Murchison Goldfield - WA (Silver Lake 100%)

OVERVIEW

Silver Lake commenced production from the Murchison Gold Operations in February 2013 and declared commercial production in June 2013.

The fall in gold price in mid-2013 resulted in the deferment of capital required to access higher grade, undergound Reserves and focus production on lower grade open pit Reserves in the Murchison.  To date production and unit costs from the Murchison have been disappointing and given the prevailing gold price environment, the Murchison Gold Operations diverts both human and financial capital from higher value, lower risk projects in the Mount Monger region.  On 20 January 2014, Silver Lake announced a strategic review of its Murchison Gold Operations.

On 27 February 2014 Silver Lake announced that it would be placing the Murchison Gold Operations on care and maintenance.  Continuing production at the Murchison Gold Operations is unsustainable at the current gold price so the company is taking decisive action by placing it on care and maintenance.  This decision preserves a number of strategic options for the Company including recommencing operations in the event of a higher sustainable gold price.  As announced the cost to place the operation on care and maintenance is approximately A$12 million for redundancy payments and site contract restructuring expenses.  The ongoing care and maintenance cost for the Murchison Gold Operations is estimated at approximately A$120,000 per month.

BACKGROUND

TUCKABIANNA PROJECT - WA (SILVER LAKE 100%)

Gold was discovered at Tuckabianna in 1915 with intermittent small scale production from rich mineralised pods within the host banded iron formation (BIF). During the period leading up to the commencement of modern open pit mining operations in 1988, total gold production was 53,000oz at an average grade of 18 g/t Au.

Between 1988 and 1997, approximately six million tonnes of ore was treated from the Tuckabianna area for a total production exceeding 500,000oz Au. Most of this production came from 17 different open pits located within Silver Lake's project area.

COMET PROJECT - WA (SILVER LAKE 100%)

Mining activities commenced in the Comet project area in 1913 with underground mining being carried out until 1983. Before the 1980s gold mining activities were largely limited to intermittent underground mining and in the late 1980s, open pit mining was undertaken at the Comet and Pinnacles deposits with production being 638,335 tonnes at 3.45 g/t Au. Up to 1996, the project area was subject to active mining operations.

MOYAGEE PROJECT - WA (SILVER LAKE 100%)

Silver Lake's Moyagee project has been the subject of several phases of exploration since the early 1980s. Past gold production from the project area totalled 11,780oz from some 9,400 tonnes of ore mainly from small high grade quartz veins.

EELYA PROJECT - WA (SILVER LAKE 100%)

The Eelya project has been the subject of limited gold and base metals exploration over the years.  In 1993 Newcrest mined the Rapier open pit and gold ore mined totalled 113,000 tonnes at an average grade of 2.97 g/t Au for nearly 11,000 ounces.

LOCATION

Silver Lake's projects situated in the Murchison goldfield are located between the multi-million ounce gold producing areas of Mount Magnet and Cue, 600 km northeast of Perth.  Murchison assets consist of the Tuckabianna, Comet, Moyagee and Eelya projects.

TUCKABIANNA

The Tuckabianna project is situated approximately 25 km east of Cue in the Murchison Province of the Archean Yilgarn Block.  The project consists of 21 granted tenements covering 236 km2 and include Caustons,Tuckabianna West and Katies.

COMET

The Comet project is situated approximately 20 kilometres east of Cue in the Murchison province of the Archean Yilgarn Block.  The project consist of 5 granted tenements covering 86 km2 and include Venus, Eclipse, Pinnacles and Comet North.

MOYAGEE

The Moyagee project is located within the Archean Mount Magnet-Meekatharra greenstone belt in the Murchison province of the Yilgarn Block.  It lies between the towns of Mount Magnet and Cue, 600 km northeast of Perth.  The project consists of 22 granted tenement covering 120 km2, which includes Lena. 

EELYA

The Eeyla project is situated 25 km northeast of Cue in the Murchison province of the Yilgarn Block. It lies between the towns of Mount Magnet and Cue, 600 km northeast of Perth.  The project consists of 10 granted tenement covering 103 km2 and include Hollandaire and Colonel.

GEOLOGY

TUCKABIANNA PROJECT - WA (SILVER LAKE 100%)

Gold mineralisation at Tuckabianna is mostly developed within brittle zones associated with well laminated Banded Iron formation (BIF) units.  Gold is also found along margins of quartz-feldspar porphyry dykes and in narrow isolated rafts of BIF within greenstone stratigraphy.  These mineralised zones are interpreted as having resulted from faults which cut the stratigraphy at a low angle. Gold is generally associated with quartz-carbonate-pyrite-pyrrhotite stringers developed within these zones.

Silver Lake's project area covers a significant strike extent of a regionally extensive shear zone, the north-northeast trending Moyagee Shear, which sub-parallels the Lena Shear to the east,  In the eastern portion of the project area, gold mineralisation is spatially associated with the Tuckabianna Shear which is regarded as a low angle splay off the Moyagee Shear.

COMET PROJECT - WA (SILVER LAKE 100%)

The Comet project consist of a fine grained massive barren basalt, the mineralisation is principally hosted by iron rich sediment within this mafic sequence.  The mineralisation occurs in two horizons, the footwall and hanging wall lodes, each separated by fine grained basalt between 0.5 – 1 metre thick.  The footwall lode is a banded quartz-chlorite-amphibole with minor magnetite and chalcopyrite.  The hanging wall lode is similar but contains more quartz.

