Dominy, S C, Cuffley, B W, McCarthy, P L & Thomas, O K, 2004.

in The AusIMM
New Leader’s Conference, Ballarat 21-22 April

The Challenges of Evaluating and

Exploiting Gold-Quartz Reefs in the
Central Victorian Goldfield, Australia
By S C Dominy, B W Cuffley, P L McCarthy 1 & O K Thomas

Abstract
The Central Victorian Goldfield is a world-class field located in Victoria, Australia. It is currently
undergoing a revival through activities in the Bendigo, Ballarat, Tarnagulla, Mount Alexander and
other sections. Sediment-hosted auriferous gold-quartz reefs that are structurally and geometrically
complex dominate the region. To date, no remote methods have been developed to assist in the
targeting of the discrete high-grade oreshoots that characterises mineralisation in Central Victoria. An
understanding of the structural setting and controls, and thus likely frequency of repetition of high-
grade oreshoots remains the main exploration tool. Gold within the reefs is generally characterised by
both its coarse nature (>100 up to 5000 microns) and erratic distribution; as a result, most of the
Victorian deposits are classed as high- to extreme-nugget effect systems. This characteristic ensures
that mineralisation is very challenging to explore, evaluate and exploit. The key issues facing the
explorer and miner are related to effective sampling, and definition of geological and grade
continuity, and ultimately grade and tonnage. Tonnage can often be estimated to a reasonable level of
confidence, whereas the grade estimate generally carries a medium- to high-level of uncertainty. In
these deposits, surface diamond drilling alone is generally only able to define an Inferred Mineral
Resource, with underground development, closely spaced in-fill drilling and bulk sampling/trial
mining required to define Ore Reserves. The extraction of gold from ores is relatively simple, based
on the coarse nature and hence amenability to gravity recovery. Ground conditions and the need for
in-stope grade control (eg mapping, sampling etc), generally point toward mechanised cut-and-fill as
the primary stoping method in the region. To potential investors this style of mineralisation has been
viewed as high risk, because of the associated low confidence in the grade estimate, general paucity
of Ore Reserves at mining start-up and need for underground development at the Feasibility Stage.

Introduction “In vein type deposits, …the essential problem is to

The sediment-hosted quartz reefs of Central Victoria contain
substantial quantities of coarse, gravity-recoverable gold. They
generally show extreme variations in grade (poor continuity of
grade), though gross geological continuity may be extremely
good. The deposits are characterised by a high-nugget effect,
reflecting the presence of spatially restricted and erratic grades
that may reach in excess of 10 000 g/t An or more (Clarke and
Thompson, 1965; Dominy et al, 2000a/b, 2001). Most reefs
display a strong structural control on mineralisation, and show
contrasting continuity characteristics at different scales
(Dominy, Platten and Raine, 2003).
As a result of these features, the Central Victorian deposits rank
amongst the most difficult in terms of delineating and
producing an accurate and precise resource estimate (Spark,
1990; Battersby, 1993; Dominy et al, 2003). This style of
orebody is often referred to as being `nugget or nothing' or
`nuggetty', and is classic 'drill for structure and drive for grade'
type mineralisation. In virtually all cases, underground
development is required to define Ore Reserves (John and
Thalenhorst, 1991; Pelham, 1991, 1992; Dominy et al, 2001).
Yuill (1985), whilst not specifically addressing Central
Victoria, summarises these issues well:
1. Managing Director, AMC Consultants Pty Ltd, 19/114 William Street,
Melbourne Vic 3000. E-mail: pmccarthy@amcconsultants.com.au
arrive economically to a reasonable estimation of the
grade and tonnage. The main problem with lode type
(vein or reef) deposits…, is the variability of the
grades…. Certainly, diamond drill holes are essential
to establish the continuity on strike of the structure…
often it would be difficult, if not impossible to
establish the grade and the tonnage without important
underground development works…”.
This paper presents a review of the issues and challenges facing
hard-rock explorers and miners within the Central Victorian
Goldfields. Discussions cover geology, exploration strategies
and targeting, resource and grade control sampling, grade and
tonnage estimation, feasibility Studies, mining methods, and
metallurgy.
Characteristics of the Deposits
Nature of reefs
The typical Central Victorian, gold-only oreshoots are discrete
targets within larger more continuous lower-grade quartz reefs.
The host quartz reefs are within fault structures, which are often
geometrically complex and vary in morphology according to
the local structural architecture (Figures la and l b).
The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia

Figure 1a - New Bendigo Mine, Victoria, Australia: Figure 2 - Different gold-quartz reef geometries observed
laminated gold-quartz vein in the well-developed east leg in the Bendigo Goldfield, Australia. This diverse
of the shale-hosted Upper S3 Reef (Sheepshead architecture is common in many fault and fracture-
Anticline). The laminated vein is about 1 m wide at this related gold systems (Source: Bendigo Mining NL).
point, and contains visible gold (pink dots) along its
footwall contact. Beneath the main structure is a complex
network of footwall spurs, which can carry grade.
Common accessory minerals include pyrite, galena and
sphalerite up to about three per cent. Gold particle sizes
vary, and are often observed at between 500 to 5000 µm
(Source: Bendigo Mining NL).

Figure 1b - Laminated high-grade hangingwall vein with

barren spurs, Poverty Reef, Nick O’Time shoot,
Tarnagulla Gold Project, Australia (Source: Reef Mining
NL/Tarnagulla Resources Ltd).

The most common setting is fault structures developed in the

locked-up hinge zones of chevron folds, within the Ordovician
turbidite host rocks. The most common scenario is a series of
stacked faults, which develop as concordant bedding-plane slip
structures in the west leg of an anticline, ramp through the
hinge zone of the fold, then flatten and propagate across the
east leg of the anticline (discordant to the bedding). The
structural disruption of the hinge zone and crosscutting faulting
of the anticlinal east leg produces dilation zones, which host
oreshoots.

Essentially the same broad structural scenario produces a

number of different oreshoot morphologies (Figures 2 and 3), in
detail - Bendigo: leg-saddle-neck-spur reef complexes
(Turnbull and McDermott, 1998; Johansen, 2001); Ballarat:
leather-jacket shoots (Sandiford and Keays, 1986; Olsen,
2004); Chewton (Wattle Gully): leg-saddle-neck-spur reef
complexes (Cox et al, 1995); and Tarnagulla/Maldon:
laminated fault reefs associated with cores of massive barren
quartz (Cuffley et al, 1998; Ebsworth and Krokowski
deVickerod, 1998).

The Central Victorian gold reef systems show many similarities

to other sediment-hosted deposits such as those in the UK
(Dolgellau Gold-Belt: Dominy, Phelps and Camm, 1996;
Platten and Dominy, 2003), and Canada (Nova Scotia and
Meguma: Keppie, Boyle and Haynes, 1986).

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The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia

Figure 3 - Cross-section 5926220N through the Poverty Reef, Nick O’Time Shoot and parallel veins, Tarnagulla Gold
Project, Victoria, Australia. This figure exemplifies the possible structural (brittle and ductile deformation effects)
complexities confronting explorers and operators in Central Victoria (Source: Reef Mining NL/Tarnagulla Resources
Ltd).

