Quarterly Activities Report
Robust IP/EM anomaly identified beneath historic high-grade gossan at the Mount Finnerty Nickel Project.
4.66 Mt maiden iron ore resource at Mt Finnerty iron ore project in WA. Eight new targets planned for follow up drilling.
On October 27th the Company announced it had signed a ‘company making’ agreement with Mineral Resources Limited (ASX: MIN) (“Mineral Resources”) to develop the Mount Marion Lithium Project (“Mount Marion Project”) located between Kalgoorlie and Kambalda in the Goldfields region of Western Australia (refer to Figure 1).
Under the terms of the binding agreement;
Mineral Resources, which has extensive experience in the construction and operation of significant mining operations throughout Australia, expects to mobilise a processing plant and related equipment to Mount Marion in Q2 2010. First shipments of product, at a production rate of 17,000 tonnes per month of +6.5% Li2O concentrate, is expected to commence from Q3 2010, subject to a decision to mine and obtaining all necessary approvals.
Como Engineers have supervised test work to confirm the recovery of spodumene from conventional heavy liquid separation on crushed ore. The current test work program was performed by Mineral Processors (WA) Pty Ltd on bulk samples from exploration winzes sunk into the No.1 and No.2 Deposits at Mount Marion and were crushed to P100 8mm before single pass testing.
Previous beneficiation test work conducted as part of the Pre-Feasibility Study (“PFS”) undertaken by previous owners, Associated Minerals Pty Ltd, in 1996 recovered 24% of the original mass of ore from the No.1 Deposit into a concentrate grading 6.5% Li2O. The current planned production rate assumes a mass recovery of approximately 20% into a concentrate grading +6.5% Li2O.
During the quarter the Company completed Phase 1 of its Resource Definition drill program (Figure 2). Drilling (139 holes) confirms multiple, stacked, high-grade pegmatites at the Nos 1, 2 and 2W Deposits. The average intercepts of high-grade mineralisation is 9.2 m at 1.52 % Li2O and 1.4 % Fe2O3, using 0.6 % Li2O lower cut-off grade.
Key developments at the Comet Vale project, situated 100 km north of Kalgoorlie, during the quarter has been the mining of high grade ore from the 4 Level Sand George Lodes.
On October 16th the Company announced an agreement with current Production Joint Venture partner Kingsrose Mining Limited (ASX: KRM) (“Kingsrose”) to terminate the existing joint venture arrangement. Under the agreement, Kingsrose will continue to mine from and above the 4 Level under the existing arrangement until 31 May 2010 at which point Reed will become entitled to 100% of production. Reed plans to continue mining the 4 Level from the existing shaft until economic resources are exhausted.
Under the terms of the agreement, Reed will:
In addition, the Company commenced an operational review of the Comet Vale Project to define the quantity and grade of underground resources that may be converted to ore reserves with the aim of increasing production from the existing underground operations.
This review will also evaluate the potential of existing shallow, open pit gold resources at Comet Vale (e.g. Sand Prince West and Princess Grace prospects) to provide base load feed to enable a decision to refurbish and re-commission its recently purchased Nimbus Processing plant at an initial rate of 150,000 tonnes per annum.
During the quarter, Kingsrose hauled 9,546 tonnes of ore to the surface, and by quarter end 9,018 tonnes of ore grading 11.2 g/t Au were stockpiled on the surface ROM pad awaiting milling.
Two parallel lodes, the Hanging Wall and Footwall Lodes, are currently being mined on 4 Level at Sand George. Mining continued on the high grade ore in the Level 4 Hanging Wall Block 1 stoping block. Kingsrose completed 216 m of sub-level development on the 4 Level Sand George lodes, in preparation for stoping of this block.
The Company has scheduled for completion in the March Quarter the installation of additional pumping capacity to enable the dewatering and refurbishment of the existing shaft to provide access to the 5 Level.
Toll treatment of surface stockpiled ore (Campaign 10) was completed in two phases, from 12-20th October and 2-11th November. Approximately 7,319t of ore was treated, the Company’s equity share of production was 927 ounces at estimated cash cost of A$632/oz. The attributed mill grade was 10.02 g/t and recovery of 96.2 %.
The Nimbus Project comprises a precious metals plant which is capable of processing 250,000 tpa and two granted mining leases (M26/490, M26/598), located 15km southeast of Kalgoorlie. Approximately 3M oz of silver were produced from 2004 to 2006 from two open pits before mining operations ceased in late 2006. The processing plant was placed on care and maintenance in late 2007.
