Gold Mines of Sardinia Limited
A.C.N. 009 234 851
FURTEI MINE KEY PERFORMANCE HIGHLIGHTS
Furtei Project Production in Ounces
MINE CASH OPERATING COSTS (US$/oz)
(Per the Gold Institute Production Cost Standard)
Gold production from oxide sources continued at Furtei throughout 2000, with the project surpassing late in the year the important milestone of 100,000 ounces (oz) of gold (Au) poured since start up.
Several new pits were opened to replace those which reached the base of oxidation during the year. The ability to replace exhausted oxide reserves reflects the ongoing exploration success at Furtei.
During the year the mine delivered carbon-in-leach (CIL) material to the mill at a grade 15% above budget predictions while maintaining strip ratios at less than 2:1 (30% below budget). Careful design and control of mining operations are maintaining this low strip ratio.
A total of 916,295 tonnes (t) of material was mined 272,950t at a mined grade of 4.01 grams per tonne (g/t) delivered to the run of mine (ROM) pad and 26,580t at a mined grade of 0.85g/t stacked on the dump leach pad. This ore was sourced from the eight principal mining areas of Cima, Est, Is Concas, Nord, Ovest, Sud Ovest, Sa Perrima and Su Masoni.
Reconciliation's for benches mined and completed during 2000 comparing material predicted by reserve estimates with that actually mined, based upon grade control information are provided in Table 1. These show mine production exceeded reserve estimates for these benches by about 20% of contained metal.
Geological mapping as mining proceeds is allowing geologists to further refine understanding of the geology of the deposits, which improves reserve estimates and aids in locating new drill targets.
A new maintenance agreement with the local Caterpillar agent resulted in fleet maintenance costs for the year significantly lower than budgeted.
The agreement with a local contractor to take waste material from the mine for use in highway construction continued throughout the year, providing cost savings of about 5% a tonne of material moved and reducing future rehabilitation costs for waste dumps.
Oxide ore reserves for the Furtei Project have been re-estimated at 31 December 2000 (Table 2) on the basis of new resource estimates for several current and future mining areas, and an allowance for mining depletions of the reserves previously reported.
Sulphide ore reserves have also been estimated for the Furtei Project, with this material forming the initial feed for the new sulphide flotation plant. Metallurgical assumptions for this material have been based upon a review of available testwork data and indicative smelter terms received.
Studies of the Su Coru resource (see exploration section, Table 6) are expected to result in much of this material being reported as reserve.
FURTEI OPERATIONS PROBABLE RESERVE ESTIMATION
TOTAL ALL SOURCES, DECEMBER 2000
Gold production from all sources at Furtei in 2000 exceeded budget predictions by 12%.
The mine delivered 26,580t of ore to the dump leach pads significantly above budget predictions at an average grade of 0.85g/t. A total of 467,977t occupies the leach pad, built up since it began operation in 1997. Gold production from the dump leach during 2000 totalled 835 ounces (oz).
The CIL circuit produced 25,520oz of gold in 2000, 2031oz above budget predictions. A total 253,448t of ore were treated at an average grade of 4.17g/t and a recovery of 76.7%.
The five-day week operating roster continued successfully throughout 2000 allowing maintenance to be carried out on weekends. Mill availability exceeded 99% as a result.
Tailings Impoundment Facility
The wall of the tailings impoundment facility was raised 2 metres (m) during the year. This work was carried out principally by the mine fleet without interrupting scheduled mining activities, producing significant cost savings. In addition, two new drainage canals were constructed around the perimeter of the impoundment facility to protect against rainwater inflows.
An independent assessment of the impoundment facility by an Australian consultancy confirmed that the condition and management of the impoundment facility were sound.
FURTEI MINE PRODUCTION
Furtei Sulphide Project
Construction of the sulphide flotation plant began in September 2000. All stages of the construction proceeded smoothly, despite heavier than normal rainfall during the winter, and commissioning was planned for mid-March 2001.
