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QUARTERLY REPORT April – June 2006

QUARTERLY REPORT April – June 2006

Key Points

  • First gold pour completed
  • Plant commissioning continuing
  • New reef discovered



  • First gold pour completed from the commissioning phase of the Kangaroo Flat Mine.
  • Production of 70,000 to 90,000 oz gold planned for 2006/07.


  • Commissioning of ‘front-end’ of circuit complete. Crushing and high-pressure grinding rolls operated to design rates.
  • Plant construction 95% complete.
  • Eaglehawk decline rescheduled to commence December Qtr.


  • Mine development rates increased 10% this quarter to 1.2 km.
  • Record monthly development rate of 504 m achieved in June.
  • Final items of initial mining fleet received.


  • Greater Garrard reef (S3) defined over 800 m (increase of 75% in six months).
  • Alexandria reef (S4) increased to 1.4 km in length.
  • Discovery of Railway reef (S4) with intersection of 12 m at 10 g/t* gold.


  • Cash in bank of $97 million at 30 June 2006.

In reporting the best estimate of drill grade, the Company mathematically transforms raw assays due to the coarse-grained nature and erratic distribution of gold at Bendigo. The transformation is based on extensive bulk-sample experience.

Bendigo Mining Limited is developing one of the world’s largest and highest-grade new gold projects. The Bendigo Goldfield produced some 22 million ounces of gold over a century of mining, and today is estimated to contain high-grade gold mineralisation of over 11 million ounces beneath the historic workings. Once fully developed, the mine is planned to produce over 600,000 ounces of gold a year for more than 20 years, which would position Bendigo Mining as one of Australia’s largest long-life gold producers. Commercial production is planned to commence at the end of September 2006 and produce 70,000 to 90,000 oz of gold in 2006/07, building to 200,000 oz/y after three years, with full-scale production of 600,000 oz/y planned to commence around 2012.


The project is being developed in two phases as the central portion of the orebody is located directly under the City of Bendigo and the mineralised system is at least 10 km long. The plan is to access the orebody from the southern and northern extremities of the field, with decline ramp access and a dedicated process plant at each end of the field. Mining is planned to occur over the full length of the mineralised system from depths of approximately 750 m to 1,500 m.

The Kangaroo Flat Mine (the south mine) is planned to ramp up to a design rate of 200,000 oz/y gold over the next three years with the Eaglehawk Mine (the north mine) planned to add 400,000 oz/y of gold from 2011/12. Once fully developed, the project is planned to produce over 600,000 oz/y gold.



The first gold bar from the Company’s Kangaroo Flat Mine was poured on Thursday 13 July. The pour marks the first gold production from the Bendigo Goldfield since 1954; a 52-year hiatus.

The 250 oz (7.5 kg) dore bar was produced during commissioning of the Kangaroo Flat processing plant. The timing of the gold pour was several weeks behind schedule due to work stoppages within the plant construction workforce, previously announced in May.

This caused a consequential delay to the commissioning schedule and a more conservative outlook for gold production in the 2006/07 financial year, as announced on the 28 June.

At no time has work stoppages by the temporary plant construction workforce affected our underground mine employees.

The current plan is to initiate commercial production as early as possible in the September quarter. However, a conservative position is to assume no commercial production in the September quarter.

Production for 2006/07 year is consequently planned to occur within a range of 70,000 oz to 90,000 oz from the processing of 330,000 t of ore at a grade which could vary from 7 g/t to 9 g/t gold. The gold head grade will determine the cash operating cost which could fluctuate between A$400/oz to just over A$500/oz. Volatility in grade and cash cost is expected to reduce as operations are bedded down over the course of the year.

Plant Construction

Construction of the 600,000 t/y gold process plant continued during the quarter under the management of Ausenco Ltd. The plant flowsheet incorporates three-stage crushing including high pressure grinding rolls, grinding, intensive gravity processing, sulphide flotation and carbon-in-leach processing of the flotation concentrate.

Overall site construction is around 95% complete. Plant commissioning, on night shift only, commenced late in the quarter. A small quantity of gold was produced in July from commissioning of the crushing circuit, high-pressure grinding rolls (HPGR), HPGR screen, coarse gold trap and a section of the gravity plant (Gekko spinners).

The performance of the crushing circuit and HPGR has met expectations. The ‘front-end’ of the circuit and parts of the gold room are now essentially fully commissioned.

Dry and wet commissioning of the ‘back end’ of the circuit (gravity, flotation, leaching and tailings handling) will commence in July. Full ore commissioning is anticipated to start in early August and be completed by the end of September.

Site construction manning levels totalled 167 personnel at the end of June and this number is expected to rapidly reduce as construction activity is completed in July.

Ausenco has advised that delays to construction and a general underestimate of activity for the site will result in a final capital cost estimate of $60-65 million (including owner costs).



  • Adam St Circuit
    The ventilation circuit was commissioned in June and is now in operation.
  • North Deborah Circuit
    The pilot hole for the 4 m diameter, 442 m long, Leg 1 of the North Deborah vent shaft was successfully completed in the quarter. Reaming will commence next quarter and it is expected that the rise will be fully commissioned by the end of the year.
  • New Chum Circuit
    Planning permission for the New Chum rise has been received. Geotechnical drilling was completed this quarter. Construction activity is planned for 2007.


Dewatering of the historic mine workings is an important element of the Bendigo project. Dewatering currently occurs at a rate of around 3 ML/d, with plans to increase this to 8 ML/d by the end of the year.