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The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
Gold mineralogy and particle size
Gold is found in the native state containing varying proportions
of silver ranging from 20 per cent to less than two per cent
(Figure 4). It is generally hosted in quartz, and may be
associated with sulfides (eg galena, sphalerite, etc) or at
microfractures/grain boundaries within quartz.
Mineralisation is dominated by the presence of coarse gold
(>100 microns). In many cases, 60 per cent or more of the
contained gold is greater than 100 microns in size. Quantities of
fine gold (<100 microns) may also be present that contribute to
the metal inventory of the deposit. The morphology of gold
grains affects the sampling characteristics of the deposit, and
can range from individual disseminated grains (or specks) from
<100 - 2000 microns (eg Tarnagulla) through to larger masses
(nugget-like) greater than 2000 microns (eg Bendigo; Figure 4).
Across the different goldfields in Central Victoria, there is
some variability in the relative proportions of coarse versus fine
gold.
Grade distribution
The range of grade values within a vein can be high, from
<0.01 to more than 10 000 g/t Au. The high grades often have a
lower spatial continuity than the low grades, but may make a
stope block(s) economic.
The high-grades are distributed erratically throughout a
deposit/structure or contained within discrete oreshoots, which
are surrounded by low-grade material. Within oreshoots the
high grades are also likely to be erratically distributed. Run-of-
mine grades are generally in excess of 8 g/t, and can rarely
reach as much as 90 g/t (eg Bonanza shoot, Tarnagulla).
Resource tonnages of a single oreshoot ranges from small (50
000 tonnes) to relatively large (>500 000 tonnes).
The complex nature of gold grade distributions within the reefs
is well known, and typically displays a very strong positive
skew with an excess of high values. It is not uncommon for as
little as five per cent of grade values to be greater than 10 g/t
Au, and for 60 per cent to be less than 1 g/t Au. To add to the
complexity, outliers are also very common, ie abnormally high
values lying beyond and detached from the main grade
population. These outliers cause problems in resource
estimation and lead to arguments as to whether they should be
cut, deleted or retained.
Figure 4 - Coarse gold particles collected from Bulk
Sample No 25, St Anthony Reef, 450 South Drive, New
Bendigo Gold Project, Australia (Source: Bendigo
Mining NL).
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The nugget effect
Defining the nugget effect
The Central Victorian Goldfields contain some of the world’s
highest nugget effect orebodies. An understanding of the
implications of the nugget effect is critical during evaluation
and exploitation.
The nugget effect is a quantitative geostatistical term describing
the level of variability between samples at very small
separation distances. It is effectively a chaotic component that
can be considered as the variance of a totally random
component superimposed on the regionalised variable. It is
defined from a semi-variogram as the percentage ratio of
nugget variance to total variance. Those deposits that possess
nugget effect values above 50 per cent are the most challenging
to evaluate (eg Central Victorian quartz-gold reef systems).
Composition of the nugget effect
The nugget effect reflects the proportion of total nugget
variance present in a data set. Nugget variance has two
principal components:
1. geological nugget variance, and
2. sampling nugget variance.
The geological nugget variance component is related to the
natural distribution of the gold within the mineralisation
(Platten and Dominy, 2003). At a small-scale, this refers to the
distribution of single or groups of grains through to larger-scale
zones of high-grades, which can be locally ‘nuggetty’. The
physical continuity of mineralisation is also an important
consideration. Variability is most serious where there are very
small-scale, low continuity structures such as high-grade gold
carriers within the main structure or small veins in wall rocks
(eg New Bendigo; Dominy, Platten and Raine, 2003).
The sampling nugget variance component is principally related
to errors induced by inadequate sample size, preparation
methods and analytical procedures. In some instances, the
sampling nugget component is the dominant part of the total
nugget variance, and reflects a high Fundamental Sampling
Error (Dominy, 2004a). The sampling nugget variance
component is not fixed, being related to the physical and
chemical processes in sampling and analysis.
Practical implications of the nugget effect
High-nugget effect deposits are the most difficult and
challenging of mineralisation types to evaluate. The higher the
nugget variance (hence nugget effect), the higher the potential
error during resource grade estimation. The randomness
introduced makes prediction of unsampled locations more
difficult. As a result, understanding and potentially reducing the
nugget effect has significant economic importance.
Exploration
Challenges for Explorers
To date, no remote methods have been developed to assist in
the targeting of the discrete high-grade oreshoots that
characterise mineralisation in Central Victoria. The low overall
sulfide content of the oreshoots (≤5 per cent sulfides) and the
presence of pyritic black shales in the host rocks, means that
electrical methods (Induced Polarisation, resistivity and
electromagmetics) are of little use in detecting the presence of a
4
The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
high-grade shoot, even if the host reef structure is definable.
Once again, detailed ground magnetic surveys can help to
define the primary structures, however, the data is often
plagued by surface maghemite and mining contamination.
Detailed gravity survey shave also been trialed. In some cases
gravity lows have been recorded over known goldfields.
Standard arsenic soil geochemistry is useful in defining the host
reef structures, however, the arsenic halo is generally pervasive
(often pre-dates gold), and does not assist in discriminating
high-grade shoots within the reef structure. Some recent partial
leach geochemical techniques, such as Maglag and Mobile
Metal Ion (MMI) methods show some promise (eg target zones
under shallow cover) but once again, surface contamination
limits their usefulness in the near mine setting.
Recent work in the Bendigo Goldfield has used state-of-the-art
spatial analysis of historical data to gain a better understanding
of high-grade occurrences for drill targeting (Raine and
Blenkinsop, 2004). Autocorrelation combined with detailed
structural studies; both underground and on surface, have lead
to the recognition of new high-grade trends and associated
structural controls. The outcome of this work has strong
implications for resource definition and evaluation within the
goldfield.
Many factors lead to the conclusion that high-grade Central
Victorian style oreshoots are one of the more difficult
exploration targets. An understanding of the structural setting
and controls, and thus likely frequency of repetition of high-
grade oreshoots remains the main exploration tool. Diamond
drilling is therefore essential to obtain the required structural
data.
When a high-grade shoot is located in drillholes, the high-
nugget effect means that although the morphology and tonnage
of the shoot can be determined with reasonable confidence, it is
difficult to estimate grade. The subject of grade estimation and
risk will be discussed later.
Geological issues/models
The Central Victorian deposits are broadly similar in terms of
structural setting and controls on mineralisation, and are
effectively all variations on a theme.
The broader controls include domal anticlinal structures
(especially north and south plunging noses), and the Goldfields
Structural Domain concept in which gold mineralisation is
hosted by back-thrust faults, which link at depth with major
crustal scale listric faults (the surface trace of which is several
kilometers east of the goldfield).
The most controversial vector is the spatial correlation of
goldfields with granitoid intrusions. Debate has raged for a
century or more on this point. Although geochronological
studies generally prove that gold mineralisation pre-dates the
intrusion of granite, evidence of granite-related re-mobilisation
of gold mineralisation (also controversial) exists (eg Maldon).
Perhaps the emplacement of the mineralising fluids and
subsequent intrusion of granites are all part of the same heating
event, despite relatively minor differences in timing. Certainly,
some companies are applying for exploration licences (EL’s)
based on the spatial association, which may be a guide to zones
of anomalous hydrothermal fluid flow. The granites are
probably emplaced along the same primary structures that acted
as conduits for mineralising fluids.
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Structural repetition is the key (eg the ribbons of Bendigo:
Turnbull and McDermott, 1998; Johansen, 2001a; Figures 5
and 6). If the frequency of repetition and the controlling factors
(structural, geomechanical competency of host quartz/wall
rocks and geochemical composition of the wall rocks, etc) can
be determined, drillholes can be targeted accordingly. Strike-
slip structural re-activation of faults hosting early massive
quartz veins or reefs appears to result in the formation of
dilation zones in which high-grade gold mineralisation is
deposited. Subtle differences exist between individual gold-
fields – most of the gold inventory at Bendigo is hosted by
spurry-quartz veins/reefs in the anticlinal saddle and neck reef
setting, which have been re-fractured during the fault re-
activation process. At Tarnagulla, laminated veins hosting most
of the gold inventory form around lower grade massive quartz
cores, and spurry-quartz veins are in general low-grade to
barren (Figure 1b: Cuffley et al, 1998; Thomas, 1999;
Krokowski de Vickerod, Cuffley and Evans, 2001). Thin,
laminated, bedding-plane-slip veins consisting of quartz and
carbonaceous slate laminae, are common to all the Central
Victorian fields – these veins are early pre-cursors to the more
elaborate vein systems and are referred to as backs in the
Bendigo district fields or indicators in other fields. Early miners
had great faith in following such indicators or backs, until a
structurally favourable setting for high-grade shoots was
reached (fold hinge zones, etc).
The role of historical research
Historical research is an invaluable exploration tool in old
Goldfield areas, as the typically closely spaced shafts, crosscuts
and drives can provide data that is the equivalent of an
intensive drilling program (Johansen, 2001; Olsen, 2004).
Information gleaned from Mines Department records,
newspapers (often weekly or even daily reports) and other
sources can provide crucial data on styles of mineralisation,
grade distribution, metallurgy, ground conditions, etc. Old
level-plans and sections can be used in the creation of a 3D
model of the historic workings (Fraser, Bartlett and Quigley,
2003; Figures 5 and 6). The 3D model then forms the basis of a
full structural model of the reefs or vein systems, thus revealing
the styles of mineralised structures to be expected and the
setting of higher-grade shoots.
Extrapolations can then be made along strike to identify new
near-mine targets or the favourable surface structural signatures
revealed by the 3D model can assist in targeting new areas
altogether.
Methods used for exploring
Structural analysis remains the principal method of identifying
targets (Cuffley et al, 1998; Krokowski de Vickerod, 1998).
The holy grail of a remote method (geophysics, geochemistry,
geobotanical, etc) for locating discrete high-grade gold ore-
shoots has yet to be developed.
Detailed aeromagnetics will provide the basis for mapping the
broad structural framework of the Goldfield. Other remote
methods will define the extent of the vein or reef structures (eg
soil geochemistry, hydrogeochemistry, geobotany, etc) but will
not define the position of a high-grade shoot. Current
developments in soil geochemistry and biogeochemistry show
some promise.
The development of a 3D model of the Goldfield is an essential
tool for identifying favourable structural settings and the
5
The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia

frequency of repetition to be expected for mineralised structures at approximately 200-250 m spacings in the anticline
and high-grade shoots. axial surface. Within each ribbon, the distribution of gold
grade is more complex and the individual reefs less
The 3D model can then be used as a predictive tool to identify continuous. Historically each strike linear km of ribbon
drill targets. Contrary to many explorers, we feel that a few
well-placed and carefully logged diamond drillholes, early in
has produced 130 000 ounces of gold. Strike length of
the exploration program, can provide crucial data, which will section shown approximately 2 km (Source: Bendigo
form the basis of the ongoing exploratory work. Some explorers Mining NL).
feel that a round of cheaper percussion drilling (RC) at the
outset gives you more for your money. In fact, RC drilling will
provide some broad data on grade and width of the mineralised
zones, however, little will be known about the actual vein
widths, vein or reef orientations, grade distribution within the
veins or reefs, the structural setting or possible structural
controls.

Targeting
In summary, predictive targeting of oreshoots within reefs or
vein systems should be based on detailed surface structural
mapping, extrapolation of trends from a 3D model (based on
historical and recent exploration data) and structural
confluences. Currently, remote exploration methods
(geophysics and geochemistry) are only useful in defining
primary controlling structures on a regional scale.

Figure 5 - 3D reconstruction of the South New Chum

Line-of-Reef, New Bendigo Goldfield, Australia
showing strong lateral geological continuity at the gross
ribbon scale, and ribbon repeat effect. Each ribbon
represents a series of quartz reefs, which group together

Figure 6 - 3D reconstruction of the New Red White and Blue Consolidated workings, Sheepshead Line-of-Reef, New
Bendigo Goldfield, Australia. This oblique view shows the historical workings on the S1 and S2 Ribbons, which where
characterised by neck, leg and spur reefs (Source: Bendigo Mining NL).

