Giants Reef update

Nick Byrne fills us in

Giants Reef was formed as a prospecting syndicate in 1985 and we incorporated as a proprietary company in 1986. We never really intended going public - we were just going to find lots of mines and make squillions of dollars and live happily ever after.
We're still doing that but we didn't find mines and make squillions of dollars so what we did do, after a couple of approaches from different brokers, we listed on the Stock Exchange in June 1993 and from then on we've had subscription funds to carry out the exploration.
We spend about $1.8 million a year on exploration in Tennant Creek and up until recently we employed about 7 people, plus contractors. There were seven full-time employees, including myself and Vera, who are the founders of the company, with another bloke called Phil Purich, who's a friend.
In June this year Giants Reef bought out all the shares in Normandy Tennant Creek, which was Normandy's operating company for its interests in the Tennant Creek goldfield. So now we have pretty well all of the historical goldfield owned by Giants Reef. The company Normandy Tennant Creek we're going to keep going as an entity. It's had a name change, it's now called Santexco - the South Australian Northern Territory Exploration Company - a bit like Santos, which is South Australian Northern Territory Oil Search except this is exploration company instead of oil search.
One of the great assets that was in the purchase was Normandy's interest in the Chariot deposit, which is, to date, about 350,000 tonnes averaging about 18 to 20 grams of gold per tonne. It's very good ore, there's no copper associated with it, and we expect to get 98% or better recovery from a very short residence time in the cyanide tanks, and a very small consumption of cyanide, which is environmentally very good. It's only about 0.2 to 0.4 of a kilogram per tonne of ore treated, which was rather good.
So what we're doing now is clearing the site at the TC8 getting ready for production. The original mill that was here is in storage in Adelaide, and it was on its way first to Ecuador and then it was going to New Guinea. Both of those projects failed and so I think we were meant to have this mill. We've bought the original mill that was here. We're going to bring it back and put it back on its original foundations.
The schedule for that is to start bringing it back in September of this year, with a view to commissioning it in the first quarter of next year. We expect our first gold production in the first quarter of next year.
On the Chariot deposit we haven't quite completed our feasibility on that yet. We know that it's feasible, but there are certain engineering programs that have to be completed, and the mining contractors that have to be negotiated where we plan to mine in conjunction with Roach's. Roach Mining will develop the decline and deliver the ore to TC8. It's going to be an underground by decline and the ore trucks from underground will drive straight to TC8 and drop the ore here, they won't be putting it down at Chariot.
Chariot's situated 5 kilometres due west of TC8, so we're currently getting quotes to install electricity there from the Power and Water Authority. We're also having, because the new railway line is going to go between TC8 and Chariot, a railway crossing with lights and bells installed so that the ore trucks don't have to stop each time they come to the crossing.
The digging is expected to start in late September to mid October and at the same time as mining Chariot, Giants Reef discovered a small deposit at a place called Edna Beryl, which is about 40 kilometres north of here.
At Edna Beryl we've got 7 to 10,000 tonnes of ore defined there, averaging about 30 grams of gold per tonne. Craig Mining are going to do the mining at Edna Beryl, and that will be blended with some of the lower grade ore that's near the surface at Chariot.
Chariot's going to start as a small open pit so that we can have a portal for the commencement of the decline, which is really the orifice from where the decline starts.
Some of that low grade ore, low grade for Tennant Creek - it's about 5 grams per tonne - will be blended with the high grade, 30 grams Edna Beryl ore and it'll be fed through the mill at roughly the grade of the Chariot Ore, which is 18 - 20 grams.
So, that will have been our seventeenth year when we start production next year, we'll get our first cash flow from the Tennant Creek goldfield, which is pretty exciting and rewarding after all these years of effort.
In summary: we started, we took out our first tenements in Tennant Creek as a syndicate over the old Gigantic Mine in November 1985, we incorporated about the middle of 1986, and then we continued exploring here, and in the Top End. We had a high grade gold prospect at a place called Sundance, and in 1986, in joint venture with a company called Henry and Walker, Kumagai-Gumi, we mined some gold there which gave us our first cash flow from gold.
We then shifted our office to here in 1992, and in June 1993 we listed on the exchange. In June this year, 2001, we paid $7 million to Normandy for all of the shares in Normandy Tennant Creek and so in September-October of 2001 we will start digging, and we will start the development of Chariot and Edna Beryl and also bring the TC8 mill back from Adelaide to the site here. And so in the first quarter of 2002 we expect to have our first gold pour.