Bibiani

• 100% ownership of Bibiani gold mine and related prospecting licences
• Immediate production: 25-30,000 ounces from tailings and 8,000 ounces from underground mining in FY2007
• Ramp-up to approximately 100,000 ounces per annum from underground mining by end 2008
• Examine expansion potential to 150,000 ounces per annum through optimised use of conveyor decline and increased extraction rate
• Low-cost conversion from resource to reserve (US$5-7/ounce)
• Clear brown-field exploration potential, with prioritised targets, team and infrastructure in place
• Total Proven and Probable Reserves of 1.10 million ounces within a resource base of 3.32 million ounces of gold underpins at least a 10 year life-of-mine

Introduction

Bibiani gold mine is located in western Ghana, 250km northwest of Accra. The mine lies within the Sefwi-Bibiani belt, host to over 17 million ounces of gold mineral resources, and the second-most significant gold-bearing belt in Ghana after the Ashanti belt to the east. The mining concession area of approximately 49km² is closely adjoined to the town of Bibiani, approximately 80km southwest of the Ashanti capital, Kumasi. The most practicable access to the area is from the east on the Kumasi road.

History

Production at Bibiani started in 1902 and since then a total of approximately 4 million ounces of gold  has been produced from a combination of historic underground and recent opencast and tailings retreatment. It is notable that historic underground ore averaged 9.5g/t (at a 7g/t cut-off), and that the opencast operation (1997 – 2005) treated 17 million tonnes at 3.8g/t of the remaining mineralised envelope down to 150m below surface. Actual small high grade stopes exist down to 28 Level (+800m below surface). The company has targeted fast track development of the significant underground and along strike potential for additional gold mineralisation at the Bibiani operation.

Mineralisation

The Bibiani orebody is a mesothermal lode type deposit similar in many ways to the lode deposits in the Korongo-Axim belt which hosts the Obuasi orebody. The orebody is structurally controlled by a steep north to northeast trending shear corridor which is between 200 and 400m wide. It is hosted by a predominantly metasedimentary package of carbonaceous shales and lesser volcaniclastics with subordinate, but important, quartz porphyry instrusions. The orebody structure is a splay off a regional structure that generally follows on a northeast trending granite-metasediment contact. Overall the orebody is subvertical or dips eastwards at 60˚ to 80˚, striking across the regional structure at low angles.

The more detailed structural controls to mineralisation are currently being studied. It has become evident that the main orebody is controlled by at least two phases of dextral shear deformation within two left lateral shears (creating a shear couple) which has been interfered with by a syn-late tectonic granite intrusion emplaced to the east of the current mine site. Gold bearing structures underground are either S3 (west dipping thrusts) or S4 (east dipping reverse faulting that deforms S3). The intersection of these structures provides maximum extension, and the broadest zones of mineralisation (up to 100m wide as on 5 Level).

The ore body package is characterised by intense carbonate alteration, silicification and sulphidation (mostly pyrite and minor arsenopyrite). The quartz porphyries are a key rheological feature of the mineralisation, and their deformation is a critical factor in the development of silicic (quartz vein) zones and areas of brecciation. At least two periods of deformation and extension have provided the “plumbing system” for the orebody to develop.

Mine Development Plan

The mine development programme has progressed significantly during 2007, already having increased Bibiani’s mineral resource base from its stated inventory of gold as at 31 December 2006 of 299,000 ounces of ore reserve within 1,473,000 ounces of mineral resources to 1.10 million ounces of ore reserves within 3.23 million ounces of mineral resources (JORC compliant). A comprehensive geological re-interpretation has been completed, and as a consequence geostatistical modeling and estimation procedures adapted to the structural and mineral style of the deposit. Further, the remodeling and revised ore reserve estimation (see reserves and resources) has taken a bulk underground mining scenario into account.

