BUILDING A PROFITABLE
MID-TIER GOLD MINING BUSINESS

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QUARTERLY REPORT October – December 2002

Quarterly Report October - December 2002

Highlights

  • Access to the first two gold bearing reefs in the New Bendigo reveals abundant coarse-grained visible gold.
  • Initial bulk sample results were returned with grades of 3 to 22g/t Au in the Upper S3 Reef and 4 to 16g/t Au in the D3 East Leg Reef.
  • Drill testing of the S4 ribbon (below S3 on Sheepshead line) intersected a quartz stockworking and arsenopyrite zone, 100 metres high and 10 to 20 metres wide. Preliminary assays include 2m @ 12g/t Au and 4.3m @ 8.9g/t Au.

Milestones

The Company has set the following targets for 2003 based on 1,600 metres of on-reef development and the trial processing of some 65,000 tonnes of reef material:

  • January - March 2003
    • Access and bulk sample Shywolup Eastern Spur Reef and Shywolup Reef in the D3 ribbon.
    • Drill test D4 and S4 ribbons.
  • April - June 2003
    • Access and bulk sample Patty Reef, True Grit No 1 Reef and True Grit No 2 Reef.
  • July - September 2003
    • Access and bulk sample Garrard Reef, Christine No 2 Reef and True Grit No 4 Reef.
  • October - December 2003
    • Finalisation of feasibility studies for a decision on production and commencement of construction of commercial-sized mine facilities.
Schematic cross-section of reefs
Section 1 . Schematic cross-section of reefs within the S3, D3 and D4 Ribbons. Reefs accessed or to be accessed in bold print.

Summary

Bendigo Mining NL has commenced exploration development and bulk sampling in three gold-bearing reefs (D3 East Leg Reef, Shywolup Eastern Spur Reef and Upper S3 Reef) in the New Bendigo. The main development to date has been in the D3 East Leg and Upper S3 Reefs with some development into the footwall (base) of the Shywolup Eastern Spur Reef. The D3 East Leg Reef and Upper S3 reefs contain coarse-grained visible gold and the initial bulk sample results have met and in some cases exceeded the Company’s expectations, with 4 to 16g/t Au in the D3 East Leg Reef and 3 to 22g/t Au in the Upper S3 Reef. While the cross cuts developed into Shywolup Eastern Spur are below the apparent centre of the defined mineralisation and the initial sampling has not returned grades of potentially economic significance, bulk sampling within the main body of the reef is now planned.

While still in the early stages of the bulk-sampling program, the grades of the bulk samples in the D3 East Leg and Upper S3 are consistent with the grades assigned to these reefs from drill data in the Company’s Inferred Resource statement.

Some of the objectives of the current extensive sampling program are to identify a mineralised envelope, containing potentially economic resources, within individual reefs and to provide a grade estimate within this boundary. Considerable success in identifying mineralised envelopes within the D3 East Leg and Upper S3 reefs has been achieved which increases our confidence in being able to successfully define economic reefs of this type through drilling.

The Bendigo reefs characteristically have a nuggety gold distribution and the initial bulk sample results reflect the grades as they vary through the mineralised envelope. The initial bulk sample grades should not be taken to accurately represent future mined grades, as the exploration drives are positioned to define the margins of the mineralised envelope as well as to sample the main body of reefs.

The reported results represent about 10% of the planned ore body sampling program. Over the next 8 months it is planned to access and bulk sample a further seven reefs.

Deborah Anticline (D3 ribbon)

The D3 ribbon comprises three quartz reefs, D3 East Leg Reef, Shywolup Eastern Spur Reef and Shywolup Reef.

D3 East Leg Reef

130 metres of development have been completed in the reef. Geological mapping and sampling have defined a 65 metre long by 5 metre wide zone of potentially economic mineralisation that remains open to the north. The results of seven bulk samples from this development confirm that drilling identified correctly the boundary to the mineralized envelope and that potentially economic grades are present (Plan 1).

Plan 1 D3 ribbon development, bulk sample locations and grades. The limits of potentially economic mineralised envelopes of the D3 East Leg Reef and Shywolup Eastern Spur Reef are shown.
Table of bulk sample results and detailed sample descriptions

On-reef development, drill testing and sampling of the D3 East Leg Reef is continuing. A 4,000 tonne parcel of development material will be processed through the Company’s New Moon pilot plant to provide further confirmation of grade.

D3 East Leg Reef Looking North
The main quartz reef is 5 metres wide at this point. The visible gold is concentrated on the eastern (right hand) side.

Shywolup Eastern Spur Reef

The Shywolup Eastern Spur Reef occurs 15 metres to the east of the D3 East Leg Reef. This large stockwork reef has now been drill tested on 3 sections, 40 metres apart and remains open to the north and south. Drilling has intersected significant visible gold occurrences and scattered high-grade assay values over 25 x 20 metre cross-sectional areas. Two crosscuts through the lower part of the envelope have been completed with initial sampling producing subdued results.
Only two bulk sample results from the margin of the mineralised envelope are available to date:

BULK
SAMPLE
Grade (g/t Au) Description
D3-06 2.4 Weak stockworking in sandstone. (10% quartz) (270 tonne)
D3-07 4.0 Moderate grade stockwork material from boundary of Shywolup Eastern Spur Reef (15%quartz) (313 tonnes)

Further development, bulk sampling and drilling within the Shywolup Eastern Spur Reef is planned for the next quarter.

