Mining from the Kerr veins during the year was reasonably successful with one of the veins mined (vein no.4) being of high grade. Kerr produced small quantities of high grade material, which was used to sweeten the grade of material to the processing plant.
Whilst the modifications that were made to the flotation and crushing circuits in 2011 and in the first quarter of 2012 proved to be successful, some further changes were completed later in 2012 to increase throughput. Production was hampered during the year by the ongoing variations in the metallurgy due to the inconsistent grade of ore being milled and an increased clay content. Improvements to the milling circuit, which resulted in decreased labour costs were completed in the fourth quarter and will contribute towards the Company's objective to achieve positive cash flow from operations in 2013.
The major focus of exploration activities in 2012 was the continuation of the successful drilling programme. In total 16,347 metres have been drilled since the programme commenced in March 2011 and significant gold intersects have been reported.
The drilling programme expanded considerably at the commencement of 2012 with six drills operational during the first half of the year. The second half of the year saw the number of rigs progressively reduce. Three rigs remained to the end of the third quarter and one rig by the end of the year. The two principal objectives of the drilling programme were to complete the deeper holes on Kearney, in order to gain a more accurate picture of the zone of mineralisation for the purpose of the underground mine plan; also, to extend the strike of Joshua to the north and the south, and begin to target deeper sections of the vein. During the year 11,991 metres were drilled with 35 holes targeting the Joshua vein, 14 holes on the Kearney veins and 4 holes on the Kerr veins. Drilling on Kearney was mainly at depth from off-site locations. Several cores yielded more than one mineralised section. The vein appears to pinch and swell at depth, similar to what has been seen in the open pit. Vein intersects ranged in width from 0.2 m to 7.6 m. A number of shorter infill holes targeting Kearney were also drilled from west to east with variable success.
Land to the west of the current Joshua vein exposure was acquired early in the first quarter. This facilitated continued drilling which initially targeted the north and central sections of the Joshua vein. The strike length now extends a total of 208 metres beyond the previously known "RioFinex" limit and the proven depth of mineralisation within this northern section has increased by 40 m to a vertical depth of 115 m. Significant results were also achieved for central and southern Joshua which have improved the understanding of the structure and geometry of the vein in these areas. In the central region, the vein was intersected at a vertical depth of 160.6 m, yielding a 4.5 m wide mineralised section grading 8.4 g/t Au. Drilling and field observations strengthened the view of a westerly dipping vein with high grade mineralisation at depth. In the south, six holes revealed two or more vein intersects, some of these were narrow stringers, and others point towards the presence of a more pervasive secondary structure. A particularly wide and high grade zone was intersected and section drawings indicate that the vein steepens in this area, dipping 85 degrees towards the east.
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