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The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
Sampling for Resource Estimation and
Grade Control
Introduction
It is critical that practitioners remember that part of the nugget
effect is directly related to the sampling process: that is, to the
size of the field samples taken; the effectiveness of collection;
sample preparation (eg crushing, pulverizing and splitting); the
size of subsamples (samples for pulverizing and assaying); and
analysis (Dominy, 2004a).
The challenges of sampling gold-bearing systems are well
documented (Royle, 1989; Sketchley, 1988; François-
Bongarçon, 1991; Dominy et al, 2000b; Roberts, Dominy and
Nugus, 2003). High-nugget effect coarse gold-bearing systems
such as many of those found in Central Victoria are the most
problematic. Special consideration is required to maximise field
sample and assay charge sizes, within a cost-effective
framework (Royle, 1989; Dominy et al, 2000b). It is often
difficult to maintain assay accuracy and precision in such
samples, due to low grades, the nuggetty behaviour of gold
grains (eg poor disintegration during pulverizing), and high
contrast between the densities of gold and host rock minerals
(leading to segregation problems: Royle, 1989; Dominy et al,
2000b). This variability is related to the Constitution
Heterogeneity of samples (hence Fundamental sampling Error),
and to the often-ineffectual methods used to prepare and assay
them (Dominy, 2004a).
Historical approaches to sampling in Central Victoria
The historical approach to sampling in the region has been
fairly straightforward, recognising the issues of a high-nugget
effect environment. The usual practice involved the
examination of working faces for gold; by dollying and
panning; and, by trial crushing (few tonnes plus). Face
examination for visible gold is not quantitative, though does
provide an easy way to discrimate between high-and low-grade
areas. It is more problematic where lower economic grades are
encountered (eg <10 - 15 g/t Au), as little visible gold may be
present. In most cases a combination of visual examination with
grab samples, and trial sample lots (eg macro-bulk samples)
were used (Clarke and Thompson, 1965). Data would then be
transferred onto assay plans for interpretation. Stope block
grades were generally assigned from bulk sample data.
Table 1 - K values for the selected Central Victorian gold deposits at their run-of-mine grade. Entries in italics are mines
with fine sulfide-locked gold, the others are coarse free gold-bearing systems.
Gold liberation diameter
Deposit ROM grade (g/t Au)
(microns)
Bendigo 10.0 5500
Wattle Gully 11.5 6000
Tarnagulla 30.0 1500
Gwynfynydd† 15.0 1500
Empire† 33.0 1500
Nalunaq† 25.0 850
Batu Hijau 0.5 20
Hadleigh 6.0 50
Mercedes 9.5 55
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Comparison of sampling difficulty
The strong variability (eg uncertainty) in gold assays is due to
differences in the gold content of single rock fragments in a lot
(Dominy, 2004a). This variability is related to sample and
subsample weights, crushing and pulverizing sizes, and to
variations in the number, shape and size distributions of the
gold grains. Gy’s Sampling Theory relates gold grain
characteristics to sample weight and fragment size (François-
Bongarçon, 1991). Part of Gy Theory defines the so-called
sampling constant (K), which is related to the sampling-nugget
effect for specific grades. K can be used to classify ores into
categories of sampling ease, based on sampling characteristics
(Dominy, 2003).
Table 1 shows a number of deposits for comparison, where the
Central Victorian systems are generally defined as being either
of extreme or major sampling difficulty.
Deposits with K values above 500 are likely to be the most
challenging to evaluate, and are prime cases for bulk sampling
programs to overcome the nugget effect, etc (Dominy, 2003). In
the cases shown in Table 1, all the coarse gold-bearing deposits
(Bendigo, Empire Ranch, Gwynfynydd, Tarnagulla and Wattle
Gully) have been sampled using bulk-sampling techniques
(Dominy et al, 2000a/b, 2001; Dominy, Johansen and Annels,
2001).
Sample types
Reverse circulation (RC) drilling
Both diamond and RC drilling methods are common in gold
evaluation. If coarse gold is suspected, RC drilling will create
problems of sample loses/gains and cross-contamination
leading to bias. In extreme cases, an RC system may recover
only 50 per cent of the gold, however a face-sampling hammer
bit can minimise this. RC methods have been used with some
success to define the outline of shallow mineralised zones,
although they generally do not permit the accurate
determination of grade or ores hoot position. Where RC drilling
is employed, extra care is needed in supervising any sampling
and sample preparation done at the drill site, and in ensuring
that dust losses from any source are minimised. To reduce
contamination it may be necessary to reduce the sampling
interval to one metre or less.
K value Difficulty classification
79 000 Extreme
78 000 Extreme
3700 Major
7500 Major
3400 Major
1900 Major
345 Minor
100 None
63 None
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The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
RC drilling was used by Bendigo Mining NL to evaluate the
near surface Williams United deposit. The surface exploration
program involved several phases of bulk sampling from surface
trenches. Prior to trenching, lines of 15 m deep grade control
RC holes were drilled at 2.5 m intervals. In many cases, this
drilling overlapped the pre-existing wider spaced (10 - 25 m)
RC exploration holes. The exploration holes consistently
understated the grade compared to the grade-control drilling by,
on average,42 per cent (Johansen, 1997, 2001; McDermott and
Quigley,1998). This is despite the same drill rig and assay
procedure being used. The difference between the two data sets
is likely to relate to sample density and gold loss in the RC
samples.
Diamond drilling
The principal method of collecting geological and grade data in
Central Victoria is through the use of diamond core drilling.
The method was first used in the region during the 1880s. In
most cases, the drilling of nuggetty gold reefs generally gives a
good indication of reef location/geology, with core assays only
providing a feel for grades and not an accurate assessment. The
importance of drilling lies in the determination of local
geological structure etc. Drilling at moderate to small spacings
(say 30 ×10 m) can enable the estimation of resource/reserve
tonnage with a reasonable level of confidence (Figure 7).
Linear face sampling
Samples are obtained from drive backs and faces. Channel
samples are more representative than chip samples in the coarse
gold environment, as they will generally provide a larger more
constrained sample. Some projects outside of Victoria have
used diamond saw cut channels to improve sample quality (eg
Roberts, Dominy and Nugus, 2003). Elsewhere, a face-panel
sampling approach has been taken to maximise sample
coverage and field size (Roberts, Dominy and Nugus, 2003).
At Tarnagulla linear chip-channel samples were taken across
the face after every 2.7 m advance in the mechanised operations
and 1.8 m in the airleg stopes. Mechanised mining faces were3
- 4 m wide and usually four 5 - 10 kg samples were taken. The
narrower airleg stope faces were 1.2 - 1.7 m wide and thus only
three 7 kg samples were taken. These samples were crushed to-
6 mm, split to 3 kg, pulverised to 90 per cent -75 µm then
subjected to an accelerated cyanide leach. If data on size
distribution of gold were required, a 1 kg screen fire assay was
performed.
A similar approach is used at New Bendigo, where chip
samples are taken for every face and sent to an external
laboratory for assay. The sample size collected is relatively
small; consequently, values for grade will be less representative
than those obtained from bulk sampling. However, linear chip
samples yield vital geological and grade domain information.
Assay plans show that chip sampling picks up general trends in
grade, which are also recognised by bulk sampling, and micro-
bulk samples. The combination of geological mapping and
digital photographs with chip sampling data makes it possible
to distinguish the domains that are carrying grade.
Broken rock (grab) sampling
This type of sampling involves collecting masses of broken
rock from muckpiles, stockpiles, trucks and conveyor belts, etc.
The technique has a number of disadvantages including the
sampler’s natural tendency to pick visibly richer fragments and
ignore fines, and the fact that the material is not well
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homogenised. The technique has been applied in Victoria with
variable success, though generally only permits the
discrimination between oreshoot versus and barren reef (Clark
and Thompson, 1965; Dominy et al, 2000b, 2001).
A study undertaken at Tarnagulla involved sampling from rail
trucks (Dominy et al, 2001). Despite the irregular representivity
of this method, they often provided a grade closest to mill
results (within -18 to +8 per cent). Two duplicate 1 kg samples
were taken out of each truck at the shaft station. All samples
were bulked together to make a larger 10 - 15 kg sample, which
was then pulverized and split down to 1 kg.
Muck pile grab sampling was undertaken at Wattle Gully mine
during the 1960s. Clark and Thompson (1965) report that:
assays of grab samples taken daily from muck
piles mined in each working place are not
indicative of the true grade of each pile and
sampling cannot be used for daily grade control.
Grab sample data, together with face channel samples, were
plotted onto assay plans and provided a method for
discriminating between economic versus barren zones.
At New Bendigo, 3 - 5 kg grab truck samples were taken during
the development of the 450 South Drive (St Anthony’s Reef).
As with other examples, this technique was able to define the
high-grade area, but did not correlate with the bulk sample
grades (see Figure 12 in Dominy, Johansen and Annels, 2001).
Latterly, larger samples from stockpiles have been taken as part
of the micro-bulk sampling program (Johansen et al, 2003).
Micro-bulk sampling
Some operations have developed sampling systems based on
micro-bulk samples, which are generally less than 1000 kg in
weight (eg New Bendigo Project: Johansen et al, 2003; Roberts,
Dominy and Nugus, 2003). This approach is based on methods
used by many old time miners, taking samples for ‘dollying and
panning’ and visual grade calling (eg Clarke and Thompson,
1965). These larger hand-collected samples (50 - 200 kg) are
more practical to collect when compared to macro-bulk
samples, and can be processed in their entirety relatively
quickly in a small lab-based plant. At New Bendigo two 50 kg
samples are collected from surface stockpiles. Turnaround
times from sample collection to grade reporting can be
potentially as little as two to four hours (Johansen et al, 2003;
Roberts, Dominy and Nugus, 2003; Figures 8a and 8b). These
samples do not generally give an accurate grade figure, but will
effectively allow the discrimination between oreshoot and
barren zones.
Macro-bulk sampling
Macro-bulk sampling provides an effective way to assess grade
when dealing with high-nugget effect coarse gold-bearing
mineralisation, sample sizes range from 10s to 10 000s of
tonnes (Dominy, Johansen and Annels, 2001). The size of a
bulk sample must be carefully controlled by geological
knowledge of the mineralisation from which it is to be taken.
Before the commencement of bulk-sampling program, it is
necessary to have a good understanding of the mineralisation,
this is important, as it will determine the size and positioning of
individual samples.
8
The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia

Figure 7 - Proposed development and drilling scenario for the definition of Indicated Mineral Resources in the New
Bendigo Project, Australia. One-hundred to 120 m spaced drill fans will be augmented by 30 - 40 m spaced fans and on-
reef development. The drilling permits the determination of tonnage and give an indication of grade distribution (Source:
Bendigo Mining NL).