To support the increase in dewatering, the construction of a new 7 ML/d water treatment and reverse osmosis plant at the New Moon site is planned to commence next quarter.


Underground development of 1,233 m was a 10% increase on that achieved in the previous quarter (1,119 m in the March quarter) . In June, a new record rate of development of 504 m was achieved which is on target for the required development rates next year.

Development priority was given to the continued extension of the north drive, which is required for exploration drill locations and ultimately for a link to the Eaglehawk Mine. The north drive advanced 146 m (147 m last quarter) and is now 604 m north of the Swan decline.

Other priority development areas include the South decline, to gain access to the Alexandria reef (S4), and then the Swan decline, for access to the deeper, northerly portion of Greater Garrard reef (S3) and the new Railway reef (S4).

Ore Mined

Initial ore development into the Shywolup (D3), Greater Garrard (S3) and Upper S3 (S3) reefs has commenced. Stoping is expected to commence in August.

Stockpiling of 5,400 t of development ore was completed, increasing surface stocks to around 15,500 t.


During the quarter the Company took delivery of a truck, loader and jumbo to complete the mining fleet for initial mine development and production.

The Company’s fleet currently consists of 4 x 50 t trucks, 3 jumbos, 3 x loaders plus ancillary support equipment. A longhole drill rig has been ordered and is expected to be delivered late in 2006.

Kangaroo Flat Mine: Process plant construction, view looking north.
Kangaroo Flat Mine: Process plant construction, view looking north.




The Company has planning permission for gold mining and processing at Eaglehawk under the 1997 Williams United Environment Effects Statement (EES). Further environmental modelling was submitted to the regulatory authorities and confirmed that the Company’s development plan does not have significantly increased environmental impact compared to the project that was approved.

The Company is now waiting for the authorities to reconfirm that planning permission is in place for the revised plan.

Pre-operational activities were largely completed in the quarter. The commencement of the box cut for the decline portal and noise bund construction is now likely to occur in the December quarter of 2006.

A consequence of this is a delayed start to the decline. The impact on the development schedule will be assessed once the approval has been received.

Kangaroo Flat Mine: Process plant construction, view looking south.
Kangaroo Flat Mine: Process plant construction, view looking south.



The 11 Moz Inferred Resource at Bendigo is supported by the highly repetitive geology of the field. The geological model (ribbon model) predicts the occurrence of gold-bearing reefs repeating vertically every 200-250 metres. Exploration confirms this on the Deborah and Sheepshead Lines and reinforces the reliability of the geological model (see attached diagrams showing stacked ribbons pages 6-7).

Exploration success is strongly influenced by the availability of underground drill platform and hence rates of underground development.

Current Activity

Schematic View of Ribbon Location
Schematic View of Ribbon Location

Drilling of 14,573 m of diamond core was completed (9,278 m in the previous quarter). Key results are:

Recent drilling has extended and defined the northern extent of two known reefs at Alexandria (S4) and Greater Garrard (S3).

Drilling has also outlined potential new reef positions at Dale (D4) and Railway (S4). Importantly, the Railway reef is developing to the north of where the Alexandria (S4) and Greater Garrard (S3) reefs appear to terminate. This position was considered to have low exploration potential; hence the Railway reef is a high-priority target.

Mineralisation has unexpectedly been encountered in the synclinal position of the Deborah Line, some 50 m beneath current development. This is the second occurrence of mineralisation in this area and it may represent a valid target. The synclinal positions (bottom of folds) in the Bendigo Goldfield are not priority targets as the majority of historical production is associated with anticlinal positions (top of folds). These synclinal zones are, at times, incidentally tested in the current exploration drill programme.

Sheepshead Line

Greater Garrard reef (S3)

Greater Garrard reef has been extended a further 120 m to the north with a drill intersection of 11 m at 17 g/t gold on section SPND2 (see long section on page 6). Reserves at Greater Garrard are currently defined over a strike of 450 m. Drilling in the past six months has extended the mineralisation some 350 m further north, at approximately similar grade but reduced reef width. The reef was not intersected 120 m to the north, on section SPND3, and is considered to be closed-off.

Reserve drilling is planned to start next quarter.

Alexandria reef (S4)

Recent drilling at Alexandria has defined an additional 240 m of mineralised reef to the north, increasing the total defined length to around 1.4 km. The reef was not intersected on section SPND2, some 300 m further to the north and is considered to terminate near this location.

Railway reef (S4)

Drilling on section SPND3 (see long section on page 6) intersected a new reef in slightly lower stratigraphy within the S4 ribbon. All four intersections into this reef, named the Railway reef, show well mineralised quartz over a vertical range of up to 35 m. A preliminary assay of 12 m at 10 g/t gold has been returned from the initial hole, with other assays yet to be delivered. This target will be progressively tested from the North drive.

Deborah Line.

Dale reef (D4)

The possibility of a small high-grade saddle reef, high in the D4 ribbon, was discussed in the March quarterly report. Drilling on a section 120 m to the north (SPND2 on long section page 7) has extended and confirmed the reef, named the Dale reef.

Syncline Mineralisation

Mineralisation was intersected 50 m below stockpile bay SP40 (page 7) in the syncline position (bottom of fold) of the Deborah line. Several high-grade intersections were recorded associated with faulting in the syncline. Further drilling will be completed in the September quarter.


At 30 June the Company held cash in bank of $97 million.