Mount Monger Operation - Exploration Strategy

Exploration Strategy FY17

Background

Silver Lake's FY16 exploration activities continued to advance development projects with near-term open pit and underground mining potential, and completed regional scale exploration drilling targeting major extensions to known deposits.  Positive exploration results were received from infill and extensional resource definition drilling at Daisy Complex and Maxwells deposits, and highly prospective gold trends north west of the Daisy Complex deposits were discovered. Underground development commenced at Maxwells following a substantial 400% increase to the Mineral Resources to 307,000 Au.  Open pit mining commenced at Santa North, Fly Camp, Rumbles and Imperial/Majestic, demonstrating the success from Silver Lake's continuing exploration and development drilling from FY15 to FY16.

 

Current Exploration Strategy

Following the completion of the FY16 exploration work program, the Silver Lake exploration team compiled and updated the detailed geology and prospectivity of the Mount Monger district, building on the recent successful exploration results from the area.  This review confirmed a number of highly prospective exploration targets.  An enhanced exploration strategy has been adopted and the company has set the FY17 exploration budget at A$14M.  Exploration continues to focus on the highest ranked gold targets at Mount Monger Operations, proximal to existing mine and processing infrastructure (Figure 1).

The two core components of the FY17 exploration stratgey comprises:

  • Definition of new, high value resource ounces from near-mine drilling
    • targeting shallow, high tenor "Daisy repeats" with similar ounces per vertical metre from highly prospective and untested horizons
    • these structures provide for cost effective exploration and low capital intensity of development
    • continued focus on BIF hosted targets in the Randalls area
    • target zones are hosted by extensions to existing mineralised structures and within preferential stratigraphic units, supported by broad spaced drilling results, surface geochemical anomalies and magnetic trends
  • Resource development drilling - extending and converting ounces into the Mount Monger mine plan to replace depletion
    • upgrade from Inferred to Indicated Resources and conversion to Reserves
    • leveraging above and below ground infrastructure via extensional ounces with short development timeframes

An experienced exploration team is in place with surface and underground drilling contractors mobilising to commence the planned exploration programme in Q1 FY17

Figure 1: Exploration Focus - proximal to existing mine and processing infrastructure

Key Exploration Targets

Daisy Complex Target Area (Figure 2)

  • Highly prospective gold trends north west of the Daisy Complex deposits were identified in FY16 through the Company's exploration programs
  • Target zones are hosted by extensions to existing mineralised structured within stratigraphic units and are supported by historical broad spaced drilling, surface geochemical anomalies and magnetic trends
  • The FY16 program of extensive top to tail aircore testing to fresh bedrock was designed to intersect quartz vein structures, bedrock alteration and geochemical traces of Daisy-style lodes.  Exploration aircore results returned highly encouraging assays including more than 50 intersections of greater than 200 ppb Au (0.2g/t Au), which is significantly elevated relative to background gold <10 ppb Au in the Mount Monger district
  • The FY17 exploration program comprises staged RC and diamond drilling to follow up the gold trends, targeting high grade, Daisy-style deposits located in the bedrock along strong near surface geochemical trends

Figure 2: Surface Exploration - Daisy Complex Targets

Randalls Banded Iron Formation Exploration Targets (Figure 3)

  • Targeting the Banded Iron Formation (BIF) units that host significant deposits within the Mount Monger Operation, including the Maxwells, Cock-eyed Bob, Santa and Rumbles gold deposits
  • The prospective BIF host rock within the Randalls area extends over 30km on Silver Lake tenements.  The distribution of high grade gold deposits along the BIF highlights the potential for discovery of additional gold deposits in similar structural settings to the current deposits
    • The FY17 exploration focus is on high value BIF hosted targets associated with the Isoclinal fold hinge and limbs within the Maxwells BIF, the western limb of Santa/Craze BIF to south of the Santa area
    • Multiple near surface BIF hosted targets include:
      • Flora Dora
      • Golden Cliffs
      • Anomalies A-E
      • Z Fold
  • At Flora Dora, the best historical intersections include:
    • 6m @ 16g/t Au
    • 2m @ 20g/t Au
    • 3m @ 14g/t Au
  • The western limb of Santa BIF is untested by drilling greater than 500m strike between Santa and Flora Dora, as is the eastern limb of Maxwells BIF
  • As demonstrated by the successful discovery, definition and development of the Maxwells underground mine in FY16, successful targets have rapid development timeframes and low capital expenditure

Figure 3: Randalls BIF Targets