Evaluation programs using bulk samples, require both
appropriate planning and implementation. The planning stage
must: delimit the nature, extent and grade of mineralisation
with development sampling (eg diamond drilling and linear
and/or panel sampling); characterise ore mineralogy (with
respect to free and refractory gold); and define the size of
sample required, being mindful of milling and resource
estimation requirements (Dominy, Johansen and Annels, 2001).
Macro-bulk sampling produces samples ranging from 10s
to1000s of tonnes in size from underground development. They
are best treated in a pilot plant or batched through a production-
scale facility in their entirety if possible. In some cases samples
have been reduced via the application of a sampling tower
system. An alternative is to reduce the bulk-sample (eg 100
tonnes) after crushing, into a smaller bulk-sample (eg 15 - 30
tonnes) using a statistically valid in-stream sampler prior to
treatment (eg New Bendigo Project; Figures 9a and 9b;
Dominy, Johansen and Annels, 2001).
At New Bendigo, a single bulk sample usually consists of one
development round with the approximate dimensions 3.5 × 3.5
m profile and a 2.1 m advance or 4 × 4.5 profile and a 3.5 m
advance. Bulk samples are stockpiled on surface before being
transported to the New Moon plant. The New Moon Plant has
the capacity to treat four to five bulk samples per week at a cost
of $A 3000 per sample. The gravity circuit operates at a feed
rate of about 1.5 tonnes per hour.
Macro-bulk sampling generally provides the most effective way
to assess mineable grades in high-nugget gold systems, and has
been used extensively at the New Bendigo Project, and other
Central Victorian operations, eg Tarnagulla, Wattle Gully, etc
(Clarke and Thompson, 1965; Dominy, Johansen and Annels,
2001).
Sample preparation and assaying
Introduction – general issues
Sample preparation is critical if the final assay is to be of any
use. Of particular importance is the sample particle size and
weight reduction during preparation to yield an assay charge.
Sample reduction error variance can be determined using Gy’s
formula. Using the formula we can either:
1. determine the variance/error for a given sample size
split from the original; or
2. calculate what subsample size should be used to
obtain a specified variance at a given confidence level
(Dominy, 2004a).
It is difficult to maintain assay accuracy and good precision in
coarse gold-bearing Victorian ore because of their relatively
low grade (<0.1 - 100 g/t Au), erratic distribution of particles,
and high specific gravity of gold (five to six times greater than
common rock-forming minerals). Assay data generally displays
a shotgun pattern of extremely poor repeatability, even with
assays from the same pulp (Figure 10). When a sample arrives
at the laboratory it is generally dried, crushed and pulverised to
a nominal -75 microns and mixed. The error can be caused by
the assumption that the pulverising process produces a
homogeneous sample. With a coarse gold-bearing sample this
is not the case, as the high malleability of gold resists
pulverizing and the liberated particles tend to cause segregation
errors (Dominy, 2004a).

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The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia

Figure 8a - Flow diagram of the Bendigo Mining NL micro-bulk sampling circuit (Source: Bendigo Mining NL).

Figure 10 - Scatter plot comparing repeat traditional fire-assay grade data at Bendigo (coarse gold-bearing) and
Fosterville (fine, sulfide-hosted gold) gold deposits, Victoria, Australia. All samples prepared in an LM5 pulveriser to
nominal -75 micron with two samples taken from each pulp. High-nugget deposits characterised by coarse gold generally
show poor repeatability between samples from the same pulp using a traditional 30 g charge fire assay (Source: Bendigo
Mining NL).

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The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
Figure 11 - BLEG assays from separate riffle splits of the same drill sample demonstrate poor repeatability (Source:
Bendigo Mining NL).
Assay methods
There are a number of techniques employed to assay samples
for gold. The most common is the traditional fire assay method,
which generally requires a charge of 30 - 100 g. A variant of
fire assaying, the screen fire assay (or metallic-assay), reduces
the coarse-gold problem by sieving out the coarse fraction (eg
+110 microns) and assaying it separately. The cyanide leach
(bulk leachable extractable gold – BLEG) method also
overcomes the problem of coarse particles by assaying the
entire sample, which can exceed 5 kg (Shaw, 1997; Johansen,
1997; Dominy et al, 2000a).
Whilst a change to screen fire assay or BLEG minimises the
problems associated with sample preparation, the larger sample
size does not overcome all the inherent problems of coarse
gold-bearing samples. The repeatability between separate splits
from the same sample can still be poor (Figure 11). If a large
number of samples are included in the assay program (eg split
and assayed), the indicated grade may be similar, but is it
representative of the mineralisation being investigated?
Keeping sample preparation realistic
The reliability of gold determination, and the lowering of the
Fundamental Sampling Error (Dominy et al, 2000a; Dominy,
2004a), can be improved by:
• not rejecting large portions of the sample during the
early crushing stage;
• keeping subsamples as large as practically possible;
• avoidance of gold liberation, except during
pulverisation of the final assay charge subsample;
• carrying out repeat assays on the original material and
averaging the results;
• using effective large assay charge techniques such as
screen fire assay or ACE;
• selecting whole samples or rejects for total gold assay
via a bench-scale process system which would
normally entail crushing/grinding, gravity separation,
and assaying of the final residues (Dominy et al,
2000a; Roberts, Dominy and Nugus, 2003; Johansen
et al, 2003);
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• carrying out a systematic QA/QC programs to
measure the reliability of each of the sampling,
preparation and assaying steps, and then optimise the
process; and
• • where coarse gold is definitely present, ensure that
separate splitters, crushers and pulverizers are used
and that equipment cleaning between samples is
effective.
There are no all-effective preparation routes for coarse gold-
bearing samples; each case should be treated on its own merit
following detailed mineralogical/size investigation and Gy
Theory calibration (François-Bongarçon, 1991; Dominy,
2004a).
Comparison of different sample types
Johansen (1997, 2001) reports a comparison between surface
drilling and bulk sampling and underground linear/panel and
bulk sampling at the New Bendigo Project. In both cases the
results indicated that the drilling and chip-channel samples
generally understate bulk sample grades. Studies reported
elsewhere agree with these findings showing that the greatest
understatement of grade comes from diamond drill holes and
the least from bulk sampling (Dominy, unpublished data;
Cuffley, unpublished data; Dominy et al, 2001; Dominy,
Johansen and Annels, 2001).
In summary, the general observations are:
• assays using small assay charge sizes (25 - 100 g;
traditional fire assay) consistently understate assays
using large assay charge sizes (1 - 5 kg; screen fire
assay and BLEG);
• wide-spaced drilling results consistently understate
close-spaced drilling results;
• close-spaced drilling results consistently understate
bulk sample results; and
• linear and panel sample results understate bulk
sample results.
These findings, though not unexpected, demonstrate the
importance of bulk sampling as a part of the grade estimation
11
The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia

process in coarse gold-bearing veins. It must be emphasised 5. moderate to strong alteration of wallrocks (Johansen,
that the above comments apply only to well mineralised, well unpublished data).
recognised coarse gold-bearing contexts, not necessarily or
automatically to prospects not yet recognised by systematic The situation at Tarnagulla was relatively simple, in that
appraisals. Bulk sample grades are not true values; they are the economic gold grades in the Nick O’Time Shoot were
results of a procedure, which if carried out effectively and exclusively hosted within laminated veins. The very presence
appropriately can provide a reliable estimate of the truth. of laminated vein within a drill intersection was encouraging
even if its assay grade was poor.
Proxies for gold – criteria to support variable assay
grades Table 2 - Characteristics of Central Victorian high
A well-known feature of Central Victorian deposits is that gold- nugget-effect golddeposits.
only assays often do not represent the true grade picture. For
example, a drill intersection of 0.3 g/t Au in an oreshoot zone Characteristic Features
can be misleading, as an intersection within 0.5 m of the Geological • Variable dip
original sample could return 1000 g/t Au or more. Clearly the characteristics
0.3 g/t Au value may represent the zone of influence of that • Variable strike
intersection, but is not representative of the overall shoot grade. • Variable width
It is sometimes possible to develop a supporting measure of • Structural variability: potentially complex
grade potential within drilling programs in particular, based on splitting and branching
parameters other than gold grade. These could be, for example
chemical, mineralogical, textural or physical. • Style variability from discrete vein to
• Wallrock-hosted mineralisation (veining
Dominy (2001) reports results of a Gold Proxy Index, which and/or disseminations)
uses specific trace element ratios to discriminate between gold- • Variable mineralogy
poor and gold-rich domains within a gold vein in North
• Free and/or sulfide locked-gold
America. The occurrence of certain minerals can also be linked
to the occurrence of gold. In the Clogau mine (UK) the • Post-mineralisation faults
appearance of galena and/or telluride minerals was indicative of Grade characteristics • Difficult to get representative samples
the presence or proximity of high-grade pockets that could
• Low average concentration and high
contain 100s or 1000s ozs of gold. Thus the occurrence of a
variance of Au
specific quartz textures, microstructures or mineral(s) can
provide some degree of confidence during • Skewed distribution of grades
exploration/estimation that a gold-bearing domain is present (eg • Large grade range
the nature and density of pressure solution features within a Data sources • Historical data
vein: Dominy, 2004d).
• Geological mapping (surface and
underground)
Such an approach has not been fully realised in Central
Victoria, though companies are looking for criteria that give • DDH drilling typically on 15 - 100 m
confidence drill intersections. • Underground development
• Underground bulk sampling/trial mining
At New Bendigo all mineralised drill core samples are subject
to multi-element analysis, though to date no geochemical Spatial continuity • Medium to high-gross geological continuity
discriminator has been found. Recent work reported by Raine, • Low to medium-local geological continuity
Dominy and Blenkinsop (2003), shows that high-grade gold is • Low-grade continuity
often hosted in quartz veining that occurs in association:
Domaining issues • Often sharp definition of overall vein
structure although internally there may be
1. with pressure solution features, ie stylolites and complex intermingling of ore and waste
slickolites,
• Mineralisation as veining and/or
2. with vein-wallrock contacts, particularly shale-quartz disseminations n altered wallrocks
contacts,
• Presence of oreshoots
3. as free gold,
Grade estimation • Handling extreme grades
4. with sulfides, and requirements
• Handling high to extreme nugget effect
5. with wallrock fragments or laminations.
• Handling highly skewed populations

Economic mineralisation, above 8 g/t Au, can generally be • Handling multiple populations
characterised by the following criteria: Grade estimation • Classical methods such as polygonal,
techniques sectional or ‘averaging’
1. gold assays of less than 4 g/t, but often above 1 g/t • Nearest neighbour
Au,
• 2D and 3D Inverse Distance Weighting
2. rare visible gold, Underground mining • Tonnage factors typically 2.7 - 3.5 t/m3
3. arsenopyrite and other sulfides, factors
• Minimum stoping width
4. well mineralised quartz (>20 per cent quartz in the • Additional and planned dilution
intersection) with stylolites and rock fragments, and
• Stoping method
• Planned production rate

