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Challenger


Exploration at Challenger is focused on the further delineation and extension of the three principal underground ore shoots, the M1, M2 and M3 at depth. All three ore positions remain open at depth.

Prior to finalising the resource and reserves for the initial underground development plan, further in-fill drilling of the principal M1 shoot has been carried out.

The principal targets during 2005/06 were the M1, M2 and M3 Shoots, with some initial evaluation of a newly identified structural target, OM1F1, where three underground diamond core holes intersected significant gold mineralisation associated with M1 Shoot-style veining and sulphide mineralisation.


M1 Shoot

At 30 June 2006, reserves within the M1 Shoot extended down to the 580m RL.

A program of surface diamond drilling designed to facilitate definition of resources and reserves down to the 480m RL, is continuing.

The more spectacular results from the 2006 program include:

Ongoing mining and associated grade control drilling has greatly increased the understanding of the geometry of the M1 Shoot and generated greater confidence in its continuity.

In addition, mining reconciliations of produced gold have consistently exceeded reserve estimates enabling the upgrading of previous reserve estimates which have been based on a ‘generic’ approach.

This approach takes into account both reconciled data and continuity of ore body geometry as interpreted from drilling and development data from below stoped out areas and is considered to be the most accurate basis for forecasting gold production.


M2 and M3 Shoots

It is believed that a high potential exists to define significant reserves within the M2 and M3 Shoots which can be readily accessed from the existing development and, in fact, are closer to the decline than the M1 Shoot.

While a relatively small resource and reserve had been estimated for the M2 Shoot down to the 980m RL (on the basis of surface drilling data) prior to the commencement of the underground development, underground development and drilling will be required to better define the grade and geometry of the Shoot prior to planning stoping.

Opportunistic access from the upper part of the decline has facilitated the definition of a small high grade reserve (16,000 tonnes @ 11.5 g/t gold) in the M3 Shoot between 1135m RL and 1075m RL. This reserve was mined during 2005/06 and delivered 37% more gold than estimated.

Programs of underground exploration development and drilling to evaluate the M2 and M3 Shoots have been ongoing during the year with the most significant initiative involving development access on the 980m RL and drilling of the M2 Shoot between the 980m RL and the 840m RL.

Some excellent intersections were returned from this drilling with higher grade mineralisation within the M2 Shoot currently being interpreted as associated with smaller and less continuous structures than is the case with the M1 Shoot.

The more spectacular results from the 2006 program include:

The M2 Shoot, is interpreted as comprising eight separate higher grade zones (designated M2S1-S8) spread over a lateral distance of 150 metres between the M1 and M3 Shoots.

However, the 980m RL development has demonstrated better than expected continuity of the target M2, S3 and S4 structures.
Initial modeling of the M2 data has outlined a resource of 290,000 tonnes @ 8.3 g/t gold. This is believed to be a very conservative estimate with the potential for significant upside as more data becomes available.

Preliminary stoping of the M2 has been scheduled to commence during 2006/07.


Conceptual Structural Targets

The Challenger Shoots are interpreted as having been developed as a result of the concentration of gold mineralisation in favourable positions within folded structures (so-called dilational positions). This is a commonly developed ‘favourable structural setting’ encountered in many gold deposits.

At Challenger, this concentration of gold is interpreted as having been preferentially developed in layers which initially contained anomalous (but not necessarily high grade) gold mineralisation. These layers are referred to as ‘zones’ which are best demonstrated in an image showing all gold values, in drill holes, above 0.1 g/t gold.

The relationship of the known shoots to these interpreted zones is shown schematically in the following figure:

The setting of the known shoots reflects the coincidence of the zones with the dilational structural positions which are interpreted to be developed within a series of target ‘structural corridors’. Applying this model defines a series of targets (i.e. intersection positions of zones and structural corridors.

One of these structural targets (the OM1F1 Target) was evaluated by three underground diamond core holes. The first hole, 06CUD0193, intersected 3 metres @ 23 g/t gold in a position located only 150 metres from existing underground access on the 825m RL.

Two subsequent holes (06CUD0208 and 06CUD0209) both intersected M1 Shoot style veining and sulphide mineralisation over widths of 15 – 20 metres with 06CUD0208 intersecting 0.7 metres @ 1.33 g/t and 06CUD0209 1.22 metres @ 7.29 g/t gold within 15 metre wide zones of lower grade mineralisation. A significant part of the target structure has been stoped out by a mafic intrusive.


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