Mandilla

Anglo Australian Resources NL 100% gold rights

The Mandilla project consists of 100% interest gold rights attached to two mining leases and one exploration licence located 70km south of Kalgoorlie and 20km south east of Kambalda. The project is located on the contact of a sequence dominated by mafics and ultramafics with a sequence of felsic volcanoclastics and metasediments of the Mandilla Formation. The sedimentary sequence is intruded by the Emu Rocks Granite (a high level stock of porphyritic monzogranite). The western contact of the granite is faulted by an interpreted southern extension of a splay fault off the Zuleika Shear Zone, which hosts 1 million ounce deposits at Raleigh (Kundana) and Mt Marion (Ghost Crab).

Previous exploration by WMC Resources Limited and Anglo Australian Resources NL had defined a resource of palaeochannel gold mineralisation at West Mandilla, a number of zones of supergene gold anomalism located at the granite sediment contact and bedrock mineralisation at East Mandilla.

The West Mandilla deposit is a gold mineralised palaeochannel overlain by approximately 20m of overburden. The main gold-mineralised part of the palaeochannel defined at a 1g/t Au cut off is 5 -30m wide and is over 800m in length. In September 2005 Anglo Australian Resources NL announced that the deposit, based on extensive drilling to that date, was estimated using a top-cut of 100g/t Au to contain an in-pit Probable Ore Reserve of 70,100 tonnes @ 7.52g/t Au for 16,960 ounces gold.

Mining of the shallow, high-grade West Mandilla deposit commenced in July 2006 and completed in April 2007. Up to March 2007 30,493 tonnes of ore was processed under a custom milling arrangement at the third party Higginsville processing plant in Coolgardie, where ore is processed on a campaign by campaign basis. 12,450 ounces of gold at average recovered gold grade of 11.1g/t has been produced.  Stockpiled ore continued to be processed in October 2007 with a total of 48,000 dry tonnes of ore processed at a calculated head grade of 5.22 g/t Au and a recovery of 95.7%, producing 7,701.29 oz for this final campaign.

 The total production of gold from West Mandilla was 20,619 ounces of gold, which compared favourably to the original reserve calculation of 16,960 oz.

While most of our exploration effort has been focused on the palaeochannel, bedrock targets remain a high priority for the company. Bedrock exploration in 2007 consisted of a two phase 61 hole RC drilling program of 5718m. Targets included Selene and East Mandilla. At East Mandilla the drilling program tested the potential for a number of very shallow south dipping lodes, which are flat lying in cross section. This new model has highlighted the potential for a shallow open pittable resource.

The drilling intersected a number of high grade intersections including 4m @ 105.1g/t Au (including 1m @ 383.2g/t Au), 5m @ 8g/t Au, 2m @13.8g/t Au, 2m @ 6.79g/t Au and 12m @ 2.89g/t Au. The drilling at East Mandilla appears to have confirmed the model and located a new very high grade zone 85m below surface.

At East Mandilla gold mineralisation occurs in stacked quartz veins within a hematite-altered porphyritic granite to the east of the West Mandilla Palaeochannel Deposit. The veins strike roughly east-west and dip very shallowly south. Strike length of veins is about 50m and the  veins range from a few centimetres to 6m in thickness. Drilling has so far traced the veins down dip for 400m.

 

BM Geological Services, an independent resource consultant, estimated a resource for the East Mandilla bedrock mineralisation as:

 

Indicated Resource 356,805 tonnes @ 3.04g/t Au for 34,873 ounces (25g/t cut)

 

The resource was estimated on drilling spaced at approximately 50 x 20m. Wireframes were constructed using a 1g/t Au grade halo as the basis for interpretation, with internal dilution  not exceeding 1m downhole. Inverse Distance Squared (ID2) interpolation was used for the grade estimation. The deposit is characterised by the frequent occurrence of very high-grade intersections and a 25g/t Au top-cut was used. As indicated in the June Quarterly Report, the Company assesses the bedrock gold potential at the Mandilla Project highly and intends conducting further drilling to test bedrock targets.

 

Recent drilling programs at East Mandilla have also shown that there may be potential for palaeochannel mineralisation as several intersections (such as MDRC26 1m @ 28.27g/t Au and MDRC45 3m @ 20.60g/t Au) relate to quartz gravel at the interface of weathered bedrock and transported overburden. Closer spaced drilling is required to test the potential fully.

 

 

In 2008 Anglo Australian Resources NL completed an aircore drilling program this year consisting of 83 holes for 1632m, vertically drilled to refusal, designed to search for new bedrock gold targets south east of the West Mandilla Palaeochannel and the East Mandilla bedrock mineralisation below alluvial sediment cover. This program has defined a 900m long gold bedrock anomaly at the Diana Prospect, 2km south east of previously defined mineralisation, which corresponds to a prominent linear structure and demagnetisation zone evident on the magnetic image. The structural setting and geological characteristics are similar to the East Mandilla and Selene mineralised zones which consist of multiple, thin, high-grade, quartz veins in granite bedrock just east of the mined palaeochannel deposit. Best results from this program include 1m @ 6.91g/t Au and 1m @ 3.76g/t Au.