The Castlemaine Goldfield

Description

The Castlemaine Goldfield is a multi-million ounce, under-explored and under-developed field. The figure below shows the extent of historical mining across the numerous north/ south trending structures of the Castlemaine field.

Drilling occurred in two significant phases over the course of the 2007 year. A structural drilling campaign that commenced in the December quarter of 2006 carried over into the first half of the 2007 year. This drilling followed on from the completion of the 3D structural model of the Castlemaine field in 2006. The first hole of this program was also the first deep hole into the Chewton Anticline prospect (CHEW_0819). The highly encouraging results to that hole announced to the market in November 2006 set in train an extensive exploration program on this specific prospect. Structural drilling resumed in the March Quarter upon the northern central corridor of the goldfield.

The detailed compilation of historical mining and geological data, mineralisation model research and development and generation of a goldfield scale 3D exploration model provided the preparation to embark on rigorous drill testing of this under-explored, high potential goldfield. The scale and breadth of drilling in the second phase which commenced in October 2007 has not been seen in past exploration upon the goldfield. At least 2 drilling rigs have been in continuous operation across the Castlemaine goldfield.

Earlier structural drilling had successfully validated the 3D model assumptions. Broad structural analysis using the mineralisation model for the field generated at least 33 prominent linear fault reef targets of various strike lengths that accumulate to over 57km of prospective targets. A prioritization process was undertaken to rank all identified targets against geological and economic criteria. The minimum amount of holes required to test each target to a first decision point was then determined. This became the minimum amount of new drilling information required to determine if the target has the potential to be at least “Wattle Gully size”, a threshold of 0.5 million ounces.

A budget was formulated and the necessary funds were raised. The program entails some 16,000 m of diamond drilling that includes the necessary amount of drilling to support the first inferred resource estimation for the Chewton Deposit together with extensive drilling extending from the far north of the exploration licences at Specimen Gully, where gold was first discovered in 1851, to Fryerstown in the south where in excess of 100,000 ounces was won from numerous old mines.

The exploration strategy was subjected to 2 external reviews between these 2 phases of drilling.  These external reviews supported the exploration approach thus far and provided further confidence in the exploration strategy that the company has adopted.  The most comprehensive of the reviews, undertaken by Snowden Mining Industry Consultants Limited in July 2007, concluded that the company was, at that time, on track to produce a resource estimate at the Chewton Anticline prospect and that it had the right capacities to achieve the goal of building a new multi-million ounce goldfield. These capacities, both as geological experience and the proven mineralisation model for the field, were recognised as a milestone towards the company’s goal.

Castlemaine Project tenement outline with Chewton Deposit and Wattle Gully Mine location relative to other areas being explored by CGT.

Chewton Anticline Diamond Drilling

The first hole drilled in the 2007 year was CGT_007 at the Chewton Anticline prospect. The very encouraging results from hole CHEW_0819 demanded follow-up drilling on this target. Drilling throughout 2007 resulted in 9 intersections (CGT_007 to CGT_014 plus wedges) of the mineralised Cemetery Reef Fault system, over a strike length of 400 m. This drilling campaign continued into the 2008 year and has now proven the continuity of the Cemetery Fault system over a strike length of 700m. Information from these holes determined where changes in either azimuth or plunge of the fold and Cemetery Fault mineralisation occur. Changes to the fold geometry can significantly influence the location of high grade gold, as seen in the fold plunge reversal within the Wattle Gully system.

Structural analysis, the intensity of wall-rock alteration, the presence of visible nuggetty gold and ‘gold indicator’ accessory minerals and assay results from the Cemetery Fault system strongly supports the comparison with that of Wattle Gully. Assay results are typically erratic; however the presence of visible gold along strike and up and down dip is a critical indicator of the economic significance of a mineralised fault. Ahead of the resource estimate, a program of gold grade characterisation and quality control was performed using drill core samples and pulps. This study, along with gold grain sizes and textures, confirmed that a high nugget effect is present in the Chewton Anticline system, identical to the old Wattle Gully deposit.

With over 50kms of prospective anticline folds and lines of reef within the Castlemaine Goldfield, and a paucity of deeper mines or drilling past 150m vertical, this goldfield remains as Victoria's major under-explored and under-developed gold opportunities.

The ground position was consolidated by others in the early 1990's but the gold price and market appetite was insufficient to raise the necessary capital.  Castlemaine Goldfields Limited is the first company to control this entire field at a time when the macro economic climate and government encouragement is more supportive of mining.

The Castlemaine community is located on the western side of the goldfield, with the small village of Chewton at its centre.  Unlike Bendigo or Ballarat, the goldfield is still accessible and not covered with a city.

This field produced some 5.6 million ounces of gold, less than 1 million ounces of which came from hard rock sources.  Half of the underground ounces came from Wattle Gully.

Although this map of the goldfield evidences extensive mining activity, the fact is that there are only three shafts that were taken to a depth of greater than 300m, and not much more.  Although greater than 300m, Wattle Gully is excluded because the Wattle Gully mine that we know about now was not discovered until the 1930's, well after the gold booms some 50 or more years earlier.

Compared to Bendigo and Ballarat, the Castlemaine field does not have extensive historical underground workings.  Therefore work in the field today is not complicated by the uncertainty of the extent of large underground workings at any appreciable depth.

During the first 9 months of 2006 a substantial volume of mining and geological information was gained from researching historical articles related to mine production found in the Mount Alexander Mail newspaper and other sources back to 1851.  This was complimented with digitising of all available past and recent mine plans and historical sketches to build a comprehensive 3D Exploration Model.

To date over 1300 plans and sections have been scanned and added to the interpreted geology contained in the model.  This significant work has provided the necessary knowledge base to develop overall structural models to define new high-quality drill targets in the goldfield.