasmania Reef as at 30 June 2005 have been estimated by Allstate as Manager of the BMJV.
Ore Reserve
Proved Reserve
Probable Reserve
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213,000 tonnes @ 17.7 g/t Au
392,000 tonnes @ 13.1 g/t Au
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(121,000 ounces contained gold)
(164,000 ounces contained gold) |
| Total Reserve |
605,000 tonnes @ 14.7 g/t Au |
(285,000 ounces contained gold)
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Identified Mineral Resource (including Ore Reserve)
Measured Resource
Indicated Resource
Inferred Resource
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159,000 tonnes @ 25.4 g/t Au
477,000 tonnes @ 17.8 g/t Au
300,000 tonnes @ 9.6 g/t Au |
(130,000 ounces contained gold)
(272,000 ounces contained gold)
( 93,000 ounces contained gold) |
| Total Resource |
936,000 tonnes @ 16.4 g/t Au |
(495,000 ounces contained gold)
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The Proved and Probable Reserves were estimated from the Measured and Indicated Resources, but exclude 158,000 tonnes at 17.0 g/t gold (86,000 ounces contained gold) contained in the F21 Zone. Completion of drilling in the F21 Zone has led to the Tasmania Reef and Eastern Hangingwall Reef in this zone being reported in the Indicated Resource category. However, the level of mine planning and economic consideration necessary to allow these resources to be elevated to the Ore Reserve category has not been completed.
After allowances had been made for mine design parameters and cut-off grade (6 g/t gold), the in-situ ore grade was reduced from 20.6 g/t gold to the diluted reserve grade of 14.7 g/t gold (a reduction of 5.9 g/t or 29%).
1.4.2 Reconciliation between 31 December 2004 and 30 June 2005 Ore Reserves
Total gold milled in the six months to 30 June 2005 was estimated to be 58,534 ounces. Subtracting this total from the ore reserves at 31 December 2004 (377,000 ounces) gives 318,466 ounces.
As the ore reserves at 30 June 2005 were 285,000 ounces, there was a net decrease in ore reserves over the six months, allowing for mining depletion, of approximately 33,466 ounces. As noted above, the updated reserves contain no allowance for the F21 Zone which has been estimated by Allstate to currently have an Indicated Resource of 86,000 ounces contained gold.
1.4.3 Resources Additional to Reserves
At 31 December 2004, resources additional to reserves for the Tasmania Reef were 296,000 tonnes at 12.8 g/t gold, containing 121,000 ounces of gold. At 30 June 2005, resources additional to reserves were 458,000 tonnes at 12.2 g/t gold, containing 179,000 ounces.
1.5 BMJV REGIONAL EXPLORATION
Mineral Resources Tasmania formally advised that a two year extension over approximately half the exploration licence EL 20/94 had been granted, backdated from the original expiry date of 28th October 2004. It is proposed that drilling will commence at Middle Arm Gorge in the December 2005 quarter with the aim of investigating a possible separate reef structure paralleling the Tasmania Reef. Middle Arm Gorge is located around 2 km south of the Tasmania Reef. Follow-up work on the historical Salisbury Gold Field is also planned.
1.6 ARBITRATION AWARD
As previously reported, an arbitration award was made in favour of the BMJV participants (Beaconsfield Gold group 48.49% and Allstate group 51.51%) against ACN 005 585 795 Pty. Ltd. (formerly Brown & Root Engineering & Construction Pty. Ltd. ("BREC")) and Batepro Australia Pty. Ltd. ACN 009 006 777 ("BA"). The arbitrator found BREC and BA to be jointly and severally liable to the BMJV participants for $60,366,785, together with interest after 17 January, 2004 at the rate of $29,292 per week.
Subsequent to the arbitration award, liquidators were appointed to both BA and BREC. Beaconsfield Gold and the Deed Administrators of the Allstate group are continuing to deal with the liquidators of both BA and BREC with regard to the arbitration award.
In late June 2005 the BMJV participants and the professional indemnity insurer of the BBR Companies reached an in-principle settlement whereby the insurer will pay $13 million as full settlement of the insurer's exposure, subject to the provision of certain third party releases. The BMJV participants are now seeking those releases in order to progress settlement.
The Beaconsfield Gold group's 48.49% share of the $13 million in-principle settlement is approximately $6.3 million.
