Octagonal Resources shoots to Producer status

THE INSIDE STORY: Sometimes putting the cart before the horse can be a smart way of operating, especially when your cart is the only suitable operating gold processing facility in the area.

Octagonal Resources (ASX: ORS) has achieved a rare feat by attaining the status of gold producer before commencing mining activities at any of its numerous projects.

Octagonal has been producing gold from its 100 per cent-owned 150,000 tonne per annum carbon-in-leach gold processing plant located near Maldon.


Maldon sits on a rich goldfield, historically producing over 1.7 million ounces of reef-hosted gold at an average grade of 28 grams per tonne, in Central Victoria.

The area rates third behind Victoria’s more famous gold rush regions, Bendigo and Ballarat.

The Maldon processing plant was recently refurbished and is fully permitted and operation ready to process competent underground ore and lower grade open pit ore.

“This means we can process lower grade and oxidised gold other operations are unable to efficiently recover,” Octagonal Resources managing director Anthony Gray told The Resources Roadhouse.

“This gives us exposure to third party ore by toll treating arrangements.”

In the past 12 months Octagonal has established two ore processing arrangements providing a revenue stream to enable it to develop its own ore sources.

In February 2012, Octagonal struck an agreement with A1 Consolidated Gold to treat up to 150,000 tonnes of ore over a three year period from its A1 gold mine at Woods Point.

In August it agreed to reprocess tailings from the Kangaroo Flat gold mine of Unity Mining near Bendigo.

“In consideration for the removal of tailings, transport, processing and refining, and paying 50 per cent of the costs- we receive 50 per cent of the gold,” Gray explained.

“We commenced regular gold production from these tailings in November.

“During the December quarter we processed 6,430 tonnes of tailings to recover almost 1,400 ounces of gold at an average recovery grade of 6.5 grams per tonne gold.

“We are producing gold on a weekly basis at grades beyond our expectations and expect to be producing gold from this material until the middle of this year.

“For processing the A1 ore, we receive a processing fee and 10 per cent of the gold produced.” 

Being a regular gold producer, Octagonal can now self-fund its exploration, mining and future growth, without diluting existing shareholders’ interests.

Octagonal’s primary focus is its Victorian operations where it is targeting 30,000 ounces per annum of low-cost gold production.

“In this area we own 17 exploration and mining licences overlying 900 square kilometres and seven historic goldfields,” Gray said.

“Our Victorian mining strategy is to develop a sustainable, low-risk gold operation by focussing on grade and profit, not tonnes and ounces.”

This is a reasonable objective; besides its gold processing plant, Octagonal also boasts 245,000 ounces of underground and open pit ore sources, an established decline towards said underground resources, and advanced exploration plays it is confident can sustain operations.


The 1.9 kilometre-long Union Hill decline accesses the Alliance South gold deposit and the southern half of the Maldon goldfield and is within 100m of the Alliance South shoot, which has an inferred Resource of 182,000 ounces of gold.

Octagonal is currently extending the Union Hill decline 180m to the south and developing two levels to determine the grades of the ore shoot, assess ground conditions, and determine the most appropriate mining technique for an ongoing operation.

Development of the Alliance South shoot will be the first step towards establishing an ongoing underground mining operation at Maldon.

The Alliance South shoot is hosted by the Eaglehawk Reef: one of five reefs in the central Maldon shear zone to have produced almost 1.5 million ounces of gold.

The others are the Nuggetty Reef to the north, and the Beehive, German and Derby Reefs to the south.

“We have five priority exploration targets on these reefs, which we intend to drill test once the Union Hill decline is developed sufficiently to the south,” Gray said.

“Each target has potential to host between 50,000 and 100,000 ounces of high-grade gold mineralisation and could contribute to ongoing underground mining operations.”

To supplement its underground mining at Maldon, Octagonal is currently developing three open pits.

The first to come into production will be the Black Reef on the Wehla goldfield, 60km from Maldon.

Octagonal intends operating a trial open pit at Black Reef to 30m depth in an area where a costean returned 14m at 4.5g/t gold and drilling intersected 5m at 15, and 5m at 35g/t gold.

“Our expectation is that by improving our understanding on the distribution of gold at Black Reef this will help us to interpret drilling results and help justify a larger open pit mining operation at Wehla,” Gray said.

A second, and significantly larger, open pit will be at the Pearl Croydon deposit, which is located 40km from Maldon and hosts an inferred resource totalling 53,000 ounces of gold.

The Pearl Croydon deposit consists of a 1.6km long reef system and is located on a granted mining licence.

A recent open pit optimisation study indicated Pearl Croydon has potential to produce between 15,000 and 32,000 ounces of gold.

Octagonal is developing a mine plan for this deposit, which once finalised will allow it to seek regulatory approval to commence mining.

The company’s third open pit mine will be the Specimen Reef located 30km from Maldon near Donnelly, which consists of a greater than 1km long line of reef.

Octagonal discovered this deposit in July last year and has since drilled 47 RC holes to define an initial inferred resource containing 10,000 ounces of gold.

“This mineralisation extends over 440 metres strike length and is not constrained by drilling to the north, south, or down dip,” Gray said.

“In June last year we applied for a mining licence to exploit this deposit and we will recommence drilling this deposit later in the year to upgrade the resource and start to define its size.”

In conjunction to its Victorian operations Octagonal intends to grow its Western Australian assets, where it holds a significant landholding located 70km southeast of Kalgoorlie, surrounded by the 12 million ounce St Ives goldfield, 800,000 ounce Daisy Milano mine and 400,000 ounce Salt Creek mine.

The main focus here is the Burns prospect, where 272 aircore holes were drilled in 2011 to define a one square kilometre area of gold anomalism.

Subsequent drilling in 2012 discovered potentially economic gold, copper, and silver, which led the company to have all samples from the 2011 aircore programs re-analysed for copper.

Octagonal has now identified thick zones of copper anomalism, where the latest drilling has defined a 2km long anomaly between 80m and 350m wide, not constrained by drilling, along its southeast margin.

A second anomaly was also identified over 700m not constrained by drilling to the northwest.

“We are excited by the potential of the Burns prospect to develop into a significant multi-commodity deposit,” Gray said.

“In December 2012 the Western Australia government awarded us a $150,000 co-funded drilling grant as part of its exploration incentive scheme for our first four hole diamond drilling program at the deposit, which we expect to complete later in the year.”

Octagonal Resources Limited (ASX: ORS)
…The Short Story

Suite 3
51 – 55 City Road
Southbank VIC 3006

Telephone: +61 3 9697 9088
Facsimile: +61 3 9697 9089

Email: info@octagonalresources.com.au
Website: www.octagonalresources.com.au

Ian Gandel, Anthony Gray, Robert Tolliday, Jason Mills

Alliance Resources    20.8%
Ian Gandel        18.7%
JP Morgan Nominees    8.9%

106.05 million


$12.2 million (at 13/3/13)