Stripping of overburden from the sulphide pit designs began during 2000. By year-end 154,510t of material had been stripped and 79,325t of sulphide material stockpiled on surface ready for the flotation plant, at a gold grade of 3.56g/t and a copper (Cu) grade of 0.39%.
Mine planning and preparations continued through the year on the Su Coru and Cima-Est potential underground mines.
Grade control activities carried out during the preliminary sulphide stripping delineated additional areas of oxide ore.
Furtei SulPHide Project Metallurgical Testwork
A bacterial oxidation testwork program was performed at Lakefield Research in South Africa, testing conventional stirred tank bacterial leaching and a lower cost heap leaching method developed by GeoBiotics, Inc.
Two flotation concentrates were tested:
Batch bio-oxidation tests were carried out at 38oC. Four column tests using the GeoBiotics GEOCOATâ process were performed. The following sulphide oxidation percentages and gold recoveries were obtained:
These results indicated the pyrite concentrate was amenable to bio-oxidation. About 10% of the gold was not recoverable after complete sulphide oxidation. Diagnostic leaching results showed this was due to the presence of jarosites as well as quartz occluded gold. Pyrite was effectively bio-oxidised using the GEOCOATâ process. Waste rock support yielded slightly better results than low grade ore support and this was thought to be due to the better pH control achieved with waste rock.
The enargite material was less amenable than pyrite to bio-oxidation by mesophiles. Some of the observed gold recovery from enargite after bio-oxidation was due to the oxidation of pyrite, also present in the enargite concentrate. Partial enargite oxidation was achieved in the GEOCOATâ columns. The column using thermophilic bacteria performed better, both interms of copper recovery and the fact that copper extraction did not plateau but continued in a linear fashion until the test was terminated. This suggested heap leaching of enargite using thermophilic bacteria could be a viable technology. It requires further commercialisation.
Further testwork on enargite flotation demonstrated that the flotation tails streams could be treated by direct cyanidation.
A composite sample from Is Concas containing 6.7g/t Au, 2.1% Cu and 0.2% As (arsenic) was bulk floated to produce a concentrate for further testwork. Three initial rougher stages were used to produce an enargite concentrate, with a further two rougher stages producing a pyrite concentrate. A further test incorporated a regrind stage ahead of cleaning and recleaning to show the merits of including these stages in the circuit.
These tests showed that an enargite concentrate containing 25% of the mass could be produced at a recovery of 80%. Regrinding would improve grade, at the same recovery. The flotation tails grade, approximately 1g/t, indicated the need for further processing. Diagnostic leaching showed that about 85% of the gold from the "pyrite concentrate" (4th and 5th rougher during enargite flotation) was recoverable by direct cyanidation, or about 4% of the total gold. Direct cyanidation of the enargite float tailing gave 66% gold recovery, or about 8% of the total gold.
A trial of activox leaching achieved 83.1% Cu extraction and 70% sulphide oxidation in 2 hours. Gold recovery after cyanidation was 76%, with high cyanide consumption.
On-site heap trials
The company is developing on-site trials for pyrite bio-oxidation. Two bacterial heap leach pads using ROM pyrite and crushed pyrite ore were built and operated from July to November 2000. Methods were developed in-house to build, inoculate, operate, monitor and sample bio-oxidation heaps. The trial heaps are the subject of an Italian government research grant application to help defray the costs of development.
Sampling revealed two types of oxidation:
Final cyanidation result was 70% gold recovery after 4 months bio-oxidation. A program has started to determine the variability of gold recovery throughout the Sa Perrima orebody.
The average realised gold price for the 12 months to 31 December 2000 was US$286 an ounce (1999: US$304). The average cash operating surplus per ounce was US$129 (1999: US$88). All silver sales were at the spot price on the day of delivery.
Project Funding Grant and Loans
Sardinia Gold Mining SpA is the recipient of two decrees, issued by the Italian Government, relating to the successful application by the company for the following:
Sardinia Gold Mining SpA also applied for other grants during 2000 from the Italian Government and the Regional Government of Sardinia:
About 1200 people from surrounding communities, and further afield, attended an open day at the Furtei mine site during the year. The day included tours of the mine and process plant area, inspections of the various plant and machinery used in the operation, viewing of rehabilitation achievements and discussions of general aspects with the company workforce. The program also involved many displays by the SGM's main suppliers.
