Operations

Following the completion of open pit mining operations in April 2004, Challenger transitioned to underground mining operations in the second half of the year, commencing full-scale underground production in early 2005.

The Challenger underground mine was developed to extract high-grade gold resources located directly beneath the open pit. The underground orebodies occur as narrow, high-grade, sub-parallel lodes linked as dilational zones within an asymmetrical fold system. The folds and lodes have predictable and consistent down-plunge continuity.

Three principal ore positions have been delineated – the M1 lode, which contains over 80% of the gold in underground reserves – the M2 and the M3. All three lodes remain open at depth, while drilling of the M1 lode has demonstrated the continuity of the orebody to approximately 620m below surface, although it is known to persist to at least 1.3km down-plunge.

Underground Operations and Services

Two stopes were initially trialled above the 1020 level to optimize underground stope designs for mining of the M1 orebody. This process commenced in the last quarter of 2004/05 financial year and was completed by the end of July 2005. Since then, mining dilution to stopes has been minimised by applying optimal drilling and blasting techniques.

The M1 orebody, which has been the principal source of production to date, is remarkably consistent down plunge, although it has a complex geometric shape. By the end of the 2005/06 financial year, stoping was in progress from the M1 orebody on the 900 and 880 levels.

The decline has been developed to the 800 level or about 400 metres vertically below surface. This allows access not only for production from the M1 orebody but also to the M2 and M3 lodes, which lie adjacent to the M1.

By the end of the 2005/06 financial year, the M1 orebody was developed down to the 820 level with exploratory development and drilling taking place on various higher levels associated with the M2 and M3 orebodies. This will enable these other shoots to be brought into the resource inventory and assessed for future production.

Geotechnical issues associated with the underground development have been thoroughly investigated, with generally good ground conditions encountered in the altered granite rock.
Both primary host rock and the quartz, feldspar, garnet veins associated with gold mineralisation are generally competent, necessitating minimal ground support. Geotechnical support will continue to be provided by a consulting specialist who has been associated with Challenger for many years, and whose recommendations were incorporated into the feasibility study.

Water inflows underground encountered at less than 5L/sec have so far confirmed the consulting hydrologist’s report of a relatively dry underground mine.

Only three of the four primary fans have so far been required to adequately ventilate the underground mine workings, and no substantial upgrades are required during the 2006/07 financial year.

Processing Plant

The Challenger processing plant is a conventional CIP gold processing facility with a design throughput capacity for primary ore of 290,000tpa.
In 2005/06, plant throughput averaged 44.4 tonnes per hour, with the mill averaging 96.6% availability.

Overall plant recovery was 94.3%, exceeding budget estimates.

In August 2006, an Acacia reactor was installed, to boost overall recovery by approximately 1.5%. The treatment flowsheet comprises a jaw crusher supplemented by a cone crusher as primary ore becomes available, a ball mill, a gravity circuit to recover coarse gold, cyanidation leaching and absorption circuit and conventional elution and electrowinning to produce gold bullion. The conventional CIP processing plant was designed for a maximum throughput rate for primary ore of 35 tonnes per hour, or up to 290,000 tonnes per year.

Reagent consumption in the treatment plant has been optimized, and in 2005/06 primary ore was treated using 1kg of cyanide, 2.3kg of lime and 2.5kg of grinding media per tonne of ore. Total power consumption for the operation including grinding and crushing circuits and power supply to the mine village varies between 25 to 30KWhr per tonne of ore.

An on-site laboratory using the latest LeachWell equipment to assay drill samples has proved an invaluable tool, providing rapid results from underground samples, to help accurately align the direction of ore drives and stopes with the narrow high-grade folded veins.

Infrastructure

The main Challenger project infrastructure covers an area of approximately 300 hectares and includes the processing plant, a mine village housing up to 70 personnel working a fly-in /fly-out roster, reagent and fuel storage facilities, offices, workshops, a laboratory, ancillary buildings and haul roads.

Water is supplied from a process water borefield located approximately 2.5 kilometres west of Challenger.

The walls of the tailings dam were lifted during 2005-06 to extend tailings storage capacity for another two years of production.

1500kVA capacity substations are installed underground, powered from a surface power station adjacent to the processing plant, located 1km from the underground portal.

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