The plant was acquired to enable Reed to further develop is strategy of increasing its level of profitable gold production from its share of the high grade Sand Queen Production Joint Venture (which ends on 31 May 2010). The Sand Queen gold ores are highly amenable to gravity recovery followed by leaching, and the Nimbus plant which includes a yet to be installed gravity circuit, will enable both open pit and underground ores to be processed at their optimal conditions.
During the quarter Reed continued the Stage 2 clean up of the Nimbus Mine site and Processing Plant as a vital step in the progress toward rendering the Nimbus Processing Plant operational again, which is planned for later this year.
The surface area around the plant and the ROM pad were skimmed to a depth of 50mm and the material returned to tailings storage facility, as was the silver refinery building, the barring furnace, fume towers and drying ovens. Requests for quotations for the refurbishment of the plant to an annual operating capacity of 150,000tpa were called for during the quarter, with two vendors currently working on proposals.
The Barrambie Vanadium Project continues to be a high priority despite the current global financial crisis restricting access to previously available funding for a project of this nature. The Company is continuing to investigate various project development alternatives and strategies.
Barrambie remains one of the world’s highest grade vanadium deposits with a Probable Ore Reserve of 39.7 Mt at 0.82% V2O5 (outlined below). This Ore Reserve is based on an Indicated Mineral Resource of 49.2 Mt which represents a Resource to Reserve conversion rate of 81%.
* Probable Ore Reserve by Snowden Mining Industry Consultants Pty Ltd for a diluted cut-off grade of 0.6% V2O5. All tonnes are estimated as dry tonnes.
The Definitive Feasibility Study (DFS) completed in April 2009 indicated that, based on the existing mineralisation, the Barrambie vanadium processing plant and associated infrastructure will target a through-put of 3.2 million tonnes per annum of vanadium bearing magnetite mineralisation at a grade of 0.82% V2O5 to produce 7,700 tonnes of Ferro-Vanadium (FeV80) per annum, for a minimum 12 year period. The DFS estimated that the capital cost for mine development and construction of a processing plant is $628.9M and indicative operating costs would be less than US $20/kg V. The price is currently US$29/kg V (Ryans Notes, 18 January 2010).
During the quarter the Company continued to engage with its consultants and the Environmental Protection Agency (EPA) with a view to progressing its Barrambie Draft Public Environmental Review (PER) through the due process. Progress was made on a number of outstanding issues as follows:
Results of all surveys conducted were as expected and the Company is targeting finalising the PER within the first quarter of 2010.
The Company has acquired minority interests in two exploration licences (E57/769, E57/770) which contain magnetite-bearing formations along strike and to the west of the Barrambie Vanadium deposit, consideration was 600,000 ordinary shares (see Figure 4).
During the Quarter, joint venture partner Cliffs Asia Pacific Iron Ore Pty Ltd (“Cliffs”) announced a maiden JORC Code compliant resource at the Mt Finnerty project in Western Australian that gives sufficient encouragement to progress exploration of other targets at the project.
The Mt Finnerty iron ore project (Figure 5) is located 65 km east of the Koolyanobbing town and mine sites operated by Cliffs. Cliffs have earned an 80% interest in the iron rights at Mt Finnerty, with the remaining 20% stake held by Reed.
The combined Inferred Mineral Resources at the FIN9 and FIN10 prospects is 4.66 Mt at an average grade of 53.5% Fe, for a lower cut-off grade of 50% Fe, and with significantly low levels of phosphorous (P) and sulphur (S). Reported tonnes and grades of Minerals Resources at each of the prospects are listed in the following table at lower cut-off grades of 50% Fe and 58% Fe (details of Resource estimation is provided in Appendix):
Resource tonnage and grade estimates comply with the JORC Code (2004) and are all assigned to the Inferred Resource category (Appendix).
Resources at each prospect are for goethitic mineralisation in supergene-enriched banded iron formation (BIF). The predominance of goethite is reflected by the relatively high LOI (loss on ignition) content of the resources. The resource at FIN10 is more complex than FIN9 with indications of hematite mineralisation.
The results of targeting studies and previous geophysical data analysis generated a total of 52 targets from various geophysical interpretations (Figure 5). Reconnaissance drilling was recommended along strike from the known FIN 9 and FIN 10 deposits. Mapping and reconnaissance drilling at Mt Finnerty and Mt Watt targets and drill testing of conceptual concealed targets at FIN 7, Mt Watt East, Mawson and Gray Prospects were also recommended.