The SGM's policy of providing assistance to local communities resulted in:
Throughout the year SGM also hosted several visits from local school and interest groups, and from Sardinian, Italian and European university groups.
Independent water analysis by the University of Cagliari continued throughout 2000 with results indicating that, while cyanide levels within the tailings impoundment and associated seepage catchment sump fluctuated, no evidence exists to suggest that cyanide levels at the other monitoring points are above background levels.
Careful blast design, coupled with routine monitoring of blast vibrations, continued in 2000 to ensure that mining had no adverse effect upon the various civil structures in and around the mine area.
Significant rehabilitation works continued. Large stretches of the Cima mountain and Nord areas (previously cleared for detritus mining) were backfilled and prepared for revegetation following the winter rains at the start of 2001.
Other works included the filling, covering and re-contouring of old drill sites and access roads around the site, seeding of grasses in several prepared areas and general monitoring, weeding and maintenance of previously rehabilitated and planted areas.
Local forestry experts reported favourably on previously rehabilitated areas after a site inspection.
At the end of 2000, the Furtei operation employed 75 people - 65 full time staff and 10 contractors (including site-based geological and exploration staff and operators).
Of this total 44 persons were employed as operators at the actual mine and mill and of these 60% were sourced from the four communities immediately surrounding the mine site. SGMs policy is to recruit first from these four communities whenever possible.
Osilo Trial Mining
SGM intends to develop the Osilo field into a stand-alone operation with the potential to produce up to 50,000oz of gold a year, subject to the successful outcome of feasibility studies and permitting. The field consists of numerous quartz veins amenable to underground mining and conventional CIL treatment at a central process plant. Currently, resources are sufficient to plan a five-year project treating about 200,000t/yr, with excellent potential for extending the life further.
Work at Osilo during the year focused on planning and permitting a trial mining/bulk sampling program at the Bunnari vein (one of the two main veins that would comprise the initial mining project at Osilo), and beginning the full project permitting process.
Approvals for trial mining and deep Bunnari resource drilling were received from the regional government during the third quarter, and subsequently vetoed by a national government authority on grounds that the regional approval did not follow due process. The veto related to the administrative process that the regulator followed and did not comment on the merit of the application. SGM appealed against the veto and received legal advice that a very strong case existed to have it set aside. Hearings have been completed.
Full Project Permitting
The preparation of an environmental impact study (EIS) is the fundamental element of major project approvals under Italian law. A selection of Sardinian experts has been identified to undertake the prescribed environmental discipline studies, assisted where necessary by international consultants, and finalization of the individual scopes of work is nearing completion.
The EIS scoping document was compiled during the final quarter of the year. This document will establish in detail the EIS terms of reference for the full-scale development of the Osilo project when it has been reviewed and commented upon by the appropriate regulators. The document will be lodged with the regulators, and be available for public comment, after the land for the preferred surface infrastructure site has been secured.
Exploration results continue to confirm Sardinia as a major gold province in Europe. The gold prospect newly discovered at Monte Ollasteddu, in the Eastern Paleozoic region, has potential to host a large tonnage deposit. The gold is of mesothermal type and is related to granites formed by crustal scale melting following the Hercynian deformation of late Carboniferous age. This orogenic and subsequent metallogenic event is responsible for similar deposits in Europe that total more than 18 million ounces (M oz) of gold in past production and current reserves and resources.
The Tertiary age volcanics that host the Cuglieri epithermal field is similar in size to that at Osilo. A number of new sinters and veins have been discovered, the most promising being the silver-rich vein at Pedra Loabbia. (Tenements Map, Fig. 1)
At Furtei, high grade intercepts were made in infill drilling at Su Coru. New veins have been found in the Osilo epithermal field, including a high-grade structure at Sa Maddelena. Resources and past production (100,000 oz Au produced to 2000) at Furtei and Osilo total more than 1.1M oz Au.