The Shywolup Reef, in the anticlinal axial position in the D3 ribbon (Section1) is below the D3 access drive and has not yet been accessed. Access of this reef for bulk sampling is planned in the first quarter 2003.

Sheepshead Anticline (S3 ribbon)

The S3 ribbon comprises 12 separate reefs as shown in Section 1. The Upper S3 Reef is currently being sampled. In the second quarter 2003 the Company plans to access and bulk sample a further three reefs (Patty, True Grit No.1 and True Grit No. 2 Reefs) with another four reefs accessed in the third quarter 2003.

Upper S3 Reef

The Upper S3 Reef is a saddle-shaped reef which plunges north with a drill indicated strike length of 360 metres. Ninety metres of horizontal reef development have been completed. The majority of the development has been to the north of the access cross cut. As the reef plunges to the north at 10, the horizontal development has accessed the leg, saddle position and neck, thus providing an oblique section through the reef.

The development intersected the reef at the lowest extent of the previously identified boundary to potential economic mineralisation and, as expected, passed through high-grade mineralisation in the main body of the reef before reaching the northern drill indicated limit of potentially economic mineralisation at the end of the development.

Table of results and descriptions of bulk samples from Upper S3 Reef
BULK
SAMPLE
Grade
(g/t Au)
Description
S3-01 3,2 4.5 metre cut from Upper S3 east leg including all footwall spurs, no visible Au. (119 tonnes)
S3-02 2,9 4.5 metre wide cut from the west leg footwall spurs.
The round included 50% dilution from the hanging wall, minor visible Au. (130 tonne)
S3-03 22,3 4.5 metre cut of reef and footwall spurs across the drive and the laminated quartz vein from the east wall of the drive, abundant visible Au. (233 tonnes)
S3-04 6,4 4.5 metre cut from Upper S3 east leg including all footwall spurs, minor visible Au. (145 tonnes)
S3-05 2,2 4.5 metre cut from top of neck, no visible Au. (160 tonnes)

Detailed drilling of the Upper S3 Reef has been completed on 5 sections and has identified potentially economic mineralisation over a strike length of 350 metres. Drilling is planned on an additional 5 sections (Plan 3) in preparation for Resource and Reserve estimation.

Plan 3 Portion of the decline including Upper S3 access, showing drill sections completed and planned to test Upper S3 reef.

Bulk Sample and Trial Processing

Bulk samples processed to date have been between 80 and 300 tonnes. Each sample was crushed to –8mm and two representative 7 tonne splits pulverized to –1mm and passed through a gravity circuit, with a tailing and concentrate sample collected and assayed to determine grade.

Between 25% and 55% of the total gold is too large to pass through a -1mm screen and is collected in a “coarse gold” trap within the pulverizing circuit. 250 metres of on-reef development have been completed and some 10,500 tonnes of material mined ready for trial processing. Over the next 8 months some 1,500 metres of on-reef development is proposed, with approximately 55,000 tonnes of reef material to be mined for trial processing.

The New Moon pilot plant, constructed in parallel with the bulk sample plant, has been upgraded to process 6,000 tonnes per month.

Exploration Drilling of S4 Ribbon

Drill testing of the S4 ribbon from SP SE 01 (Plan 4) was completed during the quarter. A parent hole and 4 wedges tested a 100 metre high zone with all holes intersecting broad zones (10 to 20 metre wide) of quartz stockworking with arsenopyrite mineralisation. Two occurrences of visible gold were seen in the core from one hole. Preliminary assays from the first 2 holes returned intersections of 2 metres @ 12g/t Au and 4.3 metres @ 8.9 g/t Au. Further assays are awaited.

Mineralisation within the S4 ribbon is significantly stronger than the initial test from S/P 26 some 550 metres to the north, and further drill testing, from S/P SE 03, is planned 300 metres south along strike.

Underground Development

The Swan decline had advanced to 4,828 metres, 740 metres below surface, by the end of December. The South Exploration drive was advanced to 390 metres from the Swan decline to provide access to the D3 ribbon and a platform for exploration drilling into the Sheepshead and Deborah anticlines. In addition a total of 250 metres of development were completed within the D3 and Upper S3 reefs.

Plan 4 Underground development completed and planned into the Sheepshead and Deborah lines. The positions of the ribbons and reefs within the ribbons are projected onto the plan. Drill sections from SP 26 and SP SE01 into S4 are shown, as is SP SE03 where further drilling is planned.

The infor mation in this report that relates to Mineral Resources or Ore Reserves is based on, and accurately reflects, information compiled by G F Johansen, Member of the Australian Institute of Mining and Metallurgy. Mr Johansen is a full-time employee of the Company and has relevant experience in relation to the mineralisation being reported to qualify as a Competent Person as defined in the Australian Code for Reporting of Mineral Resources and Ore Reserves. Mr Johansen consents to the inclusion in the report of the matters based on the infor mation in the form and context in which it appears.

Statement of Financial Position (Unaudited)
Statement of Financial Position (Unaudited)
Statement of Financial Performance (Unaudited)
Statement of Financial Performance (Unaudited)