CAG’s three primary objectives for the re–establishment of hard rock mining operations and development of new opportunities on the Mining Lease and Prospecting Licenses are:

1. Integrated geological modeling, resource estimation and mine planning of the Bibiani orebody

   CAG’s re-interpretation and re-estimation of data has served two main purposes: firstly, re-evaluation of the resources has resulted in an increased resource base that is in line with the company’s business plan and its intention to develop the main underground operation; secondly, a full understanding of the data density in the model has enabled a prioritisation of further surface diamond drilling and underground drilling and sampling for conversion of resources to reserves and the identification of new resources. Detailed mine planning and scheduling is in progress in accordance with the new model.

   CAG’s proposed mine plan for the re-establishment of underground operations at Bibiani involves accessing the main orebodies currently in close proximity to the existing ramp and level infrastructure developed to 9 Level. The existing decline will be extended from 9 Level to 14 Level together with the construction of a new decline from surface to 14 Level, which will both mitigate the risk of a single access operation and will provide a dedicated low cost conveyer haulage of ore to the ROM stockpile at the plant.




2. Capitalisation of underground mine, with continued gold production from tailings cleanup during project development

   The company is well advanced in the phased capitalisation of the underground mining operation. CAG’s mining team has inspected the existing underground excavations and has determined the width, extent and continuity of the defined orebodies lends to a combination of longhole open stoping and/or cut and fill stoping as the appropriate mining methods. Underground inspection of old stopes confirms that rock mass conditions are suitable for these methods. Stopes have been designed from the mineral resource block model above 14 Level utilising a pay-limit of 2 g/t gold. The mining methods allow stoping widths of between 10m and 40m to be planned.

   Underground production from development and mucking out old workings commenced during September 2007. Actual stoping is to commence during the later part of November 2008. During 2008 there will be a phased tonnage build up, with an initial target tonnage of 100,000 tonnes per month during the fourth quarter of 2008, when it is anticipated that gold production will reach a rate of approximately 100 – 110,000 ounces per year.

   CAG has continued with the re-treatment of tailings generated from historic underground mining operations. The tailings operation has a current LOM till July 2008, and importantly provides incremental tailings disposal sites for future mining. The current tailings storage facility has a capacity of 3-4 years production.

   • Bibiani: Drillholes existing and planned (PDF - 220KB)
   
   

3. Bibiani Exploration Programme

   Since the 1980’s the Bibiani properties have been subject to a number of phases of exploration. CAG has collated all the exploration data, reviewed previous work and subsequently undertaken its own structural geology/GIS target generation study. This work was instrumental in understanding the geological upside of the Bibiani mine and environs, as well as the Bibiani North PL’s. CAG’s conclusions are significant in establishing a new structural interpretation that can be used as a predictive tool for underground and surface exploration. This structural model, when used to constrain existing exploration data, generated six new targets, and there are now 15 prioritised targets for follow-up ground work and /or drilling.

   An exploration programme commenced in January 2007 to systematically evaluate these opportunities. The programme to end October 2007 completed 20,000 m Reverse Circulation (“RC”) and 7,000 m Diamond (“DD”), inclusive of drilling of certain underground targets from surface, and a number of trenching and follow-up soil geochemistry surveys. The current exploration expenditure on the Bibiani ML is US$2.4million, and in the order of US$1 million on the PL’s to the north. The company’s exploration and structural geological expertise has initially focused on understanding the controls on mineralisation, and these studies are immediately impacting on the prioritisation of certain surface targets for follow-up in 2008.

   Inclusive of the surface drilling programme was a 1st Phase deep drilling programme of the Bibiani orebody. This involved 35 boreholes for 3,500 metres precollar RC and 7,000 metres DD, and has clearly established geological continuity of the upper level (6-9 Level) mineralisation of the main Bibiani orebody as well as identifying mineral resources (10-15 Level). An underground structural mapping exercise and reclogging of existing core is in progress, and already clear mineralisation controls are becoming apparent. Underground drilling started during August 2007, and is currently focusing on stope delineation drilling and resource to reserve conversion.

   Simplified geological map of the Bibiani mining lease area and the Bibiani North prospecting licences