It is likely the new discoveries at Monte Ollasteddu and Cuglieri will add substantially to the future resource base.
Homestake has begun its involvement with exploration and deployed an experienced epithermal geologist to Sardinia in mid-November. Mapping and prospect evaluation began in the North West Volcanics and also in the Monte Ollasteddu region.
Exploration and infill resource definition drilling was carried out around the diatreme (volcanic vent) at Santu Miali Cima, in the structural corridor between Bruncu Laccus in the north and Sa Perrima in the south, and at a number of other targets in the mine corridor area. Eight diamond drill holes were drilled for 1,935.4m and 146 RC and RAB drill holes were drilled for a combined 7,928m (Table 4, Fig 2).
Oxide mineralisation was discovered in four separate areas south and east of the Sa Perrima mine - at Sa Perrima South, Quarry, Sa Crescia and Coronas Arrubias (Fig 3). The oxides are part of the stratabound (gold-pyrite) style of mineralisation where gold is hosted within flat lying pyroclastic units between two andesite flows.
The mineralisation is masked by a thin layer of overlying barren andesite and is generally less than 10m below the surface. This body of oxide ore is part of a second, upper layer of the main stratabound layer of mineralisation. Best drill intercepts included 6m @ 5.06g/t Au, 8m @ 4.63g/t Au, 11m @ 2.30g/t Au, 7.5m @ 4.53g/t Au, 11m @ 2.47g/t Au and 4m @ 7.09g/t Au (Table 5). New oxide resource estimates are expected to provide up to five months of additional oxide mill feed in 2001.
FURTEI - DRILLING SUMMARY 2000
The high grade gold and copper Su Coru deposit was discovered in late 1998. It is located to the south of Is Concas and the mineralisation starts at 40-70m below surface. Two diamond drill holes were drilled into the Su Coru deposit to firm up the geological interpretations and resource estimates. Both holes intersected vuggy silica alteration and stockwork veins of enargite and pyrite (Fig 4).
Drill hole COD118, drilled to infill to 20m between the high-grade intercepts in the middle of the orebody, intersected 33m @ 6.69g/t Au and 2.53% Cu from 130m downhole.
Drill hole COD117, drilled to close off the resource at the southern strike extent, intersected 32m @ 4.78g/t Au and 2.0% Cu, from 116m downhole (Table 5).
The updated geological resource at Su Coru is 345,000t @ 5.74g/t Au and 1.71% Cu. The resource is still open to the south and down dip. These possible extensions will be drilled from underground during underground development and mining.
FURTEI DRILLING BEST INTERCEPTS 2000
Cima-Est Structural Corridor
The predominant controls on Tertiary volcanism and subsequent alteration and gold mineralisation in Sardinia are the north-to-east trending transform faults and the intersections with north-south trending faults.
The Santu Miali Cima and Est deposits are joined at depth along such a northeast structure and represent the regional trend at a deposit scale.
A program of wide-spaced deep diamond drilling has been started, to locate a large and new hydrothermal system, not evident at surface, within the Cima-Est corridor.
Four diamond holes were drilled to test the intersection of the western contact of the diatreme breccia within the Cima-Est corridor, and the first of a three diamond drill hole-program has been completed on the eastern side of the diatreme where the Cima-Est structure intersects the north-south trending Sa Perrima-Coronas Arrubias structural corridor.
Diamond drilling intersected wide zones of argillic alteration (pyrite and clays) and brecciation associated with the diatreme contact, but only minor gold.
The drill hole on the east side intersected an 18m interval of vuggy silica, enargite and pyrite grading 1.88g/t Au from 163m.
This is the first time significant enargite-style mineralisation has been found away from the diatreme. Follow-up drilling is planned upon completion of the initial program.
