Ron Cunneen

Gympie Eldorado Gold Mines Pty Ltd

Gympie Qld 4570

Key Words: Gympie, gold, mining

History

Discovered in 1867 and in continuous production for 60 years to 1927, the Gympie Goldfield is the sixth largest historical gold producer in Australia. Over an area of 10 kilometres by 4 kilometres, over 1,500 shafts were sunk to a maximum depth of 1.0 kilometre, from which 150 kilometres of workings were developed. A total of four million ounces at an average grade of 29 g/t Au was produced up until 1927.

Modern Mining

Modern exploration began at Gympie between 1980 and 1995 by Freeport then BHP under joint venture with Gympie Eldorado Gold Mines (GEGM). Work focussed on definition of the Inglewood Reef. In 1995 GEGM started a small-scale mining operation with the objective of providing the basic mining infrastructure and cash flow to fully explore the goldfield.

Since 1995 total production has been 266,000 ounces.

Current resources and reserves stand at 783,000 ounces and 198,00p ounces respectively.

Geology

The Gympie Goldfield covers an area of 10km x 4km and consists of an extensive mesothermal quartz-vein system hosted within the Permo-Triassic volcanics and sediments of Gympie Group. Bonanza grades occur where the quartz veins are in contact with carbonaceous sediments.

Three styles of quartz veining are recognised:

1. Inglewood

Northwest stacking sub-vertical structures 1.8-6.0 metres wide with gold grades 6.0 – 10.0 g/t Au.

Feeder structures.

2. Gympie Veins

Narrow (0.2 – 2.0 metre wide) tension veins striking north south and dipping west, perpendicular to bedding. Historically averaged 34 g/t Au when in contact with the carbonaceous sediments and containing bonanza pods with several percent gold.

3. Stockworks

Gympie Veins where the vein density is sufficient to mine in bulk. Up to 100 metres wide with grades from 8.0 – 12.0 g/t Au.

Exploration

Orebodies at Gympie occur as an inter-relationship of three parameters:

· A north-south corridor of mineralisation that can be traced through all rock types over a strike length of 20 kilometres. The Gympie Goldfield sits in the centre of this corridor.

· Northwest structures cutting across the north-south corridor. These are the Inglewood feeder systems.

· East-dipping carbonaceous sediments. All veins passing through these sediments are enhanced in grade. The best orebodies (size and grade) occur at the juncture of these parameters.

Exploration up until 2000 has focussed on the mining environment in order to establish sufficient reserves for sequenced production and to gain a basic understanding of the geological controls on mineralisation.

Since 2000 exploration has steadily extended further into the goldfield.

The Gympie Goldfield contains considerable alluvial and stratigraphic cover. The full extent of the goldfield is not understood or contained. Potential exists for the discovery of large ore systems under shallow cover adjacent to historical and current mining operations.

For exploration beneath alluvial cover GEGM has devised a process of air core drilling to fresh rock with parts per billion assays. In addition to geochemical anomalies, 50 metre spaced air core drilling provides the required bedrock geology and structure for diamond drilling to follow upon a prospect scale.

Exploration prospectivity of the goldfield is such for the exploration budget to be increased to $7 million over the 2002-2003 financial year, with an intention to spend $23 million over the next three years.

Management

With the styles of orebodies at Gympie and the strong focus on exploration, the integration of exploration and mining activities is essential. GEGM has addressed this issue by having all geological activities (mining, production and exploration under the direct charge of the Chief Geologist. The Chief Geologist therefore has line accountability for exploration and support accountability for production. The General Manager of the mine in contrast has line accountability for production and support accountability for exploration. The intent of this management structure is to marry the benefits of geology with mine planning and production.

Gold is hard to find and at $US300 per ounce is a valuable commodity. Successful exploration therefore enhanced by access to good mine planning and production personnel. This is particularly true at Gympie where the exploration and mining functions are intertwined.