Projects Overview

Since 2006 WPG Resources has had a strong focus in project exploration and development in South Australia and currently has a portfolio of tenements covering a total of 7,343 square kilometres.

Following the Company’s success in permitting, development and sale of its SA iron ore projects for $320 million in 2011, WPG is now focused on three key existing and advanced gold projects in the Gawler Craton – Challenger, acquired in March 2016, and Tarcoola and Tunkillia – acquired in May 2014.

WPG has begun the transition into a gold producer.  On 15 March 2016, WPG finalised the acquisition of the Challenger gold mine and associated South Australian exploration assets.  The mine was placed on temporary suspension and a revised restart mine plan was developed. Site operations at the Challenger gold mine recommenced in late May 2016 with crushing and milling of low grade stockpiled ore followed by underground mining activities on schedule and under budget.  The first gold was poured on 31 May 2016.

Mine development at Tarcoola commenced on November 2016.  The mine was officially opened on 13 December 2016 and the first ore was delivered to Challenger for processing in January 2017.  First gold was poured in February 2017.

Currently Tunkillia production is targeted for 2018*. (* this is an aspirational statement rather than a production target or forecast financial information derived from a production target.)

The location of the Company’s gold projects is shown below in Figure 1.

Figure 1 – Location of gold projects and other exploration tenements

Challenger gold project

The Challenger acquisition was completed on 15 March 2016.  The assets acquired include the mine itself, all bonds totalling $2.7 million, along with other assets and infrastructure including the existing CIL plant, camp, infrastructure and airstrip.  Also acquired were a number of exploration tenements some of which are in joint venture with Tyranna Resources Limited for gold and Iron Road Limited for iron.  Exploration programs will be continued for these tenements.

The Challenger gold mine was placed on temporary suspension on 15 March 2016.  A number of essential maintenance tasks were undertaken during the temporary suspension and the mine was re-opened in late May 2016.

The mine was operated in Joint Venture with Diversified Minerals Pty Ltd, an entity associated with the PYBAR Group, one of Australia’s pre-eminent and extremely successful underground mining contractors.  In August 2016, WPG completed the acquisition of DMPL’s 50% interest in the Challenger mining and exploration joint ventures.  Effective 1 August 2016, WPG has a 100% interest in the Challenger mine, 100% of production and 100% of attributable gold contained in Challenger’s resources and reserves.  WPG has also doubled its exposure to the exploration upside potential of the Western Gawler Craton Joint Venture.

Tarcoola and Tunkillia gold projects

A Feasibility Study for the Tarcoola gold project was completed during September 2015.  The Tarcoola Mineral Lease was granted on 8 March 2016.  A revised Tarcoola Feasibility Study was released in September 2016 for the processing of Tarcoola ore through the Challenger CIP treatment plant, indicating substantially enhanced economic outcomes.  The ore will be hauled to Challenger for treatment, supported by substantially reduced on and off-site services and infrastructure.  There will be no need for leach pads or gold recovery circuit on site, resulting in a substantially reduced environmental footprint.  Treatment through the Challenger CIP plant results in estimated gold recovery of 95%.  The Tarcoola Program for Environment Protection and Rehabilitation (PEPR) was approved in November 2016.  The mine was officially opened on 13 December 2016 and the first ore was delivered to Challenger for processing in January 2017.  First gold was poured in February 2017.

The current resource estimates for the Tarcoola and Tunkillia projects are:

The Tarcoola Goldfield was discovered in 1893 with gold production to date of ~77,000 ounces at ~35g/t. The Tunkillia deposit was discovered in 1996. Tunkillia is a blind orebody with no prior production.

WPG has 100% of all minerals at Tarcoola and Tunkillia.

These projects have had in excess of $20 million in historic expenditure and both have been taken through successful pre-feasibility studies (PFS).

Numerous high ranking targets identified in both project areas and WPG will test identified near-mine targets at Tarcoola and Tunkillia to add to mine life in both areas.

A detailed review of the Tunkillia gold project data has confirmed that the resource estimate for the main 223 deposit can be enhanced at higher cut-off grades allowing a wide degree of flexibility for development options.

A limited exploration drilling program on three priority prospects commence during October 2015 to better define drilling targets.  These priority prospects are all located within close proximity to the Tunkillia 223 deposit which makes them suitable to provide potential satellite feed for a centralised processing plant.  Two high priority targets at the Area 51 and Tomahawk Extended prospects were identified, and RC drilling of these two targets commenced in March 2016.  Assay results indicated that the most significant gold intercepts occur in the westernmost holes drill at Area 51 and that follow-up drilling is warranted to test for more consistent zones of better grade mineralisation further to the west.  Additionally, the gold geochemical anomaly remains open to the north-west and further detailed sampling is required to extend and close off this anomaly.  Further exploration work is being evaluated to undertake this, and additional, work.

Other tenement exploration programs

WPG also retains its other exploration tenements which are considered to have excellent potential for the discovery of several types of mineral occurrences including gold, nickel, base metals, iron ore and coal.

Muckanippie (EL 5154), Robins Rise (EL 5718) and Lake Woorong (EL 4907)

A geophysical exploration program on the Muckanippie, Lake Woorong and Robins Rise tenements in the Northern Gawler Craton region south of Coober Pedy in South Australia was completed in July 2013. This program identified a number of priority targets on anomalies considered prospective for the discovery of direct shipping iron ore, gold and nickel sulphide deposits.

Prospect targets within the Muckanippie EL are considered to have excellent potential discovery of a massive sulphide nickel deposit while the Robins Rise and Lake Woorong tenements are highly prospective for the DSO haematite deposits analogous to the Peculiar Knob and Hawks Nest deposits that were developed and sold by WPG in 2011.

An aircore drilling program on the Muckanippie tenement was completed during 2014. The Nardoo South prospect included a total of 59 drill holes for 2,569 metres yielded significant assay results with broad zones of anomalous nickel mineralisation within the regolith profile indicating individual assays of up to 0.12% Ni. Anomalous gold assays at the Duke prospect in drill holes intersected 2 metres at 0.54g/t gold from a hole depth of 32 metres and intersected 1 metre at 0.08g/t gold in the bottom of hole interval of 42–43 metres. WPG is evaluating the next phase of exploration on these tenements.

The Robins Rise and Lake Woorong project tenements are located on the southern side of the geological terrain known as the Coober Pedy Ridge. Basement rocks comprise a mixed suite of gneiss, schist, quartzite and BIFs of Lower Proterozoic age intruded by adamellite and granite. Several of the former sedimentary units contain high levels of magnetite. In addition to total aeromagnetic coverage, over 80 percent of the combined project area has been subjected to detailed gravity surveying by past explorers.

Penrhyn (EL 5718)

The Penrhyn sub-bituminous coal project located at Robins Rise in the Arckaringa Basin 40 km South West of Coober Pedy hosts a 352Mt resource and has excellent access to the Central Australian Rail Line.

The total identified coal resource at Penrhyn is 352.4 million tonnes, with additional exploration potential to virtually double that tonnage.

The deposit consists of four main and two subsidiary seams that are well developed along that part of the length of the Penrhyn Trough drilled to date, and also across its strike. The average total thickness of coals intersected in drilling to date is 21 metres.

Testwork on samples has shown that export-quality thermal coal can be produced through upgrading.

Perfection Well (EL 4908)

Perfection Well 80 km South West of Coober Pedy is prospective for coal. The EL covers 342 square kilometres.