A compilation of all previous data, additional geological mapping and structural analyses has been carried out to optimise drill targets along the known gold mineralised structures. The cumulative along-strike distance of the mineralised structural corridors that host the epithermal quartz veins in the Osilo and Nulvi epithermal fields is in excess of 50 linear kilometres, most of which have not been drill-tested (Fig 5).
As a result of this work the area south and east of the Bunnari vein was targetted and new epithermal quartz, silicification and hydrothermal breccias were discovered in four new areas. These are located at Sa Vittoria and Serra Coloras, 1.5km and 0.7km along strike and east of Bunnari respectively; at Bevegalza, 1km north of the Bunnari structure; and Matta Mala, 500m east of Pedra Bianca (Fig. 6). The chalcedonic quartz and quartz textures suggest they formed in the upper zones of the epithermal system. This is supported by low level gold and high mercury (up to 1000 ppm).
Additional rock chip sampling along the Sa Maddalena vein confirmed the potential for high grade shoot development. Rock chip and channel sampling have returned values of 42g/t Au, 29.9g/t Au and 8g/t Au from an interpreted dilational jog along the vein.
An RC drilling program is planned to test the new discoveries and the high grade structure at Sa Maddalena vein.
Diamond drilling to determine the extent of the high-grade shoots at the Bunnari vein was interrupted for reasons outlined in the Osilo Project section. The company expected this problem to be resolved in the first quarter of 2001 and to complete the initial program of 10 diamond drill holes.
As a result only three holes were drilled, 0BD 12, 13 and 14, into the 300m panel of the 1.4km vein. These drill holes were designed to intersect the vein structure from 250m to 300m below surface (Fig 7).
Drill core recovery in OBD12 was extremely poor, with only 30cm of core retrieved from a 2.4m wide quartz vein. Poor core recovery is generally associated with the more friable and brittle parts of the quartz vein, which at Osilo are more likely to be of higher gold grades.
A wide intercept of 5.5m, with average grades of 3.55g/t Au, was returned from OBD 13. This is an encouraging result. It confirms the tenor of vein development and, at this wide-spaced drilling, significant potential for possible high-grade shoot development to extend at least 300m below surface.
A low-grade result was returned from OBD 14, indicating that high grades are restricted to the upper 300m at this point along the strike of the vein.
The total gold resource (at December 2000 and depleted by mining) at Furtei is estimated to be 9.37Mt at an average grade of 2.10g/t Au - 631,642 contained ounces of gold, plus15,000t of copper.
The resources comprise three ore types: oxide, copper-gold (enargite) sulphides and stratabound (or pyrite-gold ) sulphides (Table 6).
At Coronas Arrubias, the stratabound resource has been recalculated using a 0.5g/t Au cut-off and is estimated to be 6.12Mt @ 1.52g/t Au. The stratabound resource is still open to the north, south and east. Drilling has intersected this mineralised horizon as far as 2km to the north of the reported resource area.
The Bruncu Merdegu resource has been re-classified as pyrite-gold sulphide and has been removed from the Cu-Au sulphide resource.
The Cu-Au sulphides total 2.1Mt @ 3.62g/t Au and 0.71% Cu.
A new resource estimate for mine planning purposes was carried out for five of the veins in the Osilo field. The veins were re-interpreted using a 3g/t Au lower cut-off. Total Indicated and Inferred resources are 1.65Mt @ 7.06g/t Au and 29.7g/t Ag (silver) for a total of 376,140oz Au and 1.58Moz Ag (Table7).
The Bunnari and Fieldies veins remain open along strike and at depth. The resource at Bunnari has been determined from a 300m panel of the 1.4km-long vein. Considerable potential exists to add substantially to the Osilo base by additional drilling into the 20 known vein sets at Osilo.
The resource estimates for all of the veins were audited and verified by SRK Consulting (UK).
SUMMARY OF GEOLOGICAL RESOURCES
The year 2000 was very successful for the regional exploration team. The highlights included two new discoveries: at Monte Ollasteddu in the Eastern Paleozoics and at Pedra Loabbio in the Cuglieri region. Both have the potential to host significant gold mineralisation.
