Lachlan owns a 100% interest in the Bushranger exploration-stage copper and gold deposit (the "Bushranger Copper Project") located approximately 25km south of Oberon in the Lachlan Fold Belt in New South Wales, Australia. Given Lachlan's acquisition of the CMD Gold Mine and its focus on the operation and continued development of that project, the Bushranger Copper Project is not considered to be a core asset of the Company.

On September 29, 2011, the Company entered into a farm in agreement (the "Newmont Farm In Agreement") for the Bushranger Copper Project with a subsidiary of Newmont Mining Corporation ("Newmont") providing for the potential acquisition by Newmont of a 51% interest in the Bushranger Copper Project.

The Bushranger Copper Project lies within the highly prospective Ordovician Volcanics of the Lachlan Fold Belt. These Ordovician volcanics host the North Parkes, Lake Cowal, Cadia and Ridgeway porphyry copper and gold deposits.

The Company has recently completed a Scoping Study on the Bushranger Copper Project, the Highlights of which are:
•    The Scoping Study was based on an open pit mining operation treating 2Mtpa of ore through a standard flotation concentrator to produce copper concentrates with gold and silver credits.
•    The Scoping Study was completed at two copper prices, namely US$7,500/t and US$10,000/t, and on all resource categories which resulted in pre-capital operating cash flows of AUD$112 million and AUD$344 million, respectively. (Refer to   Table 1 below)
•    The 2Mtpa throughput rate selected provides a mine life of between 5 and 11.5 years for the two price scenarios examined.
•    The net operating cash flows are on a pre-capital cost basis, with the capital cost estimate for a 2Mtpa concentrator and associated infrastructure being A$98 million.

Scoping Study Results

The Scoping Study was completed to an accuracy level of +/- 30% and used costs sourced from an operating copper mine in New South Wales that were amended to reflect the Bushranger Copper Project mineralisation, metallurgy, infrastructure, proposed throughput rate and location.  

Given the preliminary nature of the Scoping Study, all mineral resource categories were used for the pit optimisation. The mineral resources for the Project were estimated at a 0.3% and 0.2% copper cut-off. (Refer to Tables 2 and 3 below)

The resource tonnage and contained copper increases rapidly as the cut-off grade is reduced. The economic cut-off grade derived from the Scoping Study is 0.20% copper and 0.15% copper at copper prices of US$7,500/t and US$10,000/t, respectively. (Refer to Table 4 below)

The 2Mtpa throughput rate selected provides a mine life of between 5 and 11.5 years for the two price scenarios examined. Given the relatively low grade nature of the mineralisation, and the larger mineral resource base available at lower cut-off grades, there may be merit in examining a higher throughput scenario that would reduce process and overhead costs, thus lowering the cut-off grade required for mineralisation to be economic. As can be seen from Tables 2 and 3 below, the contained copper in the mineral resource increases substantially as the cut off grade is reduced.

Project Location and Infrastructure Access

The Bushranger Copper Project is located 25km south of Oberon in the Lachlan Fold Belt of New South Wales, in an area well served by existing infrastructure. A high voltage power line traverses the property, and water is potentially available from a large regional dam nearby. The Bushranger Copper Project is predominately on cleared farmland used for grazing and NSW state forest. Access is good with numerous unsealed major and minor roads and tracks. No Native Title claim exists over the area.

The Bushranger Copper Project area has a history of mining at the nearby Burraga Copper mine 10km southwest and more recently at the Lucky Draw Gold Mine 10km west of the tenement. The Lucky Draw Gold Mine was reported to have Reserves of 1.5Mt grading 3.5g/t Au and produced in the order of 200,000 ounces of gold between 1988 and 1991.

Access to the rail network would be via road haulage on a sealed road to the nearest rail head 25km away. Concentrates would then be railed to ports in either Newcastle or Port Kembla for export to Asia. The initial metallurgical test work on the mineralisation indicates that saleable concentrates could be produced at reasonable recoveries.

The capital costs for the concentrator and infrastructure were estimated from a database of similar projects and recent construction of projects in eastern Australia and are considered to be accurate to a +/-30% level.

In This Section

PROJECT OVERVIEW

CMD Gold Mine

BUSHRANGER Copper Project (EL 5574)

PRINCHESTER