Detailed (1:1,000 scale) mapping was undertaken at the Gray, Mt Watt, Mt Watt South and Mt Finnerty targets. A total of 28 potential targets were inspected with the majority being downgraded. Additional haematite-goethite mineralisation was discovered southeast of Mt Watt. Three areas of new mineralisation were discovered that potentially warrant further investigation. Leichhardt South is approximately half way between, and along strike of the FIN 10 and FIN 11 prospects and consists of patchy haematite with scree mineralised scree. Two ‘Fenceline Prospects’ have also been discovered approximately 3 to 4 km southwest of FIN 10 consisting of patchy goethite and goethite-haematite outcrop.
Results for 41 rock chip samples are displayed in Appendix 1.
The Company’s exploration at the project has focussed on the western flank of the Mt Finnerty greenstone belt, in an area where historic exploration resulted in the discovery of a nickel-rich ‘gossan’ by Western Mining Corporation (WMC) in 1968 and surrounded by an extensive PGE soil geochemical anomaly detected by previous explorers in 2006. This area is underlain by a thick sequence of ultramafic-mafic volcanic rocks that is continuous along the western flank of the greenstone belt; a distance of over 50 km (Figure 6).
The Company’s exploration program included an induced polarisation (IP) survey and ground electromagnetic (EM) survey, supervised by Southern Geoscience Consultants. This work resulted in the discovery of a robust geophysical anomaly coincident with the ‘gossan’ and soil geochemical anomaly.
The IP anomaly is close to a geological contact that was also interpreted from resistivity measurements during the IP survey. This geological contact is at the interpreted base of an ultramafic unit within the ultramafic-mafic volcanic sequence.
Following the success of the IP survey, a fixed loop electromagnetic (FLTEM) survey (5 lines, 4 line km, 100 m line spacing) was undertaken over the IP anomaly. The FLTEM survey revealed a diffuse EM anomaly that is attributed to a weakly conductive feature approximately coincident with the IP anomaly (Figure 7). Modelling of the EM anomaly indicates a steeply east-dipping planar feature, possibly a stratigraphic source that extends along strike to the north beyond the IP anomaly.
The geophysical anomalies also coincide with an extensive PGE soil geochemical anomaly that has maximum values in excess of 100 ppb Pt+Pd (2006). This anomaly is at least 500 m in length along the strike of the ultramafic unit.
Historic RC drilling along strike to the north of the IP anomaly included two intersections of 1.5 m @ 0.55 % Ni, 375 ppm Cu and 1.5 m @ 0.52 % Ni, 390 ppm Cu in a vertical drill hole BFRP21 (WMC 1970). Another drill to the south of the IP anomaly intersected 15m @ 0.35 % Ni, 237 ppm Cu and 3m @ 0.33 % Ni, 425 ppm Cu in an inclined drill hole MF103 (Arimco 1995). Drill hole MF103 is also reported to have disseminated pentlandite, a primary nickel sulphide, in peridotite below the weathered profile. These drill holes are in the same ultramafic unit as the IP-EM anomalies but are at least 1 km from the geophysical anomaly.
The coincidence of IP and EM geophysical anomalies below a nickel-bearing ‘gossan’ and an extensive PGE soil geochemical anomaly that parallels an interpreted basal ultramafic unit confirms the potential of this target and the remainder of the Mt Finnerty greenstone belt for nickel sulphide mineralisation.
An RC/diamond drilling program to test the geophysical anomaly, confirm the ultramafic-mafic volcanic stratigraphy, and increase the geological understanding of the prospect commenced mid January 2010.
Exploration by Western Areas NL (“WSA”) focussed on the Johnnies Dam prospect on the Western Ultramafic sequence on the western flank of the Watt Hills greenstone belt. Logging and sampling of a deep (220m) RC drill hole, WMFRC010, drilled in September, was completed. The hole was stopped at 124m due to an inflow of salty water. The drill hole intersected unmineralised basalt and thin low-Mg ultramafic units and did not reach its target. Data from recent RC and RAB drilling has been compiled and further assessment of the assay results is in progress.
Bell Rock Range project (E69/2293) covers some 471 km2 within the western part of the Proterozoic Musgrave Block in central Australia (Figure 9). It is highly prospective for several commodities, particularly Ni-Cu sulphide and PGE mineralisation.