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The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
Resource Estimation
Overview
The reliability and accuracy of a resource estimate is dependent
upon many factors including geological understanding, sample
density, sample collection method, sample preparation and
assay technique, bulk density determination and method of
estimation. One of the key aims of resource estimation is the
understanding of grade and geological continuity (eg Dominy,
Platten and Raine, 2003; Dominy, 2004c). Geological and
grade distribution issues control the applicability of estimation
techniques, the key issues are listed in Table 2.
Estimation approach – data density versus continuity
The basis of a reliable resource estimate is founded on sampling
data of appropriate quality and density. Data density in
particular, governs our ability to resolve grade and geological
continuity (Dominy, Platten and Raine, 2003; Dominy, Noppé
and Annels, 2004).
The issue of drill spacing is a vital one, with the ultimate
question being ‘what is the optimum spacing required?’ In
reality it is related to the level of risk that management is
prepared to accept (or not perhaps), in relation to potential cost.
If the drill spacing is not able to resolve orebody geology and
geometry (and hence continuity), then there is a risk of high
uncertainty in grade and tonnage. This inability to resolve
continuity is related to the data gap – a lack of information.
When joining up sample points, whether drill holes or
underground/surface exposures, it is important to consider very
carefully the implications of what is being done. Drilling
density rapidly escalates to absurdity in complex systems, and
naturally leads to the need for underground development.
Underground development allows detailed mapping and
sampling, the results of which enable grade and geological
continuity to be assessed. Development in itself permits
evaluation of the orebody by macro-bulk sampling and/or trial
stoping. Depending upon the geometry of the oreshoot and
distribution of grade within it, drives and raises can be placed in
a regular pattern to ‘block-out’ ore before stoping. Reefs
showing the highest nugget effect, such as those in Central
Victoria, will need closely spaced development to achieve
Indicated Resources/Probable Reserves (Figure 7). The
development pattern will also need to reflect the grade
distribution (see Figure 6 in Dominy et al, 2001). Resource
grades are likely to be global estimates, or at least ‘locally’
restricted to ‘blocked-out’ stope panels.
Estimation techniques
Introduction
Some Central Victorian reefs are relatively narrow tabular
structures amenable to 2D representation and evaluation on
plans and vertical longitudinal projections (eg Tarnagulla). In
many cases structures are much wider (eg New Bendigo and
Ballarat) and are amenable to computer-based 3D resource
modelling. Conventional estimation methods that have been
applied to some Victorian reefs in the past, and include
weighted averages and polygonal models (Annels, 1991;
Dominy and Annels, 2001).
Polygonal estimation
The polygonal method produces an unsmoothed estimate that is
based on sample, rather than block support. As a result, the
histogram of the estimated values is the same as the histogram
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of the raw samples, where in reality the grades of mining blocks
will have a lower variance. When recoverable reserves above a
cut-off are considered, the polygonal method generally results
in severe bias and overestimation of grade. With a high to
extreme-nugget effect, the worse the problem. If the variation
in grade is totally random (eg pure nugget effect), the best
estimate at any point is the mean of all the sample grades
(global estimate of grade only).
In 1995 the Tarnagulla project produced a preliminary resource
estimate based on weighted averages and polygonal blocks
projected to a midpoint between drill holes (Dominy et al,
2001; Krokowski de Vickerod, Cuffley and Evans, 2001). A
top-cut of 30 g/t Au was selectively used to remove the
influence of abnormal high-grades in the areas of lower grade
mineralisation. The estimate was based on limited drilling
plotted on a vertical longitudinal projection. Some 30 000
tonnes at 30 g/t Au was defined for the Nick O’Time Shoot.
Classification in the Inferred Resource category was regarded
as prudent, since uncertainty existed regarding the overall
grade. Once mining commenced in 1996, the resource estimate
was progressively modified, and elevated to the Measured
Resource category on the basis of 15 - 25 m spaced
underground drilling, development and bulk sampling.
Underground development increased the resource, in this case
double the initial estimate, as mining and exploratory
development was concurrent.
‘Conventional’ block modelling
In recent times, block modelling using nearest neighbour and
inverse distance weighting (IDW) interpolation techniques have
been used. Bendigo Mining NL has trialed nearest neighbour
methods to define orebody grade shells. IDW has been applied
to estimates at Ballarat and Tarnagulla (Parsons, 2000). For
nuggety structures with poor grade continuity, IDW to the
power three is used with an elliptical search area whose long
axis is aligned parallel to the oreshoots, and whose axial ratios
may be defined by investigation of historical stope shape and
structural controls.
Olsen and Cox (2003) report on the resource estimate for the
Ballarat East Project. Some 5110 samples comprise the
resource database, based on 12 drill sections with an average
spacing of 250 m along strike, and 40 m down dip. IDW to the
power one was used to interpolate grade into 10 × 10 × 10 m
blocks, with 2 × 2 × 2 m sub-blocks. This interpolator was used
to ensure that grade was not overestimated by maximising the
smoothing effect. The search neighbourhood defined for the
model was based on historical grade distribution in the
leatherjackets (eg oreshoots). Grade distributions in the
orebodies were investigated to define a cut-off grade, and to
identify low-and high-grade domains. The majority of high-
grade shoots are typically characterised by a high-grade core of
>10 g/t Au, with a peripheral lower grade halo (≥2 - 3 g/t Au).
Low-grade waste domains were generally <2 g/t Au.
Consequently a cut-off of 2 g/t Au was applied to the model.
Results from this estimate were considered to meet the criteria
for both Indicated and Inferred Resources. The model was
calculated using a range of top-cut values, including: uncut, 145
g/t Au top-cut; and a 100 g/t Au top-cut. The 145 g/t Au top-cut
model was chosen for the 2003 estimate, which contains 2 Mt
at 10.7 g/t Au for 675 000 oz gold (Olsen and Cox, 2003).
Geostatistical (kriging) block modelling
Kriging block modelling has rarely been applied to resources in
the Central Victorian Goldfields, because of the high-nugget
effect, and inadequate sample density to define the structure of
13
The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
variograms at low lags. Kriging may, however, become more
applicable during the operational phase of a mine when more
detailed sampling has been undertaken.
Attempts at variography at the New Bendigo underground
operation have all resulted in a pure nugget effect variogram
(Morris, 2000; Raine, unpublished data). Estimation undertaken
on the Bendigo Williams United project (nugget effect of 75
per cent) used ordinary kriging to interpolate grade into 25 × 8
× 10 m blocks based on a 25 × 25 m drill grid (McDermott and
Quigley, 1988). It was found that the kriged estimates generally
understated the ‘true’ grades defined from bulk samples, a
reflection of the high-nugget effect and wide sample spacing
(McDermott and Quigley, 1998).
Variography undertaken at Tarnagulla on development grade
control samples yielded a nugget effect of about 60 per cent.
This is a relatively low figure, and is related to the high quality
of the samples (hence low Fundamental sampling Error;
Dominy, 2004a), and the more ‘continuous’ grade continuity
within the Nick O’Time Shoot laminated veins (Parsons, 2000).
As a result, kriging was trialed on the Tarnagulla data set,
yielding resource grades that were verifiable with production
data (Parsons, 2000).
Resource grade risk/uncertainty
General considerations
The reliable estimation of grade is generally more critical, and
has less tolerance, than for tonnage. This feature has lead to the
usage of phrases such as grade rules, grade is king and nothing
beats grade. When it is considered that, even for a good
operation, production costs can be at least 40 - 70 per cent of
the mine site revenue, it can be seen that even a 15 per cent
decrease in grade can translate to a 20 - 40 per cent decrease in
operating surplus (Dominy, Noppé and Annels, 2004). In some
cases this could render a financially stretched project non-
viable. Therefore the reporting of grade uncertainty is a key
issue for any gold project, and in particular those of Central
Victoria (Dominy, 2004b).
Table 3 - Potential grade precision levels at the 80 per
cent or 90 per cent Confidence Levels for Mineral
Resource and Ore Reserve estimates over a 12-month
production period (after Dominy, Noppé and Annels,
2004).
Resource category Data level Uncertainty
Measured Resource/ Developed ±5 - 10%
Proved Reserve
Undeveloped – drilling only ±10 - 15%
Indicated Resource/ Developed ±15 - 25%
Probable Reserve Undeveloped – drilling only ±25 - 35%
Inferred Resource Developed ±35 - 100%
Undeveloped – drilling only ±35 - 100
Various workers have attempted to provide guidelines for the
classification of resources and reserves based upon the
perceived precision of the grade and tonnage estimates. These
are generally intended to be qualitative or intuitive by nature,
based on consideration of all the factors that might impact on
confidence and uncertainty. Table 3 presents examples of
precision ranges, which may give appropriate levels of
uncertainty for classification using the JORC Code (JORC,
1999). For example, limits may be up to ±20 per cent, though
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are likely to be asymmetrical (eg -20 per cent to +5 per cent)
for high-nugget gold deposits. The levels of precision can
change depending upon the type of estimate, and hence data
density. Deposit type will have a very clear influence on
attainable resource and precision levels. It is less likely that
high-nugget systems, such as those in Central Victoria, will
approach the levels expected for Measured Resources.
Grade uncertainty is clearly a major concern with high-nugget
gold operations. In many cases the general pattern is for grade
to be overestimated during a 12-month production period or
less. Dominy (2004b) reports reconciliation values of between
+18 per cent and -76 per cent for selected worldwide high-
nugget systems with similarities to Central Victorian deposits.
The key issues on which resource grade is dependent upon are:
• nature of the data (eg skewness, nugget effect, etc),
• data density,
• data quality, and
• the estimation method applied.
Poor reconciliations indicate that these issues are often
inappropriately addressed. The reconciliation period is an
important factor, since grades and tonnages over a 12-month
period can sometimes reconcile ‘reasonably’ well (±15 per
cent), whereas on a stope-by-stope basis (shorter reporting
period), they can be highly variable (±15 - 100 per cent or
more).
In many cases, operators may consider that they have the
confidence to define Proved Reserves (hence Measured
Resources), yet their ultimate reconciliation could be as poor as
-45 per cent; only Inferred Resource quality. In some cases
poor grade performance can be related to dilution, however in
these cases estimation issues were dominant. Where grade is
overestimated, this usually reflects issues related to top cutting
and grade smearing (Dominy and Annels, 2001; Dominy et al,
2003). In other cases incorrect assumptions are made with
respect to grade continuity (Dominy, Platten and Raine, 2003).
Reporting grade uncertainty using grade ranges
In an attempt to be more open about grade uncertainty, a
number of publications have suggested the use of the grade
estimate quoted within a grade range to achieve more complete
and useful disclosure (Johansen and Stephenson, 1999;
Dominy, Johansen and Annels, 2001; Dominy, Stephenson and
Annels, 2003; Dominy, 2004b/c).
The key issues are clearly the definition of the grade estimate
and the grade range. The grade can be estimated by various
techniques ranging from simple weighted averages, through to
advanced geostatistical methods (these are less likely to be
applied in Central Victoria). The definition of the grade range is
often somewhat more subjective, depending upon the data
available.
Four ways of defining grade range have been applied (Dominy,
2004a):
1. An empirical method based on the experience of the
estimator, where the grade range for an Inferred
Resource, for example, could be defined by a range
of -40 per cent and +10 per cent. This choice would
recognise that the grade variability is likely to be
asymmetrical, with a strong negative bias.
14
The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
2. A similarly empirical method based on the actual
resource classification used (eg an Indicated Resource
grade at ±20 per cent, see Table 3).
3. Grade range defined by comparing the results of trial
stopes with development bulk sample grade estimates
(see Dominy, Johansen and Annels, 2001; Dominy,
2004a). If for example, the bulk sample estimated
grades were within ±20 per cent of the reconciled
trial stope grades, then the grade range would be ±20
per cent.
4. The most rigorous method to define grade uncertainty
is through the use of geostatistical conditional
simulation. For global estimates this usually provides
a relatively symmetrical grade range, though if more
local variability is defined, the ranges will be more
asymmetrical. This methodology is less likely to be
applied in Central Victoria because of the previously
cited problems of defining variograms.
Reporting of Mineral Resources and Ore Reserves
General issues
The classification and reporting of Mineral Resources and Ore
Reserves (eg JORC, 1999) in mineralisation dominated by a
high-nugget effect is not straightforward, though not impossible
(Dominy, Stephenson and Annels, 2003). To raise money for
project development, investors and financiers want to see
significant tonnages of Measured Resources and Proved
Reserves.
However, at the commencement of mining it is likely that much
of the resource will have Inferred Resource status, with a lesser
amount of Indicated Resources (hence Probable Reserves).The
definition of higher confidence categories is likely to be
controlled by the cost of development, yet funding is probably
being sought for such development.
For high-nugget effect reefs it is likely that Indicated and
Measured Resources (hence Probable and Proved Reserves) can
only be defined after substantial close-spaced underground
development/sampling. Clearly the foregoing statement is very
dependent upon the nature of individual deposits.
Non-JORC reporting
In many instances it is likely that a ‘provisional’ global gold
inventory can be identified outside of the JORC guidelines.
Resource potential has been used as an informal term to
describe the conceptual nature and likely size of nuggety reef
mineralisation, which is supported by empirical data such as
historical geologic or mining data. However, it lacks the
geological controls required for the Inferred Resource status as
defined in the JORC Code.
For example, the 13 M oz resource potential at New Bendigo is
supported by historical production information and the ribbon
repeat model, which has been verified by underground
development and deep diamond drilling (BMNL, 2004).
Similarly at Ballarat, an exploration potential of 6 M oz is
quoted, based on similar data (Olsen, 2003).
The prospectus for the Tarnagulla Project in 1994 quoted pre-
resource mineralisation based on historical mine and modern
drill data for the Poverty Reef (RMNL, 1994). Further drilling
and development subsequently defined the 30 g/t Au Nick
O’Time Shoot. Pre-resource mineralisation was formerly part
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of the JORC code, subsequently being replaced by Exploration
Results (JORC, 1993;1999).
It should be noted that if any non-JORC compliant phrase is
used, then grades and tonnages must not be quoted. It should be
clearly stated that it is outside the JORC code. Some of course
would argue that such classes should not be publicly reported
anyway.
Continuity and the JORC code
Table 4 shows suggested continuity criteria for resource
categories in Victorian high nugget systems, which may help
the Competent Person. These are clearly generalisations and
will vary from deposit to deposit. It is important to note that the
Inferred Mineral Resource is based upon apparent (global)
geological continuity in two or three dimensions, supported by
samples that are few and widely spaced. It is unlikely to be
possible to delimit the ore zone within any level of certainty.
Any estimate of grade and tonnage is likely to be semi-
quantitative and with a high margin of error. At the other end of
the spectrum, fully realised global continuity and establishment
of local continuity characterise the Measured Mineral Resource.
However, to achieve this, it is likely that close-spaced drilling
and underground development will be required.
Resource precision
As previously noted, transparency of resource risk is important.
Where considered appropriate, grade and tonnage figures
should be rounded to reflect the levels of precision of the
estimate. Grade can be rounded to one decimal place, and
quoted within a grade range as previously discussed. Bendigo
Mining NL, who in July 2003 announced its first Ore Reserves,
provides a good example of this practice. Some 440 000 tonnes
of Probable Reserves were delineated (based on underground
drilling, on-reef development and bulk sampling), within a
grade range of 7.5 - 9.5 g/t Au (best estimate of 8.5 g/t Au) for
120 000 ounces gold (BMNL, 2003).
Feasibility Studies
Introduction
In Central Victorian gold deposits there is a diminishing returns
effect for expenditure on exploration and evaluation that
usually prevents a project being proved up to the point where
project finance could be obtained. In other words, decisions
must be taken and commitments made with lower confidence in
the resource than is usual. This often results in exploration and
evaluation projects being under-funded, and thus doomed to
failure.
A key driver of failure has been the belief that drilling produces
misleading or at least ambiguous information, and that
underground access is required to evaluate a reserve.
Most Central Victorian projects have been assessed several
times, with most of the funding raised in each boom cycle being
expended on re-work such as re-assembling databases,
obtaining permits and dewatering old workings again.
Sometimes very little funding has actually been applied to
effective exploration. There has been an unhealthy focus on
reopening old workings, at considerable financial and physical
risk, with the end result being access to drive or stope faces that
were deemed uneconomic a century earlier.
Examples of past unsuccessful underground exploration
programs include projects at Blackwood, Percydale, Berringa,
15
The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia

Llanelly, and Wattle Gully (Chewton). These efforts range from
privately funded ventures of several hundred thousand dollars
to public company investments of several million dollars. It
should be noted that a similar story could be told about the
Gippsland Goldfields, including projects at Kevington, Woods
Point, Gaffney’s Creek, Walhalla and Cassilis.
Several companies have attempted to reduce risk by open pit
mining the near-surface part of a narrow or nuggetty deposit,
usually at a marginally low grade. Such projects at Costerfield,
Ballarat, Heathcote and Maldon have probably not been overall
financial successes although impressive holes in the ground
resulted in each case. There has been growing community
opposition to open pit mining, partly due to inadequate
environmental and rehabilitation practices and/or poor
community relations by past operators. Proposed open pit
projects at Bendigo and Stawell have been halted during the
permitting process.
A new project at Fosterville, by Perseverance Corporation
Limited, will develop a >2 M ounce resource as an open pit and
later underground mine at a planned rate of >110 000 ounces
per annum. The company describes it as not your average
Victorian gold deposit because the sulfide ore, while refractory,
is not nuggetty and thus grades can be established reliably by
drilling. A feasibility study was completed in 2003, and the
project was financed by an $A 75 M share placement.
Four projects provide interesting case studies as follows.
Wattle Gully
Wattle Gully gold mine last operated as a bona fide gold
producer in about 1963, although it continued to absorb
investment dollars under several owners until the early-1980s.
As a Newmont project, the treatment plant was rebuilt, the shaft
rehabilitated, and substantial bulk samples taken from quartz
exposures in accessible workings. No payable material was
found. A positive outcome of this period was the assembly of a
comprehensive historical database, which has been used by
subsequent owners.
Under a new owner a small decline was developed with the aim
of accessing remnant high-grade material or payable backfill in
the near-surface Philips Reef, later connecting into the upper
levels of the old mine. The undercapitalised project was
stopped before reaching its targets. Little effective surface
drilling was attempted.
The current owner (Alexander Resources Ltd) has initiated a
thorough, modern review of the geological context and is
proceeding methodically to prioritise and test targets and
models. To date, no feasibility study has been prepared by any
of the project’s owners despite cumulative expenditure of more
than $A 20 M.
Tarnagulla
The Tarnagulla goldfield provided bonanza grades of around 90
g/t Au in the 1850s. After four unsuccessful attempts at
reopening two Tarnagulla mines in the late-1980s, including
one effort by WMC Ltd, a single project company was
established to explore extensions to the Poverty Reef. Reef
Mining NL, floated in 1993, quickly identified a high-grade
shoot within a southern extension of the reef, relying in part on
drill results from the WMC program.

Table 4 - Detailed continuity criteria for Mineral Resource (and Ore Reserve) categories in Central Victorian-style high-
nugget-type reef-gold systems. In many cases it is highly likely that only the Indicated Mineral Resource category will be
achieved, principally because of the uncertainties in the grade estimate. The content of this table provides some general
characteristics for guidance. It is important that the Competent Person treats each deposit on an individual basis. It should
also be noted that various other parameters should be considered by the Competent Person when reporting Mineral
Resources and Ore Reserves (eg drilling techniques, sample recovery, assay quality, etc), and not just continuity. The
reader is referred to Table 1 of the JORC Code for more detail. After Dominy, Platten and Raine (2003) and Dominy et
al (2003).

