St Barbara Limited is engaged in mining and sale of gold, mineral exploration, development, and investments in Australia. The Company focuses on gold production, the extension of mine at Southern Cross operations, development of operations at Leonora and exploration for gold adjacent to existing operations at Southern Cross and Leonora, as well as for nickel, copper and zinc, all within Australia. Production at Southern Cross totaled 157,477 from the Marvel Loch underground mine and a number of open pits, including Hercules, Grand National and Norton (Nevoria). In May 2008, the Company disposed of St Barbara Pastoral Co. Pty Ltd (SBP), a 100%-owned subsidiary.
St Barbara to commence production at King of the Hills Gold Project in Q2 2011
St Barbara (ASX: SBM) has announced the King of the Hills gold project near Leonora in Western Australia (formerly referred to as the Tarmoola higher grade, underground project) has been approved for development.
Gold production is planned at the rate of 65,000 ounces per annum over 3.5 years following a 12 month ramp up period, and is expected to commence in the June quarter of 2011.
The company said the geological controls over the higher grade gold domains are well understood. The gold is hosted by arrays of quartz veins within granodiorite and ultramafic rocks intersected by the major King of the Hills Shear Zone.
Steep quartz lodes occur on the Eastern flank, and shallow north-plunging lodes occur on the Western Flank. Metallurgical recoveries are in the range 93-95%.
The company said potential exists to extend the King of the Hills gold mineralisation within the mine vicinity and at depth, plunging north along the intersection of the regional shear zone and granite surface.
This potential has been confirmed at depth and over 800 metres to the north by previous drill intersections.
Recent gravity and magnetic surveys have identified an analogue target located 1 – 2 kilometres to the north of King of the Hills. Work to further define this target for drill testing is underway.
Probable Ore Reserves of 1.4 million tonnes @ 4.3 g/t for 195,000 ounces of gold have been established at a gold price of A$1,150 per ounce and cut-off grade of 2.8 g/t. This ore reserve estimate will be updated as at 30 June 2010 to incorporate pre-development drilling results and further design work.
The company expects that the project will produce in the target range of 1.9-2.0 Mt @ 4.0 to 4.5g/t containing 240,000 to 270,000 ounces of gold, based on current Probable Ore Reserves and the conversion of Inferred Resources in mining areas, through additional grade control drilling.
The deposit remains open on the Eastern and Western Flanks. A pre-production drilling program is underway to identify ore reserve extensions in the 10400 lode, Eastern Flank and Western Flank and undertake grade control and geotechnical assessment drilling to accurately position the initial decline development and mine stoping operations.
Pre-production capital expenditure to first gold production is expected in the range of $12.5-$14 million and will be fully funded from available internal cash resources. Cash payback is anticipated by mid 2012.
The additional tonnage from King of the Hills will lead to operational efficiencies at the Gwalia processing plant.
The expanded Leonora Operations (comprising production from the Gwalia and King of the Hills mines) is expected to lift total annualised production to 255,000 to 275,000 ounces of gold.
At the Tower Hill gold project, located 2 kilometres north of the Gwalia processing plant, further work is being undertaken to better understand the structural geological controls over the high gold grade domains and the potential for extensions to ore reserves.
Subject to satisfactory completion of this work and a final feasibility study, the Tower Hill gold project remains a potential source of ore to follow on from King of the Hills.
The company said the decision to commit to development of the King of the Hills gold project is another important step for St Barbara in leveraging long term value from Leonora Operations.
