Victorian Gold Projects

During November 2019 Cauldron Energy Limited executed Heads of Agreement (HOA’s) over the Bullarto South and Blackwood gold projects, lying adjacent to one another south-east of Daylesford, in the highly prospective Central Victorian Goldfields that surround Ballarat.

Together the Bullarto South and Blackwood gold projects cover an area of ~160 km2 and secure the most significant portion of the historic Blackwood Goldfield.

From 1864 to 1960 the Blackwood Goldfield produced approximately 218,000 ounces of gold. Gold was won down to a depth of 100 m below surface, with very little mining activity below a depth of 150 m.  The Sultan mine is the deepest in the goldfield with production levels at 230 m below ground surface and its shaft reaching 274 m, and still in pay.

The vendor of Blackwood Gold Project has spent 25 years consolidating the leases of the project area, now providing a great opportunity for systematic exploration and development over the entire goldfield.

Multiple high-priority targets have been identified across both projects with plans prepared for immediate testing.

On 12 December 2019, Cauldron announced that it had completed its legal and technical due diligence in relation to both projects.

Cauldron and the project vendors are in the process of drafting and finalizing joint venture agreements for each project and satisfying other conditions for acquisition including, but not limited to, gaining regulatory approval for transfer of ownership to the joint venture.

From 1864 to 1960 the Blackwood Goldfield produced about 218,000 ounces of gold from orogenic gold sources (199,000 ounces) and from placer sources (19,000 ounces)1.

The two projects complement each other and together provide:

  • A sizeable foothold in a largely forgotten but historically significant goldfield that has received only sporadic exploration since the 1920’s;

  • Potential to fast-track mining production with near-term generation of cash flow;

  • Potential for significant expansion of known mineral resource;

  • Exceptional logistics being only 30 minutes easy drive from the outer suburbs of western Melbourne;

  • Well-rounded exploration portfolio with an exploration pipeline of prospects.

Cauldron has a high level of confidence in the Blackwood Gold Project, and the Bullarto Gold for the following reasons:

  • The advanced nature of the exploration and mining dataset showing the real possibility for near-term production and expansion of Mineral Resource;

  • Existence of shallow remnant, high-grade gold mineralisation around historic underground workings abandoned due to flooding, in several areas of the licences;

  • Existence of gold mineralisation deeper and down-plunge from known workings around the Sultan mine;

  • The vast historic dataset underpinned by historical exploration work conducted by skilled personnel; and

  • The experience of the geological team assembled by Cauldron and Vendor having deep understanding of the Victorian Goldfields.

Blackwood Gold Project

Overview

The Blackwood Gold Project comprises Exploration Licence (EL) 5479 covering an area of 24 km2 located in central Victoria,40 km east-northeast of Ballarat.  The Exploration Licence is granted and is in Good Standing with a licence expiry date of 23 March 2024.

The Project is centred on the Sultan Mine which historically produced a little over 73,000 ounces of gold at an average grade of 28 g/t1.  In addition, the project contains in excess of 250 underground workings; with the largest known producers shown in Table 1:

Table 1: Gold production various reef sources in Blackwood Goldfield
MineWorked Depth [m]Ore Mined [t]Gold Produced [oz]Grade [g/t Au]
North Sultana243620
Sultan23182,00073,31028
Sultana611,530
Mounters13419,0709,91016
Homeward Bound20450
Bog Hill623,180
Annie Laurie76270
Grace Edgerton621,0902,85080
British Lion1,100
Source: Report titled “The Gold Mines of Blackwood” prepared by Erik Norum, Consultant Geologist, August 2018
Note: total reported production in this table is over 93,000 ounces for the larger producers; over 190,000 ounces for field

Most mining activity on reef structures in the goldfield halted at shallow depths.  Cessation of mining in many cases was not due to depletion of mineralisation but to other factors such as inability to cope with high ground water flows in the underground workings or inability to raise the capital for development work.

There are two important considerations for any drill-testing of targets in the Victorian Goldfields. The first consideration is defining drill targets having a very good understanding of structural geology and targeting the geometries that are significant.  The second is to test lode structures at depths that are either above or below the geochemical depletion zone, a zone of reduced gold tenor. Attesting to the very high prospectivity in the acquired goldfield.

Figure 1; Blackwood Gold Project – Location Map; Victorian structural zone with historic gold production (modified after GeoVic3); Blackwood and Bullarto South tenements shown in dark blue

Historical Exploration and Mining Activities

The discovery of gold at Red Hill (near Blackwood) in 1855, led to a rush of prospectors to the goldfields. It is reported that at the peak of mining activity, there were about 13,000 miners along the Lerderberg River and its tributaries.