Resource/Reserve class Data density/pattern Geological continuity Grade continuity

Inferred Mineral • Based on geological information,
Resource and widely-spaced data
• Data pattern potentially irregular
Indicated Mineral • Based on geological information
Resource and moderately-spaced data
(Probable Ore Reserve) • Data pattern likely to be more
regular
• Will involve underground
development, and bulk sampling
and/or trial mining
Measured Mineral • Based on geological information
Resource and close-spaced data
(Proved Ore Reserve) • Data pattern likely to be regular
• Will involve underground
development, and bulk sampling
and/or trial mining
• Global continuity assumed (in • No continuity established • Semi-
either 2D or 3D), but probably quantitative estimate of global grade with
not established high error margin
• Local continuity issues
unresolved
• Semi-quantitative estimate of
tonnage with high error margin
• Global continuity partly • Local continuity partly established due to
realised in 3D wide sampling grid
• Local continuity issues • Local continuity resolved along
probably unresolved development
• Local continuity resolved • Quantitative estimate of global grade with
along development (if present) a medium margin or error
• Global estimate of tonnage
with a medium margin of error
• Global continuity realised in • Local continuity well-established along
3D Local continuity resolved development
along development • Quantitative estimate of global grade and
• Global estimate of tonnage in some cases a local estimate
with a low margin of error

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The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
A courageous decision was made to develop a decline-access
mine, as an exploration platform, based on about six drill
intersections. The permitting and construction process was
completed in less than two years and ore was trucked for
treatment at the Wattle Gully plant. A total of about 53 000
ounces of gold was produced from the Nick O’Time shoot, so
called because the company was low on cash reserves when the
shoot was first intercepted in 1996.
The Feasibility Study for the project, on the basis of a few drill
intersections, was able to predict capital and operating costs
with reasonable accuracy and the project geologist was able to
predict the 30-g/t grade of the shoot within a few percent. The
distribution of gold within the shoot, whilst still nuggetty was,
more consistent than elsewhere in Central Victoria. While it
operated profitably, the project was not able to repay the capital
spent on decline development because the payable strike length
averaged around 30 m. The cost of advancing the decline, per
tonne of ore, proved prohibitive. However, the Nick O’Time
Shoot was never regarded as a company maker by Reef Mining,
merely a stepping-stone to understanding the controls of
mineralisation, and providing the basis for on-going exploration
for repetitions of intact reef segments. Unfortunately the loss of
control in the company lead to premature cessation of
exploration.
In this case there seems to have been no alternative to going
underground on limited information. Any realistic expenditure
on infill drilling from the surface would not have clarified the
geometry of the oreshoot sufficiently for feasibility study
purposes. A lower cost access option, using the shaft
refurbished by WMC Ltd, was rejected due to the small size of
the shaft and proximity to dwellings in the township.
At the current time, Tarnagulla Resources Ltd is exploring the
Tarnagulla EL’s.
Ballarat
The Ballarat mines were largely closed by 1917 although small
underground mines operated through the 1930s into the
early1940s. Ballarat Goldfields NL (BGF) was floated in 1985
to explore the Ballarat East goldfield, and later added the
Ballarat West field to its tenements. Around $A 50 M has been
spent over nearly 20 years on historical research, 49 km of
exploration drilling, decline development, shaft recovery, shaft
sinking and underground exploration.
The Ballarat mineralisation has a relatively low nugget
component, so that assay repeatability is high and drill-
estimated grades are consistent with historic production grades.
BGF was able to estimate Indicated and Inferred Resources in
the range of 650 - 700 000 ounces Au based almost entirely on
surface drilling, in addition to a exploration potential estimated
at 6 Moz. Several Scoping or Pre-Feasibility Studies have been
prepared over the years, each becoming less relevant over time
as understanding of the goldfield improved.
The ore definition challenge at Ballarat is mainly due to the
configuration of the mineralisation, where vertical structures
intersect west-dipping faults. Historically, stopes on these
structures were typically 500 m long but only 10 - 20 m wide
and a little higher. To drill such targets from surface is
expensive, and usually impractical due to urban development.
Decline development is essential to provide an underground
platform for drilling. Development must follow the general
strike of the resources, which extend over several kilometres
along strike but only tens of metres wide.
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Justification for work at Ballarat, from the outset, has been
based on projection of historical production (grades and
tonnage) to depth. Without the historical production records it
is highly unlikely that the program could have been funded to
define the Inferred Resource.
Bendigo
The Bendigo Goldfield is the second largest producing
goldfield in Australia (after Kalgoorlie’s Golden Mile) with a
total production of 22 Moz, including 4 Moz of alluvial gold
and 18 Moz of reef or hard rock gold production (Wilkinson,
1988a). Hard rock gold production in Bendigo during the 60-
year period between 1854 and 1914 averaged in excess of 270
000 ounces per year. The last mine closed in 1954.
The Bendigo Goldfield is a classic slate-belt style of
mineralisation dominated by turbidite cycles. The sediment-
hosted, auriferous quartz veins are closely associated with
anticlinal axes and reverse faulting (Wilkinson, 1988b).
Structurally the region is comprised of compression-ruptured
chevron folds.
Bendigo Mining NL (BMNL) was floated in 1984 and later
acquired tenements from WMC Ltd so that it now controls the
entire field. More than $A 90 M has been spent on historical
research, exploration drilling, decline and ventilation shaft
development, and underground bulk sampling.
A Conceptual Study on the New Bendigo Gold Project was
produced in 2002 (AMC, 2002), which included an assessment
of project geological risk (SRK, 2001). Three key risks were
identified:
1. the risk associated with the assumption that the
ribbons repeat at 250 m vertical spacings;
2. the geological risk that each ribbon will not have the
contained gold in the mineable bodies with the
shapes, sizes, grades and distributions embedded in
the study; and
3. the risk that boundaries and internal grade
distribution of the mined bodies will not be correctly
assigned ahead of mining, resulting in either or both
excessive dilution or misclassification of ore as waste
(SRK, 2001).
The most critical issue was related to risk (3) above, assignment
of ore boundaries and grade distribution, as was largely a
function of Bendigo’s extreme nugget effect. Further drilling,
in-reef development and careful geological mapping and
sampling were considered the best way to mitigate the risk.
Protocols were instigated and new approaches taken, that have
resulted in a better understanding of grade and geology to
support the Feasibility Study (Johansen et al, 2003).
A Feasibility Study for development of an underground mine
was completed in January 2004 (AMC, 2004). The base case
calls for funding of around $A 110 M to develop a project that
could eventually produce more than 0.5 Moz of gold per annum
for decades.
The configuration of mineralisation at Bendigo is very similar
to that at Ballarat, although multiple, parallel lines of reef
require parallel underground strike development to provide an
exploration platform. The prize at Bendigo is an estimated
resource potential of more than 12 Moz in the central part of the
field, from a total potential that probably exceeds 20 Moz. The
Bendigo potential, as at Ballarat, is based on geological
17
The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia

inference and projection of historical production grades and provide some challenges, and are likely to require Fibrecrete on
tonnages to depth (Johansen, 1998, 2001). top of bolting and meshing.

The entire expenditure to date has been justified on the basis of
the exploration model, and high-level conceptual studies of a
possible project configuration. The Feasibility Study relies on
only two years of Probable Ore Reserves (656 000 t at 9 g/t
Au), after which the mining schedule is based largely on
projections from the historical data. Given the unique challenge
of the nugget effect at Bendigo, it is unlikely that Ore Reserve
estimates can be substantially extended at reasonable cost prior
to committing to project development. Offsetting the
investment risk is the potential for a long life mine with an
NPV of more than $A 400 M.
In March 2004, Bendigo Mining NL announced details of the
company’s development strategy based on the AMC Feasibility
Study (AMC, 2004). The average target mine head grade is 12
g/t Au, with total recovered gold of 12.7 Moz over 25 years
from 33.6 Mt (BMNL, 2004; AMC, 2004). Following
financing, full production of 1 600 000 tpa will be achieved by
Year seven. The project will go into production with Probable
Reserves of 656 000 tonnes at 9 g/t Au, enough for two years of
initial production.
Project Finance
Central Victorian projects will always require substantial risk
(equity) funding before any debt finance can be considered.
Work at Ballarat and Bendigo indicates that resources can be
upgraded to the JORC Indicated resource category and later to
Probable Ore Reserves, which could support ordinary bank
debt. However, analysis of the cost of proving sufficient
reserves to satisfy bank coverage ratios versus the cost of
alternative finance suggests that the more expensive finance
options will remain attractive in many cases.
Stoping methods
Introduction
It is tempting to suggest that modern mining could employ
longhole-stoping methods, but geotechnical studies and the
need for in-stope grade control (eg mapping, sampling, etc)
generally point toward mechanised cut-and-fill as the primary
stoping method. The ribbon style of mineralisation at Bendigo
and Ballarat lends itself to in-stope ramping, and the use of
stopes as part of the longitudinal return airway system. In wider
orebodies, hangingwall rib pillars or post pillars will be
required.
Across Australia there is a trend away from hand-held (airleg)
mining due to perceptions of safety and a loss of skilled miners.
While some Central Victorian deposits may contain a
significant component of high-grade narrow vein material, this
will remain considerably less attractive until new narrow vein
mining methods are developed (eg Beigaj, 2000; Beigaj and
Dominy, 2003).
Figure 12 - Conceptual diagram of mechanised cut-and-
fill stoping at Bendigo (Source: AMC Consulting Pty
Ltd).

Mining Methods
Introduction
Contrary to popular opinion, most gold production in Central
Victorian mines came from stopes that were above 6 m in
width, and sometimes up to 30 m wide. In these wide reefs,
Ballarat and Bendigo mines generally used cut-and-fill methods
augmented by various forms of timber support. Laidlaw (1993)
reports the use of shrinkage and resue stoping in the narrow
portions of reefs in the Bendigo Goldfield. In the 1950s the
Wattle Gully mine used a flat-back square-set timbering cut-
and-fill method (Clarke and Thompson, 1965).

Access to new projects is likely to be by decline rather than

shaft because the lateral extent of workings requires equipment
mobility, and because decline portals can be sited more
selectively to account for urban development (eg New Bendigo,
Ballarat and Tarnagulla).

