Crater Gold Mining Limited ABN 75 067 519 779
PO Box R607
Royal Exchange, NSW 1225
Australia Ph (02) 9241 4224
QUARTERLY ACTIVITIES REPORT
For the period ended 30 September 2016
About Crater Gold Mining Limited
(ASX CODE: CGN)
Crater Gold Mining Limited ("CGN" or "the Company") is focussed on development of the HGZ Gold mining project at the potentially world class Crater Mountain Gold project in PNG, on the Fergusson Island gold project in PNG and on the A2 Polymetallic and Golden Gate Graphite projects at Croydon in Queensland, Australia
Crater Gold Mining Limited
ABN: 75 067 519 779 PO Box R607
Royal Exchange NSW 1225
Australia
Phone +61 2 9241 4224
www.cratergoldmining.com.au
Key Points
Crater Mountain - High Grade Zone ("HGZ") Gold Mining Project, Papua New Guinea
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Gold production
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Stoping at HGZ project
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2nd Adit commenced
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Mixing Zone project exploration to resume at Crater Mountain
Corporate
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Richard Johnson appointed as Director
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Underwritten Rights Issue
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Banking facility
Russ Parker Managing Director
CRATER MOUNTAIN, PNG
Key developments during the Quarter
Crater Mountain - High Grade Zone ("HGZ") Gold Mining Project, Papua New Guinea
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Gold production
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Stoping commenced at HGZ
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2nd Adit commenced
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Mixing Zone project exploration to resume at Crater Mountain
Gold production
During the quarter the Company announced that stoping commenced within the central high grade gold block at the HGZ Project at Crater Mountain. During the quarter, the Company received AUD127,000 in revenue from gold sales.
The mining focus switched from development and exploration to stoping of the high grade gold block from the 1960m level up. The Company expected that the mining rate and the recovered gold grade would increase with stoping underway.
Gold production had previously been predominantly from development material on 1980m level including material beyond the limits of the central high grade block to confirm the interpretation of the zone and to ensure that high grade gold would not be left behind when stoping began.
The Company was expecting that gold production would further increase as stoping was undertaken on the flat dipping structures as well as the near vertical structures within the central high grade block of the HGZ mine (see ASX release 10 February 2016 for details of the block).
Second adit development
In the area of mining between the 1960 level and surface artisanal mining was frequently encountered thus diluting the expected gold grade and gold production.
As a consequence, the Company announced the fast tracking of development of a second Adit at the 1930 level, 30m below the existing 1960 level. The area between 1930 level and 1960 level has not been mined by artisanal miners, unlike the area between 1960 level and surface. The Company is confident that the addition of the Second Adit will result in higher gold production. The adit will access the depth continuity of the central block of the high grade zone as demonstrated by the previous drilling program undertaken by the Company.
The HGZ is high grade high-sulphidation epithermal quartz-pyrite-gold mineralisation, extending from surface to possibly several hundred metres depth (possibly in excess of 500m); local artisanal miners produced an estimated 15,000 ounces from a small area of shallow
workings (maximum 50m depth as encountered by the Company) in the base of a mineralised spur from 2005 to 2011
Gold production from the 1960 level will continue until the 1930 level is brought into production. This is anticipated by the end of 2016. Our focus remains on ramping up production to full capacity
In addition, enhancements to the milling circuit are underway, involving the installation of a vibrating screen and the placement of the mills in series rather than in parallel. This will result in a considerable increase in throughput and less wear of hammers and discharge screens.
Mixing Zone project exploration to resume at Crater Mountain
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Underground drive development to connect High Grade Zone (HGZ) and Mixing Zone (MZ) at Crater Mountain
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Mapping and sampling will provide fresh interpretation of Nevera Prospect containing HGZ and MZ projects
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Potential to further identify zones of high grade mineralisation within the MZ project
The Company announced that it is planning to resume exploration at the "Mixing Zone" project at Crater Mountain, with a view to carrying out diamond drilling in a broad 300m zone between the HGZ and the Mixing Zone. No previous drilling has been undertaken in this area. Generally difficult and extreme topography meant that it was not possible to place suitable drill platforms on surface during the previous drilling campaign by the Company ending in 2012.
Development at the HGZ gold mining project since 2013 at the 1960m Level now provides the infrastructure and underground access to be able to construct underground drill platforms.
This will require an extension of the existing underground HGZ drive for approximately 250m east placing it in the middle of the "Mixing Zone" and passing through this zone with no geological data.
Immediate benefits of this development will arise from mapping and sampling fresh rock exposures and hence fresh interpretation of controls to mineralisation. It will also provide an accurate cross section of the hitherto unmapped or drilled zone.
Interpretation will allow formative decisions to be made regarding future drilling and the potential to further identify HGZ mineralisation to the east and to further identify the higher grade gold mineralisation within the MZ project, which includes 9.4Mt at 1.46 g/t using a 1.0 g/t Au cut-off for 440,000 ozs. There remains potential to increase this resource and the total resource of 24Mt at 1.0 g/t Au for 790,000 ounces at the Mixing Zone Project at Crater Mountain (refer ASX Release of 24 November 2011: "Crater Mt - Initial Resource Estimate". This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The Company is not aware of any new information or data that materially affects the information contained in that ASX release. All material assumptions and technical parameters underpinning the resource estimate continue to apply and have not materially changed).
The MZ project lies entirely within the Company's ML 510. This offers scope for fast tracking the development of the MZ project.
No drilling was undertaken during the quarter and the Company is not reporting on any sampling results related to its operations at the HGZ.
Corporate
Appointment of Mr Richard Johnson as Director
The Company announced the appointment of Mr Richard Johnson as a Director of the Company.
Mr Johnson is a mining engineer with extensive experience managing projects in many regions, including PNG. Between 2002 and 2005, Richard was responsible for turning around DRDGold's high grade underground Tolukuma Gold Mine in PNG's Central Province into a highly profitable operation. He has also held senior executive and Director positions in several other resources companies in the region, including Allied Gold and DRDGold.
Richard has been an integral part of the Crater team for several years now; it is a pleasure to welcome him to the Board.
Rights Issue
On 27 July 2016 the Company announced an underwritten 1:8 rights issue at $0.08 per share to raise $2.12 million. The rights issue was underwritten by Freefire Technology Ltd, a company associated with Chairman Mr Sam Chan. The rights issue was undersubscribed in the amount of $822,971. The shortfall was taken up by the underwriter, Freefire Technology Limited.
Loan Facility
The Company advised that it secured a loan facility of up to A$800,000 from the Industrial and Commercial Bank of China (Asia) Limited (ICBC, or the Bank). The ICBC loan facility is repayable on call and is guaranteed by interests associated with the Chairman, Mr Sam Chan.