Crater Gold

Papua New Guinea’s newest gold producer says this is only the beginning for its world-class project

About This Project

It takes a bold management team with great confidence in their project to open a gold mine in the current climate, and Crater Gold Mining Limited (ASX: CGN, ‘Crater’) – who began mining in mid-March – fit the bill. The reason behind this emerging gold producer’s confidence is all in the name of its first project: High Grade Zone, or HGZ. Part of Crater’s flagship Crater Mountain Project in Papua New Guinea, the HGZ Project is designed to mine a shallow, high-grade gold zone in order to achieve rapid initial cash flow that will fund further project development.

 

The HGZ project

 

Managing Director Russ Parker was appointed to the position just last month, but having joined the company as a Director in March 2013 he’s been there every step of the way in developing the HGZ Project. Russ explains that the project’s high gold grade became clear very early on.

 

“Back in 2013, the exploration adit returned numerous high-grade samples exceeding 100 grams of gold per tonne [g/t], including 0.2 metres at 847g/t,” he says. “Following drilling, the company had sufficient evidence to determine a high-grade mineralised structure 90 metres long and 60 metres wide, remaining open along strike. Coupled with easy processing, this resulted in a project with low production costs of less than US$400 per ounce.”

 

Crater was not the first to recognise the HGZ Project’s potential. Artisanal gold miners were operating in the project area between 2005 and 2013, over which time they produced an estimated 15,000 ounces of gold through shallow underground workings and simple gravity processing. This recent history served as a good indication to Crater of how quickly and easily production could be achieved.

 

The exploration adit of mid-2013 showed that the HGZ Project could be fast-tracked to achieve small- to medium-scale gold production, the profits from which could go toward funding further exploration of Crater Mountain. The project was developed through 2013 and 2014, including the construction of a mill and gravity concentration circuit, and Crater began mining on 15 March 2015.

 

“We are now selectively mining the high-grade structures, so that the operation can generate excellent cash flow,” says Russ. “Processing involves quite simple technology, with ore passing through a small hammer mill and centrifugal concentrator. This helps control capital costs and enables the mine to be among the lowest cost producers in the region.”

 

While the project was designed to get up and running in a short period of time, its operation will likely extend over a much longer period. The initial mining lease for the HGZ Project is for a five-year term, but, if exploration continues to yield positive results, this term could be lengthened significantly. “We are hopeful of extending that five-year timeframe, as our exploration geologist Peter Macnab is of the opinion that the gold could continue for many hundreds of metres below the current mining depth,” Russ explains.

 

“A study by independent geological consultants Mining Associates determined a target of up to 100,000 ounces contained gold in the HGZ and highlighted the likelihood of similar repeating high-grade zones in the surrounding area.”

 

Further exploration

 

The HGZ project is just one small part of the Crater Mountain Project, which contains four prospect areas: Nevera, Nimi, Awanita and Masi. Nevera is a former BHP asset and by far the most advanced of the four, with the potential to become a large-scale mining operation. More than 14,000 metres of drilling have been completed at Nevera to date and almost all of it in an area called the Mixing Zone. This work resulted in a JORC-compliant inferred resource of 24 million tonnes (mt) at 1g/t gold, using a 0.5g/t cut off for 790,000 ounces of gold. That includes 9.4mt at 1.46g/t, using a 1g/t cut-off for 440,000 ounces of gold. Russ says that Crater geologist Peter Macnab is “confident” that this zone contains “a large porphyry copper-gold deposit”.

 

Crater has another project in Papua New Guinea on Fergusson Island: part of the D’Entrecasteaux Island Group of Milne Bay Province. This project is currently on the backburner while Crater seeks a partner to develop it with. “The Fergusson Island Project currently has a JORC-compliant resource of 295,000 ounces,” says Russ. “With further infill drilling, we believe that the resource can be expanded.”

 

The company has further projects at Croydon in Queensland, Australia. These are the Golden Gate Graphite Project, for which a drilling program is planned later this year, and the A2 Polymetallic Project. “The A2 project has immense potential, with initial drilling results indicating a very large Zn-Ag-Sn-Cu-Pb system,” Russ remarks.

 

For the immediate future, the HGZ Project remains at the centre of Crater’s strategy. The company’s main goals for next 12 months are to further develop the HGZ resource and to achieve a gold production rate of 10,000 ounces per annum. The market’s current prices for gold are not a huge concern. “Our belief is that the price of gold is currently bouncing around at near-bottom prices,” says Russ. “Nevertheless, our HGZ Project – with its operating cost of lower than US$400 – would remain robust even if the price of gold were to fall further.”

Phone

+61 2 9252 2335

Company

Crater Gold

Category

Mining

Brochure

Category
Mining
Tags
copper, gold, mining, Papa New Guinea