Alluvial mining quickly gave way to underground hard-rock mining of gold-rich quartz reef structures.  More than 90% of the gold produced from the Blackwood goldfields came from the hard rock source.

The largely forgotten Blackwood Goldfield produced significant gold (220,000 ounces pre-18901) from near surface historic mining, with great potential for large tonnage high grade gold, down-plunge and along strike of workings, most less than 100 m below surface

Figure 2; EL5479 Prospect location map and mines of Blackwood Goldfields; blue points show location of mine sites; dark blue denotes location of gold reefs; light blue denotes location of alluvial gold field; image from Google Earth.

There is a cluster of mines along parallel but stepped reef structures around the Sultan Mine, including Central, Mounters, Intermediate, Pioneer, Homeward Bound, Western, Edgerton, and Annie Laurie, refer Figure 2, 3 and 4.  Often each of these lodes were owned and operated by different companies.  The well-capitalised Sultan mine having the deepest workings effectively dewatered the workings of the adjacent mines.  When pumping halted at Sultan the adjacent mines lacked the ability to keep their workings dry and ceased operations when their mines flooded.  The operations ceased because of flooding as distinct to depletion of ore reserve.

Historical exploration work in the area of the exploration licences includes mineral resource definition drilling, completion of mineral resource estimates (not compliant with JORC 2012 reporting standards), mapping and soil sampling, costeaning and drilling.

Cauldron and independent researchers associated with the vendor has completed a desktop study with preliminary fieldwork and has identified highly prospective target areas for gold mineralisation in the Project area.  There is potential for near-term production of gold ore from the mining lease at Nuggety.  In addition, there is strong potential for down-dip extensions to mineralisation at Sultan, Barrys Reef East and Yankee, with ability to expand the Target Range and define a Mineral Resource (JORC 2012) of considerable size.

Figure 3; Barrys Reef East (Annie Laurie and Grace Egerton) and Sultan Mine.

Figure 4; Annie Laurie long section; grade model derived from face sampling underground workings.

Figure 5; Sultan Mine Area – Plan view of mineralised vein structures and underground workings (Turner 2019).

Bullarto South Gold Project

Overview

The Bullarto South Gold Project comprises Exploration Licence (EL) 6804 covering an area of 155 km2.  The Exploration Licence is in the process of being granted with completion of native title; and can be renewed subject to approval by the Victoria Mines Department.

The Project is located approximately 10 km southeast of Daylesford and 4 km west of the Blackwood Goldfields in the Central Victorian Goldfields surrounding Ballarat. Historical reporting showed the adjacent Blackwood Goldfields produced about 218,000 ounces of gold from orogenic gold sources (199,000 ounces) and from placer sources (19,000 ounces) in 1860’s Victorian goldrush. The grade and purity of the gold mined from over ten substantial shafts and by numerous gold mining companies over a wide area was noted in the historical reports.

Historical Exploration and Mining Activities

Historical exploration work includes mineral resource definition drilling, completion of mineral resource estimation (not compliant with JORC 2012 reporting standards), mapping and soil sampling, costeaning and drilling.

Historic small-scale mining production completed as late as 1990’s at relatively low gold prices shows existence of mineralisation at Dicksons.

In excess of 100 named shafts and pits within Project area (minesite database managed by GeoVic, the Resources branch of the Department of Jobs, Precincts and Regions).

Cauldron completed a desktop study with preliminary fieldwork and has identified the potential existence of gold in the Project area.  There is strong potential for down-dip extensions to mineralisation at Abels and Dicksons. In addition, there is a very good drill target at the high-grade gold-in-soil anomaly at Hill 858 prospect.

Geology And Mineralisation of the Victorian Goldfields

The Blackwood Gold Project and the Bullarto Gold Project is located in the highly prospective Golden Triangle.

The “Golden Triangle”, a colloquial term for a highly productive central portion the Victorian gold province, contains the Bendigo (>22.4 million ounces of gold production), Ballarat (>13.1 million ounces of gold production), Castlemaine (>4.2 million ounces of gold production) and Stawell goldfields (>2.6 million ounces of gold production).

The central portion of the Victorian gold province, one of the world’s most productive and until recently, largely forgotten gold producing areas, accounting for more than 2% of world gold production and 30% of Australian gold production since 1850.