An extensive airborne electromagnetic (EM) geophysical survey was carried out by Anglo American Exploration using their highly successful proprietary SPECTREM system was completed in mid-October 2009 with 2,504line km of surveying completed, providing coverage over 95% of the tenement area at 250m line spacing. Preliminary grids and images of the Spectrem survey data were delivered to Reed in December 2009. The south-eastern corner of E69/2293 does not currently have Spectrem survey coverage, data over this part of the tenement will be collected as part of an ongoing regional survey in Q1 2010.
The Spectrem survey over E69/2293 did not highlight any immediately obvious conductors that may represent massive sulphide mineralisation. However, data from some of the areas within E69/2293 that are obscured by conductive cover need to be interpreted in more detail to ensure that no potential conductive targets are overlooked – this work will be carried out in Q1 2010.
The corporate events that took place during the quarter are summarised below:
At the end of the quarter the Company had $12.8 million in cash and term deposits, including $8.8million in restricted-use term deposits supporting performance bonds, in addition 450.71 ounces of gold was on hand at 31 December 2009.
Geological aspects of this report that relate to Exploration Results have been compiled by Dr Peter Collins (MAIG), a Director of Reed Resources Ltd. Dr Collins has sufficient experience relevant to the styles of mineralisation and typse of deposit under consideration and to the activity being reported on to qualify as a Competent Person as defined in the Code for Reporting of Mineral Resources and Ore Reserves. Dr Collins consents to the inclusion in the report of the matters in the form and context in which it appears.
Rock Chip Results
|RK 2044||222253||6609382||Mt Watt||63.70||0.059||4||0.56||0.018|
|RK 2045||222248||6609389||Mt Watt||61.23||0.159||2.92||0.61||0.013|
|RK 2046||222500||6609076||Mt Watt||58.69||0.033||3.43||1.36||0.04|
|RK 2047||222498||6609110||Mt Watt||58.71||0.103||5.01||1.01||0.034|
|RK 2048||222500||6609121||Mt Watt||58.27||0.057||5.28||1.29||0.028|
|RK 2049||222476||6609126||Mt Watt||58.79||0.074||4.84||0.94||0.02|
|RK 2050||222449||6609117||Mt Watt||58.90||0.068||3.83||1.47||0.026|
|RK 2051||222461||6609105||Mt Watt||59.80||0.069||3.81||0.69||0.025|
|RK 2052||222627||6608769||Mt Watt||61.24||0.094||3.1||0.46||0.012|
|RK 2053||222623||6608750||Mt Watt||59.99||0.048||2.85||1.05||0.021|
|RK 2054||222765||6608497||Mt Watt||62.40||0.038||2.57||0.9||0.021|
|RK 2055||222760||6608484||Mt Watt||60.98||0.065||3.14||0.5||0.008|
|RK 2056||222755||6608445||Mt Watt||60.18||0.036||3.7||0.62||0.017|
|RK 2059||225456||6602793||Mt Finnerty||50.97||0.081||15.59||4.76||0.033|
|RK 2060||225466||6602874||Mt Finnerty||52.72||0.018||15.56||0.79||0.022|
|RK 2061||225476||6602893||Mt Finnerty||60.94||0.014||5.94||0.66||0.024|
|RK 2062||225474||6602915||Mt Finnerty||61.71||0.013||5.09||0.52||0.026|
|RK 2063||225490||6602939||Mt Finnerty||55.91||0.014||11.01||0.37||0.018|
|RK 2064||225472||6602948||Mt Finnerty||57.15||0.011||9.12||0.63||0.024|
|RK 2065||225469||6602975||Mt Finnerty||65.36||0.029||1.8||0.25||0.037|
|RK 2066||225479||6602978||Mt Finnerty||65.26||0.043||1.93||0.2||0.037|
|RK 2067||225503||6602978||Mt Finnerty||63.95||0.14||2.17||0.49||0.027|
|RK 2068||225478||6602963||Mt Finnerty||67.27||0.039||0.97||0.3||0.035|
|RK 2069||225426||6602935||Mt Finnerty||59.50||0.063||4.13||0.96||0.026|
|RK 2070||225492||6603021||Mt Finnerty||59.36||0.049||6.15||0.76||0.042|
|RK 2071||225487||6603033||Mt Finnerty||61.88||0.045||3.78||0.81||0.056|
|RK 2072||225468||6603055||Mt Finnerty||61.16||0.055||3.3||0.97||0.046|
|RK 2073||222224||6609259||Mt Watt||07.84||0.02||17.74||7.03||0.023|
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