At Monte Ollasteddu, the targets include high-grade veins and large tonnage low-grade deposits, while the Cuglieri region has the potential to host high-grade low sulphidation veins similar to that at Osilo.
SGM has discovered a new large area of gold mineralisation at Monte Ollasteddu in the Eastern Paleozoics. The gold is associated with stockwork and sheeted quartz veining, silicification and arsenopyrite mineralisation related to the waning stages of the Carboniferous age Hercynian deformation.
This orogenic event is host to a number of major gold deposits in north-western Spain (more than 7Moz gold produced), the Massif Central in France (6.3Moz Au in past production and reserves) and Slovakia in eastern Europe. This metallogenic event arose from the continental collision between Gondwana and Baltica, which formed the Variscan belt in Europe, and extends further east to the Urals and Tien Shan.
The Monte Ollasteddu area was first highlighted by very high stream sediment results of up to 330 parts per billion (ppb) gold. Subsequent ridge and spur soil sampling along 50m intervals on lines spaced 500-700m apart, taken in October-November 2000, now defines an east-west trending soil anomaly more than 4km long and up to 1km wide. Best soil results include 996, 554, 334 and 330 ppb Au. The soil anomaly is open to the east and west (Fig 8).
A high percentage of rock chip grab and channel samples taken in this zone has returned values greater than 1g/t Au. Best results from grab sampling include 57.6, 40.3, 19.44, 19.28, 12.39, 6.31 and 5.61g/t Au. Channel samples have been taken by using a hammer and chisel on the rock outcrops. They are mostly exposed as low mounds protruding from soil or on cliff faces in
rugged terrain. Best channel sample results taken from quartz sulphide veins include 0.4m @ 43.49g/t Au, 0.7m@ 13.24g/t Au, 1m @ 12.69g/t Au and 1m @ 12.4g/t Au. A semi-continuous channel sample (58m of outcrop), taken over a north-south line of 75m, returned an average grade of 0.87g/t Au.
The mineralisation is hosted in brittle deformed meta-rhyolites and at the sheared contact with meta-siltstones. The Monte Ollasteddu discovery represents both a high-grade vein-style target and/or a significant lower grade bulk tonnage stockwork vein and disseminated sulphide target (Fig 9).
Topographically, the area is dominated by an elevated plateau and deeply incised valleys. The plateau area is covered by soil and thick brush. The steep slopes largely comprise scree and elluvium. Rock outcrops comprise less than 20% of the area.
Reconnaissance mapping and rock chip sampling 1km to the north-west and 2km to the east of the soil anomaly have returned best results of 4.74, 4.34, 4.48 and 3.23g/t Au. This extends the mineralisation to 6km along strike and it more than likely continues under a thin layer (10-100m thickness) of Eocene sandstone further to the east for another 4km and crops out at the Baccu Locci group of old workings.
The Baccu Locci area was mined in the past for arsenic, as arsenopyrite mineralisation in quartz veins, and previous rock chip sampling from underground and surface exposures returned up to 12g/t Au.
The Monte Ollasteddu to Baccu Locci zone of gold-arsenopyrite mineralisation totals in excess of 12km and is still open to the east and west. The structure may continue to the Genna Ureu prospect, where grab sampling of quartz veins with arsenopyrite mineralisation has returned up to 16g/t Au, giving the mineralised structure a potential strike length of 35km (Fig 10).
The gold-arsenopyrite-silver +/- lead and zinc association at Monte Ollasteddu and Baccu Locci is thought to be part of a regional-scale gold-antimony-bismuth-tungsten-molybdenum intrusive-related system that developed in response to crustal scale melting following the Hercynian deformation. These systems commonly show metal zoning on a regional scale and there appears to be metal zoning in the Eastern Paleozoics, with molybdenum in the far east and gold-arsenic plus base metals close by at Baccu Locci. Gold, tungsten and antimony occur in the more distal areas such as Genna Ureu and Corti Rosas in the west, and Villasalto in the south. The Sarrabus silver lode, the zinc deposits at Sa Lilla and the lead-fluorite mineralisation at the Silius mine are gold-poor but are thought to be part of the overall metallogenic event. The causative intrusion for the metals is at probably more than 1-5km depth.