The geology of Victoria is split into twelve distinct zones, each having a distinct stratigraphic, structural and lithological style.  Of these zones, the Ballarat (mustard colours), Melbourne (blue colours) and Stawell zones (mauve colours) are historically the most productive for gold (refer to Figure 6).

Figure 7; Victorian geological zones with goldfield coloured by production (GeoVic3)

Gold mineralisation is associated with quartz hosted by tightly folded monotonous fine-grained sedimentary rock sequences (interbedded sandstone and siltstone becoming slate).  The folds have upright geometry with trends that are oriented north-south.  As folding developed the sequence ‘locked-up’ causing differential tension in the deforming and shortening rock sequence.  Faulting released the built-up stresses leading the development of zones of weakness having some specific geometry relative to the north-south trending folds.  Of the range of fault sets that develop on this ‘locking up’ folded geometry, the high angle reverse fault has a major influence on the development of mineralisation.

The combination of folding and faulting of certain geometry allowed dilational openings which localised the deposition of quartz, gold and minor sulphide mineralisation (refer to Figure 8).  This process occurred over the regional area causing much of the lode-style mineralisation now known in the Victoria gold province.

Three-dimensional modelling of the Barrys Reef workings (Turner 2019) including the eastern reefs of Annie Laurie and Grace Egerton, as well as the Sultana-Mounters group leads to the following conclusions:

  1. Gold-quartz structures are formed by interaction of faults that are sub-parallel to bedding, but when encountering a change in bedding orientation will refract with possible dilation.

    Figure 8; Typical fault intersections with folded sediments in Victoria (Boucher 2017)
  2. Mineralised shoots may be controlled by the intersection of faults with bedding, some high-angle reverse faults refract as they pass through changes in competency of host rocks.
  3. Reef structures are not always associated with anticlines or synclines
  4. Gold shoots plunge towards the south and dip towards the west; the vertical historic shafts markedly diverged from the shoots with increasing depth and quickly undershot the lode.

These learnings will be used in drill targeting lode structures after compiling underground mapping data and assays.

Victorian Goldfields – History

Gold was first discovered in Australia in July of 1851 at Clunes by James Esmond on a grazing property located approximately 30 km north of Ballarat.  The gold on the property, which would later become known as the Port Phillip mine, became one of the most famous deep lead gold mines in the world at the time, and yielded over 500,000 ounces of gold.

The discovery spurred the Victorian gold rush and resulted in several major goldfields (districts) being identified in Victoria including Ballarat, Bendigo and Castlemaine.  It is reported that an estimated 80 million ounces of gold was mined from the Victorian goldfields in the period 1851 to 1900; with twelve Victorian goldfields producing at least one million ounces of gold each.   The discovery of Kalgoorlie in the 1890’s started the investment decline in the Victorian colony for gold mining, by 1915 most of the major fields had substantially closed.

Although the 1980’s saw the greatest gold boom of the 20th century, the Victorian gold province was relatively little explored during this time, with less than 2% of Australia’s exploration expenditure spent in Victoria, despite it having produced more than 30% of Australia’s gold.  Several factors were considered to have contributed to the poor state of gold mining in Victoria: perception of deposit type and size, perception of remaining potential, loss of mining culture, environmental considerations, and level of government support.

Since the 1980’s exploration activity in the Victorian goldfields has significantly lagged activity at Australia’s other premier gold districts: Yilgarn Craton in Western Australia (with major Archean greenstone-hosted deposits such as Kalgoorlie, Granny Smith and Boddington), South Australia’s Gawler Craton (host to Olympic Dam and Prominent Hill mines), Central Lachlan Oregon of New South Wales (host to Cadia and Northparkes), Tanami Province of Northern Territory (host to Tanami) and the Thompson Orogen of Queensland (host to Mount Leyshon, Kidston,  Mount Elliott and Charters Towers mines).

However, in recent years, significant interest has returned to the Victorian goldfields largely as a result of the recent transformation of the Fosterville Mine and thanks to the discovery of extremely large and high-grade extensions deep underground.  Its converted Fosterville from a modest-scale operation of less than 100,000 ounces of gold per annum to be the world’s richest mine and one of Australia’s top five gold producers with a targeted production of between 570,000 and 610,000 ounces for the 2020 financial year.

The success of Kirkland Gold at Fosterville (75 km north of Project), and more recently by Catalyst Metals at its North Bendigo Project and Stavely Minerals at its Ararat Project in Western Victoria has led to a renaissance in the Victorian goldfields.

Figure 9; Simmons Reef, Mount Blackwood (portrait by Elizabeth Shepherd circa 1850’s)