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: THE INVESTMENT CASE
INVESTMENT OVERVIEW

WPG Resources is an emerging South Australian gold producer

The company recently accessed a never-before mined area underground, Challenger Deeps.
aerial view of Challenger gold mine
INVESTMENT OVERVIEW: The Big Picture
The Challenger mill is fed by the Challenger underground mine and Tarcoola open-pit

WPG Resources Ltd (ASX:WPG) is a junior gold producer through its 100% owned Challenger gold mine operations in South Australia.

The processing facility at the Challenger operations is fed ore from both the Challenger underground mine and the Tarcoola open-pit gold mine.

Tarcoola is located 165 kilometres by road from the Challenger processing mill to which the ore is trucked.

WPG also owns the Tunkillia Project and other South Australian exploration projects.

Taking the mine further down to unlock Challenger Deeps

The company’s focus is developing and accessing the new Challenger Deeps area of the Challenger underground mine.

WPG’s involvement with the Challenger mine is relatively new considering open-pit mining commenced in mid-2002.

In October 2015 WPG gained a 50% interest in the operation alongside Kingsgate Consolidated (ASX:KCN) and increased to 100% ownership in August 2016.

At the Challenger mine the emphases for WPG is to reduce high-cost remnant mining in older parts of the mine and to focus more on developing into the virgin Challenger Deeps area.

WPG reaches the virgin Challenger Deeps area

In February 2018, WPG delivered on its strategy and reached the never before mined area, Challenger Deeps.

Initial production will focus on the M2 structures to be followed by the M1 lodes as development progresses.

These lodes have been successfully mined above the shear at high grades over the 15-year mine life at Challenger.

Targeting 60,000 ounces of gold for FY18

The guidance for the combined Challenger and Tarcoola gold mining operations is 60,000 ounces for FY2018.

Gold recovered in the December 2017 quarter was 10,671 ounces at an all-in sustaining cost (AISC) cost of $1,760 per ounce.

Other exploration initiatives in play at Challenger

The focus of exploration activities at Challenger will focus on Challenger Deeps, Challenger West, M3/SEZ and near mine exploration targets.

READ: WPG Resources reveals high-grade gold results from Challenger Deeps

Drilling at Challenger has highlighted the potential to increase the ounces per vertical metre above those used for initial planning purposes.

READ: WPG Resources surges on bonanza gold grades from Tarcoola project

Furthermore, infill grade control drilling from February 2018 at Tarcoola’s Perseverance pit supported sustained increases in tonnages and grade of Tarcoola ore to be processed.

The best result was 11 metres at 73.31 g/t gold from 11 metres, including 1 metre at 607.75 g/t from 17 metres.

Tarcoola’s high-grade ore was successfully processed after blending with Challenger ore.

Ore parcels mined and delivered to Challenger during February graded up to 12 g/t gold in the higher grade zones.

High-grade gold intercepts from multiple prospects at Tarcoola

Tarcoola’s expansion potential was lifted in the December 2017 quarter when results from the first near-pit 54-hole drilling program were received.

Best Intercepts include:

• Morning Star: 2 metres at 39.90 g/t gold from 73 metres;
• Genie Bar: 4 metres at 3.24 g/t gold from 57 metres;
• Wondergraph: 2 metres at 3.24 g/t gold from 7 metres;
• White Hope: 0.5 metres at 4.95 g/t gold from 54 metres; and
• Daly’s Dream: 3 metres at 1.28 g/t gold from 17 metres.

Emerging prospects from nearby joint venture could also feed Challenger mill

WPG also has a 26% interest in the Western Gawler Craton joint venture (WCGJV) alongside manager Tyranna Resources Ltd (ASX:TYX).

Importantly, Tyranna’s strategy is to target the more advanced gold prospects which are situated within 50 kilometres of the Challenger gold processing operations.

Prospects include the Greenewood prospect located 37 kilometres from Challenger and the Typhoon prospect located 35 kilometres from Challenger.

Greenewood produced 22 metres at 4.03 g/t gold intersections in November 2017 and Typhoon produced 11 metres at 2.72 g/t gold in October 2017.

Funding and valuable partnership with experienced mining contractor

In late December 2017, WPG  received a $20 million loan facility from the Byrnecut Group.

Byrnecut is the mining contractor at Challenger, and is familiar with the operation as it was the contractor prior to WPG's acquisition.

Byrnecut and its mining consulting arm Mining Plus worked together during December 2017 to optimise the longer term production strategy at Challenger by accessing Challenger Deeps.

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