// Gold Production
Ze Vermelho
The historic Ze Vermelho workings cover an area of 3 hectares (200 metres x 150 metres) in the Paranaíta District of the Company´s Alta Floresta Gold Project. Mining at Ze Vermelho dates back to the early 1990’s during the second gold rush in mid-west Brazil. The mining activity started as an open-cut mine to 30 metres depth. Anecdotal reports are that the artisanal miners subsequently divided into four groups and moved to underground mining through four timber-lined shafts, which all remain in good condition today. Gold production is reported to have reached up to 1 kilogram per day, from which it is estimated a minimum of 20,000 tonnes was processed during six years. In 2003, Metamat, the Mato Grosso State Mining Company, estimated that 70,000 ounces of gold had been recovered up to 1996, when mining ceased.
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Figure: Location of Ze Vermelho Prospect, Paranaita District, Mato Grosso State, Brazil
Trial Mining at Ze Vermelho
In late 2010, the Company undertook geological assessment of the historic garimpeiro workings at Ze Vermelho. This involved accessing the timber-line shafts which are developed to a maximum depth of 64 metres and along 150 metres of strike.
All of the shafts intercepted a north-west trenching suphide-rich quartz vein up to 1.3 metres wide. The vein predominantly occurs along the contact of a bluish-grey, biotite-monzogranite and a quartz-sericite mylonite up to 3 metres wide.
Sampling was undertaken and subsequent assays confirmed high-grade gold.
Subsequently, a decision was made to trial mine in order to gain a better understanding of the structures and the contained gold grade.
This trial mining has involved (to date) an extension of shaft depth to 74 metres and excavation of development drives, as depicted in the diagram below.
Samples taken during excavation of development drives have returned high-grade gold as also depicted in the diagram below.
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Figure: Long section of Ze Vermelho Trial Mine Workings to date.
In order to process the ore extracted from the underground workings at Ze Vermelho, the Company constructed a rudimentary gravity processing and treatment plant – refer below.
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Figure: The Ze Vermelho gravity processing plant with the Castanha-do-Para Tree (Brazil Nut) which stands at the entrance to the site.
From commencement in January 2011 up to the end of June 2011, the Company has successfully extracted approximately 60 kilograms of gold; with the resultant gold sales generating approximately USD$2.25 million in income for the Company.
Assay information suggests that the Company is successfully recovering approximately 1/3rd of the gold from the ore using the gravity processing technique. The Company is currently completing the construction of a cyanide treatment circuit which metallurgical testing has indicated should be successful in recovering in excess of 80% of the gold remaining in the tailings from the gravity processing and treatment plant – refer below.
Cyanide Leaching Circuit at Ze Vermelho
The Company has undertaken to construct a cyanide leaching circuit at Ze vermelho in order to treat the tailings from the gravity plant. Note: it is estimated that only approximately 1/3rd of the gold is currently being recovered from the gravity treatment.
Metallurgical testing has confirmed an expected recovery of greater than 80% of the gold contained.
The cyanide leaching infrastructure is nearing completion. Leaching and solution vats have been prepared and waterproofed with 1,000 micron membranes and it is expected that loading of the first vat will commence during the first week of September 2011. The first batch to be leached is to be limited to 500 tonnes, with subsequent batches being varied in size according to results obtained.
The electro-winning and associated gold smelting circuit is nearing completion and is expected to be installed by mid-September 2011. The set up and fine tuning of the system is expected to take up to 1 week. The first gold to be recovered from the Cyanide Leaching Circuit is expected in the last week of September 2011.
Competent Persons Statement
The information above that relates to exploration results is based on information compiled by Dr Christopher Stephens who is a consultant to the Company. Dr Stephens is Principal of CJ Stephens Consulting Pty Ltd is a member of the Australian Institute of Geoscientists (AIG) and the Australia Institute of Mining and Metallurgy (AusIMM). Dr Stephens has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the “Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dr Stephens consents to the inclusion of the matters based on his information in the form and context in which it appears.