Ground conditions
In general, ground conditions in Central Victoria are quite
variable, and are related to lithology. The most favourable
conditions tend to be within the sandstone-dominated rocks
(good quality), followed by the ore zones/reefs (fair quality),
and poor conditions are encountered in the shales (very poor
quality). Blocky ground is quite typical, particularly close to
regional structures such as faults and synclines. In most cases,
ground can be controlled by split set bolts and mesh, and cable
bolts where required. Interbedded shales and sandstones will
New Bendigo
Two stoping methods are planned at New Bendigo –
mechanised cut-and-fill (75 per cent) and longhole stoping (25
per cent). The primary method will be mechanised cut-and-fill,
which will permit a high level of selectivity as well as good
control of ground conditions (Figure 12). The base parameters
for cut-and-fill stoping calls for access ramps commencing at a
maximum gradient of -1 in 5, extraction of the lower level and

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The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
then filling (AMC, 2002). The access is then stripped to provide
access on top of the fill. Consecutive slices of 4 m in height are
then taken and filled. Once the access ramp has been stripped to
maximum gradient of +1 in 5, a new access ramp is required,
accessing the orebody at a higher elevation.
The second method, longhole stoping, will be applied where the
orebody permits top and/or bottom access (Figure 13). The
technique provides higher productivity and lower cost than cut-
and-fill stoping (AMC, 2002). Longhole-stoping was selected
for both large and small orebodies. In the large orebodies, all
development is 4 m wide by 4.5 m high, and production holes
will be 76 mm in diameter. In the small orebodies, development
is 3 m wide by 3.5 m high, and productions holes are 57 mm in
diameter.
Tarnagulla
Ore at Tarnagulla was mined by a combination of mechanised
methods (3.5 - 7.0 m mining widths) and conventional hand-
held methods (1.2 - 2.0 m widths). Mechanised flat-back cut-
and-fill mining was employed where reef width and
geotechnical conditions allowed it. Longhole stoping could not
be employed due to the degree of deformation of the wall rocks,
and very high potential for hanging wall instability.
Development waste was used for backfill. Conventional
handheld stoping was used where geological/geotechnical
parameters allowed selective mining of high-grade laminated
veins, leaving the massive quartz core of the shoot behind as a
pillar. Tailings-sand hydraulic-backfill was successfully used in
the handheld stopes. The sand was conveyed to the stopes via
exploration drill holes exposed in the levels. Ground conditions
were good away from the reef where mainly split-set bolts were
used. Where faults were encountered or wide areas were
opened up, grouted bolts and mesh was used. In the narrow
handheld stopes, timber stulls were used where necessary and
timber sand-fill barriers were constructed.
Figure 13 - Conceptual diagram of longhole stoping at
Bendigo (Source: AMC Consulting Pty Ltd).
Metallurgy
The metallurgy of gold ores from Central Victoria is relatively
simple, based on the coarse nature and amenability to gravity
recovery (Figure 4).
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At Bendigo, the majority of the gold is coarse, easily liberated
and free milling. Some 80 per cent of the gold is gravity
recoverable, with the rest reporting to the fine fraction (AMC,
2002). This material, sometimes associated with sulfides, can
be effectively recovered into a floatation concentrate without
the use of cyanide to give an overall recovery above 95 per
cent. Gold extraction will be via a leach reactor, recovering 98
per cent of gold from the gravity and flotation concentrates.
Laplante (1998) undertook a study to characterise the gravity
recoverable gold of worldwide samples, including one from
Tarnagulla. The sample from Tarnagulla assayed 39 g/t and
contained 97 per cent gravity recoverable gold with most
coarser than 100 microns. At 100 per cent – 850 microns 79 per
cent of the gold was recovered; at F80 of 170 microns 94 per
cent was recovered and at the final grind of 72 per cent -75
microns 97 per cent gravity recoverable gold was achieved.
This compared well with bench tests carried out in 1996 on drill
core at the same grind size of 75 microns. Reef Mining NL
extracted its gold using the Duketon Goldfields NL plant at
Wattle Gully (Chewton). The plant consisted of a gyratory
crusher, ball mill, Knelson Concentrator, in-line jig and leach
circuit. The average recovery of the gravity circuit was 77 per
cent. For the year 1998 - 1999 the average assayed head grade
was 31 g/t Au, compared to a reconciled head grade of 29.6 g/t
Au. The overall recovery, based on the reconciled head grade
was 98.5 per cent with a recovered grade of 29.2 g/t Au
(Krokowski deVickerod, Cuffley and Evans, 2001). The leach
feed grade reconciled at 7 g/t Au, and leach recovery was 94
per cent.
Clarke and Thompson (1965) report that some 76 per cent of
gold at Wattle Gully was recovered by the gravity circuit (eg
jig) after fine grinding. The gold was relatively coarse, with
some 40 per cent above 1700 microns, and five per cent +6200
microns in size. The remaining gold, 20 per cent, was recovered
by the cyanidation of a flotation concentrate. Overall recovery
from the plant was about 95 per cent.
Battersby (1993) reports on the sole use of a CIP/CIL plant for
the processing of gold ore from the Maxwells mine (Inglewood
Goldfield). Unsurprisingly recovery was extremely poor, and
the company had to install a gravity circuit to improve recovery
to94 per cent. Later on a Knelson Concentrator was added,
further improving recovery to 98 per cent.
Conclusion
Quartz reefs that contain erratically distributed coarse gold
dominate mineralisation in the Central Victorian Goldfields.
High-grade economic zones are typified by oreshoots that are
structurally controlled. Exploration for the oreshoots is difficult
unless large diamond drilling programs are embarked upon.
Regional exploration techniques are generally effective in
identifying the major host structures of the reefs, but not in
picking out individual oreshoots.
Once an oreshoot is identified, the definition of resources and
reserves is hampered by a high-nugget effect. Many drillholes
piercing the reefs, even oreshoots, will return low-grade assays,
whilst a few will return ore grade or even bonanza grade values.
Thoroughly designed and optimised sampling protocols are
required to ensure that assay grades are as representative as
possible. Highly skewed grade populations lead to specific
challenges during grade estimation. In most cases underground
development is required to define Indicated Resources and
Probable Reserves or higher categories.
19
The Challenges of Evaluating and Exploiting Gold-Quartz Reefs in the Central Victorian Goldfield, Australia
Central Victorian-type gold reefs are arguably one of the most
challenging types of mineralisation to evaluate and exploit
successfully. Geological understanding is the key to improved
confidence in the operation. Detailed geological interpretation
supported by 3D computer modelling is critical. In the simplest
sense, there are three principal reasons for incorrect estimates:
1. a lack of detailed geology and fundamental
understanding of the deposit;
2. poor quality sample, assay and geological data; and
3. an over-reliance in computer and/or
mathematical/statistical techniques.
A number of guidelines to ensure the optimisation of the
estimation process are suggested:
1. strong collaboration between project geologists,
engineers and management;
2. effective geological data collection;
3. development of a strong 3D geological model;
4. investigation of reef mineralogy and texture, in
particular the nature of the coarse gold;
5. development of a representative and quality
sampling/ drilling program that is pertinent to the reef
in question;
6. effective handing of samples and the use of the right
assay and preparation methods;
7. use of the correct method for estimation and the
application of computer modelling, but not to the
detriment of good geological understanding;
8. production of a clear, unambiguous Resource/Reserve
statement in which data reliability etc are quantified
as best as possible; and
9. constant re-evaluation of methods used and results
gained as database expands.
The classification and reporting of high-nugget reserves and
resources is not straightforward. By their nature, it is extremely
difficult to estimate Measured Resources and Proven Reserves.
Inferred and Indicated Resources will require differing levels of
diamond drill intersection, underground development and bulk
sampling. Tonnage can sometimes be determined to a
reasonable level of confidence but not grade; it is therefore
often difficult to produce bankable documents containing
substantial Ore Reserves.
When presenting resource statements, it is suggested that the
grade estimate be defined within a grade range. How the grade
range will be determined will depend upon the particular
operation. With some production history and a measure of
resource reconciliation. Both grade and tonnage figures will be
rounded to reflect the level of precision of the estimations. For
instance grade may be rounded to one decimal place within a
grade range rounded to the nearest g/t. It is felt that this
approach better reflects the current situation than reporting a
single grade, and as a consequence better informs investors and
the stock market.
The extraction of gold from Central Victorian ores is relatively
simple, based on the coarse nature and amenability to gravity
recovery. Mining poses no great problems, providing that
geologists and engineers work together to integrate geological/
geometrical and grade distribution characteristics, with
geomechanical issues to provide cost effective and safe
extraction. Ground conditions and the need for in-stope grade
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control (eg mapping, sampling, etc), generally point toward
mechanised cut-and-fill as the primary stoping method in the
region.
With any mineral deposit there is no one recipe for success.
Once a gold-quartz reef is located its exploration is from the
inside out and linked with development. The old adage of ‘drill
for structure and drive for grade’ is still very applicable. This
approach uses the instinct for reef behaviour built up by miners,
geologists and engineers based on experience. Above all, a
flexible approach should be used that is sensitive to the
dynamic nature of development driven exploration. Explorers
and operators should be prepared to ‘think out of the square’,
and use new techniques and approaches to further their aims.
Acknowledgements
This contribution has benefited from contact with numerous
colleagues over the past ten years. The authors are particularly
grateful to staff from the following organisations: Reef Mining
NL/Tarnagulla Resources Ltd, Alexander Resources Ltd,
Bendigo Mining NL, Ballarat Goldfields NL, and AMC
Consulting Pty Ltd. Simon Dominy acknowledges past and
present postgraduate students at JCU and Cardiff University
including: Matt Raine, Ben Parsons and Steffen Morris. He also
acknowledges the Minerals Council of Australia (MCA) for
funding his Senior Lectureship at JCU. Steve Olsen (Ballarat
Goldfields NL) is thanked for his constructive comments on
this contribution.
References
AMC, 2002. New Bendigo Gold Project conceptual study
update, Unpublished Report, p 104 (AMC Consulting Pty Ltd
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AMC, 2004. New Bendigo Gold Project feasibility study –
project summary, Unpublished Report, p 65 (AMC Consulting
Pty Ltd for Bendigo Mining NL).
Annels, A E, 1991. Mineral Deposit Estimation, A Practical
Approach, p 436 (Chapman and Hall: London).
Battersby, J, 1993. The Inglewood Goldfield, in Narrow Vein
Mining Seminar, pp 107-108 (The Australasian Institute of
Mining and Metallurgy: Melbourne).
Beigaj, K, 2000. Alternative access, mining and hoisting for
underground deposits, in Proceedings MassMin 2000, pp 911-
914 (The Australasian Institute of Mining and Metallurgy:
Melbourne).
Beigaj, K and Dominy, S C, 2003. Lowering orebody risk in
complex gold veins: application of underground mobile
supersucker winzing, in Proceedings Fifth International Mining
Geology Conference, pp 273-278 (The Australasian Institute of
Mining and Metallurgy: Melbourne). BMNL, 2003. Annual
Report 2003 (Bendigo Mining NL).
BMNL, 2004. Bendigo Mining announces production plans.
ASX announcement and media release by Bendigo Mining NL
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