Research Permits are in place to cover the Monte Ollasteddu prospect area. Infill soil sampling and rock chip channel sampling will be carried out to better define targets for planning fences of RC drill holes. In addition, regional stream sediment sampling, along with ridge and spur sampling will be carried out over the entire Eastern Paleozoic belt.
Preliminary metallurgical bottle roll results from eight sulphide samples collected at Monte Ollasteddu average 86.53% gold recovery from 24hr active cyanide leach.
Cuglieri Epithermal Field
New epithermal veins and sinters have been discovered near the town of Cuglieri and a new quartz barite (sub-sinter) vein with anomalous gold and high silver has been discovered at Pedra Loabbio. These epithermal occurrences, along with the previously known sinters at Porto Alabe,
Scano Montiferro and Monte Olia, appear to be centred on two large magnetic highs located near Cuglieri and falling within a 20km diameter ring structure (Fig 11). This represents a large epithermal field similar in size and potential to Osilo.
Anomalous pathfinder elements accompany each of the above. The Pedra Loabbio quartz barite vein is high in silver: the average grade of 11 rock chip samples is 8.57g/t Ag, with a maximum of 35g/t Ag. The vein crops out over a 450m strike length and attains up to 6m width.
The vein strikes north-south and is masked by a thin layer (5-10m) of recent basalt cover. It is interpreted to be high in the epithermal zone and this is supported by the occurrence of floats of epithermal sinter near the vein. The sinter is anomalous in arsenic (880ppm) and barium (6200ppm). The vein itself preserves well developed colloform and crustiform banding and also layers of fine sulphide banding which, according to some epithermal workers, is an important feature in low sulphidation bonanza grade veins (Fig 12)
A second north-south striking silicified structure occurs 300m to the south and east of the Pedra Loabbia vein. The structure is 400m long and in places more than 10m wide. It is anomalous in gold and silver and is hosted in epiclastics and in ignimbritic breccias of possible phreatic origin. The breccias, where cut by the structure, have had the entire matrix material replaced by silica and sulphide mineralisation. These lithologies are potential targets for bulk tonnage mineralisation. High level veining and sub-sinter deposits occur at the southern end of this structure.
At Scano Montiferru, the sinters and epithermal veins were mapped and sampled over a 3km strike before they disappeared under as much as 40m of Pliocene basalt cover to the north and south. Anomalous geochemistry from rock chips includes 0.2g/t Au, 0.2% Hg (mercury) and 600ppm As (Fig 13).
An IP survey carried out over the interpreted structural feeders for the silification and sinters has identified a number of chargeability anomalies coincident with the arsenic-gold soil anomalies and the interpreted structures.
Reconnaissance mapping and sampling are continuing in the Cuglieri region. A research permit has been applied for the Pedra Loabbio vein and RC drilling is planned to test the vein and sinter field at Scano Montiferro.
Other Exploration Projects
Systematic mapping, sampling and on some targets RC and diamond drilling are planned for the numerous gold prospects elsewhere in the North West Volcanics (Fig 14). These include the large area of hydrothermal clay alteration and silicification at Romana, anomalous gold associated with skarn-type mineralisation at Monte Murale, copper and silver mineralisation at Bidighinzu, gold in polymetallic veins at Monte Mattagiana, the north-east trending corridor between the Osilo epithermal field and the porphyry copper-gold mineralisation at Calabona and the epithermal gold structures at Siliqua in south Sardinia.
Mr. Jeff Rayner B.Sc. (Hons.), Chief Geologist for Sardinia Gold Mining S.p.A., has been responsible for the preparation of the geological sections of this report. Mr. Rayner is a corporate Member of the AusIMM and has more than five years experience in the estimation, assessment and evaluation of mineral resources and ore reserves, which is relevant to the style of mineralisation under consideration.