In March 2004, $4 million of interest due to the Company's then secured creditor was set aside, to be repaid only from 50% of any proceeds received by Beaconsfield Gold from the BBR arbitration. As a result, it is anticipated that approximately $3.15 million of this contingent liability will be repaid as a result of the in-principle settlement, reducing the contingent liability to approximately $0.85 million.
2. BEACONSFIELD GOLD NL CORPORATE
2.1 EXPLORATION OF BEACONSFIELD GOLD'S 100% OWNED TENEMENTS
2.1.1 Beaconsfield Tenements
Expenditure on Beaconsfield Gold's 100% owned tenements at Beaconsfield during the quarter totalled $114,000.
North Pease Creek Project
The North Pease Creek property is around 4 km northwest of the Beaconsfield Mine. The "Mine Sequence" rocks that host the major Tasmania Reef at the Beaconsfield Mine (Ordovician conglomerate, sandstone and siltstone) occur between two well-defined, north-westerly trending thrust faults - the Cabbage Tree Thrust and the Cobblestone Creek Thrust. Beaconsfield Gold's geologists have confidently interpreted extensions of both the Mine Sequence rocks and of the two enclosing thrust faults northwest under a cover of Tertiary sediments into the North Pease Creek property. Some 2 km of prospective Mine Sequence rocks are interpreted to exist in the North Pease Creek property. The belt of prospective Mine Sequence rocks is only around 400 m wide and provides excellent focus for systematic exploration.
Following the initial, previously reported, drilling success at North Pease Creek involving holes NPC-1 to NPC-5 encountering a substantial fault structure with low grade gold mineralisation in a hanging wall position, a comprehensive drilling program comprising three stages was designed for the entire prospective corridor:
- A fence of vertical rotary mud tricone pre collars, with PVC casing, through the partly consolidated Tertiary clays, sands and gravels which have proved to be between 30 and 70 metres thick.
- A prospect generation fence of vertical RC percussion holes to a maximum depth of 200 metres, utilising the pre collars in areas of Tertiary cover and collared from surface in areas of Permian cover.
- Angled RC percussion pre collar /diamond tail drill holes to follow up any prospects generated by the vertical RC drilling.
The first (pre collar) stage is now complete and the second (prospect generation) stage commenced at the end of the quarter.
Cobblestone Creek Project
No drilling was carried out on the Cobblestone Creek Project during the quarter. During the September quarter, a vertical RC percussion wildcat drill hole is to be drilled north east of the North Tasmania Mine to test a geophysical anomaly.
2.1.2 Stavely Project, Western Victoria
As reported on 28 July 2005, Beaconsfield Gold and New Challenge Resources Pty Ltd ("NCR") have executed an agreement giving Beaconsfield Gold a four-year option to acquire NCR's 100% interest in the Stavely Exploration Licence 4556 for $350,000, subject to NCR retaining a 3% net smelter return royalty. The Stavely Project is located 70 km south of Stawell in western Victoria.
The extensive Stavely property of 370 sq km contains large scale hydrothermal/plutonic mineralizing systems associated with base metal and gold mineralisation. The extensive character of these systems has attracted previous exploration expenditure of some $4 million by major companies, including most recently Newcrest Operations Limited.
The Stavely Project contains one of Australia's largest copper anomalies associated with a little known magmatic copper-porphyry complex that has returned significantly mineralised drill intersections such as 229m @ 0.22% copper. Mineralization also includes a supergene chalcocite blanket with significant gold values. The host porphyry complex has similarities to those around the large Cadia copper-gold mine and at the North Parkes copper-gold mine in NSW.
A 3km long gold-in-soil anomaly at the Fair View Prospect and other gold targets have been outlined for immediate exploration.
Massive sulphide mineralization at the Wickliffe Prospect is analogous to the Rosebery and Hellyer-style polymetallic mineralisation in western Tasmania.
A 30km long serpentinite belt is prospective for nickel sulphide mineralisation akin to that at the Avebury nickel deposit in western Tasmania, particularly as values up to 1% nickel have been returned from areas of intense alteration.
2.2 GOLD HEDGING AND GOLD PROCEEDS
At 30 June 2005, the Company's hedge book was 60,000 ounces of flat forwards and spot deferreds, with deliveries out to February 2007, at an average price of $586 per ounce.