Gold mineralisation is intimately associated with pyrrhotite in both lodes, and course grained gold can occasionally be observed in drill holes.  The highest grades occur in well defined, steeply dipping shoots.

MOYAGEE PROJECT - WA (SILVER LAKE 100%)

The project covers mafic to ultramafic intrusive and volcanic rocks of the north-north east trending Gabanintha and Galconda Formations, which are truncated in the south by the regional Cuddingwarra Shear.  The north east trending Lena Shear, which splay off the Cuddingwarra Shear, is the principal host to the known gold mineralisation within the project area.  The trace of the Lena Shear under lacustrine sediments of Lake Austin through Silver Lake's project area has recently been defined by scout exploration drilling and aeromagnetic imaging.

The ultramafic dominated Lower Gabanintha Formation has generally been considered an unfavourable host for gold mineralisation in this part of the Murchison Province.  Tholeiitic basalts and dolerites of the overlying Upper Gabanintha Formation are host to over 50% of the known gold mineralisation within the Murchison Province including the 2 million ounce Great Fingall mining centre near Cue, 30 km north of Moyagee.  The Lena Shear transgresses this greenstone stratigraphy at a low angle with good potential to cut the prospective Upper Gabanintha Formation in the northern portion of Silver Lake's project area.

EELYA PROJECT - WA (SILVER LAKE 100%)

The Eelya complex has been stripped of its laterite by erosion, exposing moderately weathered bedrock.  The granodiorite which forms the core of the complex is described as unusual by the Geological Survey of Western Australia because it has the field relationships of post-tectonic granite yet is completely re-crystalised.  Narrow north and east striking mafic intrusives are found within the complex. Massive sulphide mineralisation hosted by the felsic volcanic rocks are now present as extensive gossanous zones at the surface.  The region hosts a felsic volcanic rock complex that indicates the potential for volcanogenic massive sulphide ("VMS") mineralisation.

Hollandaire lies within the Eelya Project and is a tabular stratabound felsites hosted VMS deposit.  Mineralisation is dominantly supergene chalcocite in the oxidised zones and chalcopyrite in the primary zone.  The deposit is underlain in part with disseminated sulphides and a semi-concordant stockwork of sulphide and silicate veining.

Resources and Reserves

Gold Resources

  Measured Resources Indicated Resources Inferred Resources Total Resources
Deposit Ore
t
'000s
Grade
g/t Au
Total
Oz Au
'000s
Ore
t
'000s
Grade
g/t Au
Total
Oz Au
'000s
Ore
t
'000s
Grade
g/t Au
Total
Oz Au
'000s
Ore
t
'000s
Grade
g/t Au
Total
Oz Au
'000s
Tuckabianna - OP - - - 4,050.0 2.1 270.0 4,430.0 1.9 270.0 8,480.0 2.0 540.0
Tuckabianna - UG - - - 1,350.0 4.2 180.0 2,410.0 4.2 330.0 3,760.0 4.2 510.0
Comet - OP 36.0 0.6 0.7 2,324.0 2.5 186.8 250.0 1.4 10.0 2,610.0 2.4 197.5
Comet - UG - - - 1,060.0 4.6 160.0 730.0 3.7 90.0 1,790.0 4.2 250.0
Moyagee - OP - - - 960.0 2.1 70.0 1,410.0 2.2 100.0 2,370.0 2.2 170.0
Moyagee - UG - - - 80.0 3.3 10.0 1,630.0 4.0 210.0 1,710.0 4.0 220.0
Murchison - OP 36.0 0.6 0.7 7,334.0 2.2 526.8 6,090.0 2.0 380.0 13,460.0 2.1 907.5
Murchison - UG - - - 2,490.0 4.3 350.0 4,770.0 4.0 630.0 7,260.0 4.1 980.0
Hollandaire - - - - - - 2,800.0 0.4 34.1 2,800.0 0.4 34.1
Total Murchison 36.0 0.6 0.7 9,824.0 2.8 876.8 13,660.0 2.4 1,044.1 23,520.0 2.8 1,921.6

Base Metal Resource

  Measured Resources Indicated Resources Inferred Resources Total Resources
Ore
t
'000s
Grade Incr Total
'000s
Unit Ore
t
'000s
Grade Incr Total
'000s
Unit Ore
t
'000s
Grade Incr

Total
'000s

Unit Ore
t
'000s
Grade Incr Total
'000s
Unit
Hollandaire                                        
Silver - - - - oz - - - - oz 2,800.0 5.0 g/t Ag 457.8 oz 2,800.0 5.0 g/t Ag 457.8 oz
Copper - - - - t - - - - t 2,800.0 1.6 % Cu 45.1 t 2,800.0 1.6 % Cu 45.1 t

Gold Reserves

  Proved Reserves Probable Reserves Total Reserves
Ore
t
'000s
Grade Incr Total
'000s
Ore
t
'000s
Grade Incr Total
'000s
Ore
t
'000s
Grade Incr Total
'000s
Murchison Project         4,871.3 2.7 g/t Au 424.8 4,871.3 2.7 g/t Au 424.8
Murchison Stockpile 77.0 1.0 g/t Au 2.5         77.0 1.0 g/t Au 2.5
Total Murchison 77.0 1.0   2.5 4,871.3 2.7   424.8 4948.3 2.7   427.3