The marked-to-market value of the hedge book at 30 June 2005, when the spot price of gold was A$572.63 per ounce, was negative $764,000.
2.2.1 Gold Hedging as a Percentage of Ore Reserves/Resources
BMJV ore reserves at 30 June 2005 were approximately 285,000 ounces, of which Beaconsfield Gold's 48.49% direct interest was approximately 138,200 ounces. As a percentage of those ore reserves, therefore, Beaconsfield Gold at 30 June 2005 was approximately 43% hedged.
Total BMJV resources at 30 June 2005 were approximately 495,000 ounces, of which Beaconsfield Gold's 48.49% direct interest was approximately 240,000 ounces. As a percentage of those total resources, therefore, Beaconsfield Gold at 30 June 2005 was approximately 25% hedged.
2.2.2 Average Received Price per Ounce
Total net gold book proceeds and effective average received price per ounce of production are approximated in the following table.
Average Proceeds per Ounce of Production
2.3 CASH POSITION
At 30 June 2005, total effective cash held by the Company was approximately $6.8 million, including $1.1 million proceeds of the 30 June gold delivery received early July and $1.8 million cash advanced to the BMJV, but excluding pending cash from the in-principle settlement with the BBR insurer.
2.4 CLAIM AGAINST ALLSTATE EXPLORATIONS NL ("Allstate")
On 3 November 2004, Beaconsfield Gold lodged a Proof of Debt with the Allstate Deed Administrators for $29,271,854, representing 48.49 % of the damages awarded to the Beaconsfield joint venturers in the claim against BREC and BA. The Proof of Debt alleges that Allstate was negligent in the performance of its duties as manager of the joint venture and was in breach of its duties owed to the joint venturers, under the terms of the Beaconsfield Joint Venture Agreement, in its dealings with BREC and BA in connection with the contract to design, supply, construct and commission the gold ore treatment plant and bacterial oxidation plant at the Beaconsfield mine.
On 18 April 2005, the Allstate Deed Administrators formally advised the Company that the Proof of Debt had been rejected.
On 2 May 2005, Beaconsfield Gold filed an application in the Supreme Court of Victoria appealing against the Allstate Deed Administrators' rejection of the Proof of Debt.
2.6 BEACONSFIELD GOLD ISSUED SECURITIES AT 30 JUNE 2005
Type of Securities
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Number of Securities
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ASX Code
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Fully-Paid Ordinary Shares
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153,021,231
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BCD
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Unlisted Convertible Notes ($0.30 each by 30/6/2006)
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666,667
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BankWest Unlisted Options ($0.2823 each by 30/6/2006)
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6,500,000
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Unlisted Partly-Paid Shares ($0.35 paid to $0.01)
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2,050,000
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2.7 TENEMENTS
Beaconsfield Gold has interests in the following tenements.
Description
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Licence Number
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Area
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% Interest
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State
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Beaconsfield Consolidated Mining Lease
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1767 P/M
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594 hectares
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48.49
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Tas.
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Beaconsfield Retention Licence
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RL 99/2001
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2 sq km
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48.49
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Tas.
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Salisbury Hill Exploration Licence
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EL 20/1994
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12 sq km
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48.49
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Tas.
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Beaconsfield Exploration Licence
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EL 12/1999
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8 sq km
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100.0
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Tas.
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North Beaconsfield Exploration Licence
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EL 27/2000
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3 sq km
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100.0
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Tas.
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Pease Creek Exploration Licence
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EL 30/1997
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5 sq km
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100.0
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Tas.
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Beaconsfield Exploration Licence
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EL 07/2000
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19 sq km
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100.0
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Tas.
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Stavely Exploration License (Option*)
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EL 4556
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370 sq km
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100.0*
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Vic.
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* BCD has an option to acquire 100% interest, subject to a 3% net smelter return royalty
2.8 INTERNET
Shareholders are invited to visit the Company's newly upgraded website to view all ASX releases (including all quarterly and annual reports), historical information relating to the Beaconsfield Mine, and Beaconsfield Gold NL corporate information: www.beaconsfieldgold.com.au
Shareholders who wish to receive Beaconsfield Gold ASX releases by e-mail are encouraged to contact the Company on: beaconsfieldgold@bigpond.com
Yours faithfully
Brian Coulter
Acting CEO
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