COSTERFIELD MINE

PROPERTY AT A GLANCE

Location

Victoria, Australia

Land Package

1,293 hectares

Mining Method

Long-hole stoping with cemented rock fill

Product

Gold and Antimony

2020 Production

44,958 gold ounce & 3,903 antimony tonnes

Life of Mine

3 – 4 years

Processing Capacity

150,000 tonnes per annum

The Costerfield operation is located in Victoria, Australia, within the Costerfield mining district, approximately 10 km northeast of the town of Heathcote, Victoria. Purchased in 2009, Mandalay Resources immediately restarted capital development and mining. By 2013, through extensive improvements and investments in mining and processing methods, the processing plant's capacity was expanded to approximately 13,000 tonnes per month from 5,000.

The Augusta mine has been operational since 2006 and was the sole ore source for the Brunswick processing plant until December 2013, when ore production started from the Cuffley deposit located approximately 500 m to the north of the Augusta mine workings. The Brunswick deposit is being mined in conjunction with the Youle deposit, which produced its first ore in August 2019. Mandalay Resources expects Youle to be the sole ore source by the third quarter of 2020.

The mining method employed is long-hole stoping with cemented rock fill. Ore is accessed by a primary spiral ramp. Level spacing is at 10 m centers and horizontal development is advanced in a minimum of 1.8 m wide drives in both directions of the deposit. Levels are then mined out on retreat with long hole stopes drilled to a minimum width of approximately 1.5 m. The stopes are subsequently backfilled with cemented rock fill to supply stability, reduce dilution, and allow for mining above and below developed levels.

Ore is trucked on the surface from the Augusta mine portal to the Brunswick processing plant, where it is stockpiled and blended into the processing circuit. Costerfield is currently planning a second mine portal at Brunswick. The circuit includes primary mobile crusher, primary and secondary ball mills, rougher, scavenger, cleaner flotation, gravity circuit, and filtering. Gravity gold concentrate is sold to a refinery in Melbourne, Victoria, and gold-antimony flotation concentrate is trucked to the port of Melbourne and shipped to a smelter in China.

2021 OUTLOOK

PRODUCTION

Gold (oz)

44,000 – 49,000

Antimony (t)

2,700 – 3,000

Gold Equivalent (oz)⁽¹⁾

53,000 – 60,000

Cash Costs ($USD/oz)⁽²⁾

$675 – $825

All-in sustaining Costs ($USD/oz)^(2,3)

$950 – $1,100

Capital Expenditures ($USDM)⁽⁴⁾

$16M – $20M

• NOTES

2020 PERFORMANCE

PRODUCTION

Gold (oz)

44,958

Antimony (t)

3,903

Gold Equivalent (oz)

58,148

Cash Costs ($USD/oz)

-

All-in sustaining cost ($USD/oz)

-

Capital Expenditures ($USDM)

-

GEOLOGY AND MINERALIZATION

The Costerfield gold-antimony vein district, of which the Augusta Lodes are part, is located on the northern end of the Darraweit Guim Province. Stratigraphy in this area comprises a thick sequence of Lower Silurian to Lower Devonian shelf and flysch sedimentary rocks, dominated by turbiditic siltstone, with minor sandstone and argillite. These rocks form the Murrindindi Supergroup. At the base of the Supergroup is the Costerfield Formation, which is conformably overlain by the Wappentake (sandstone/siltstone) and Dargile (mudstone) Formations, the McIvor Sandstone and the Mount Ida Formation (sandstone/mudstone).

The north-trending Heathcote-Mt William fault system marks the western boundary of the Melbourne Trough in the Costerfield area.

The gold-antimony veins in the Costerfield district are hosted within the Silurian Costerfield Siltstone unit. Within the district, four north-northwest – trending zones of mineralization have been identified. They are, from the west:

• Antimony Creek Zone, approximately 6.5 km southwest of Costerfield, on the outer western flank of the Costerfield Dome;
• Western Zone, approximately 1.5 km west of Costerfield, on the western flank of the Costerfield Dome;
• Costerfield Zone, near the crest of the dome, centred on the Costerfield township and hosting the major producing mines and deposits; and
• Robinsons – Browns (R-B) Zone, 2 km east of Costerfield (see Figure below).

• READ MORE ON GEOLOGY AND MINERALIZATION

EXPLORATION

At Costerfield, Youle depth extension drilling was ongoing throughout Q4 2020 and will continue through 2021. Drilling also focused on the extension of the Minerva veining that sits above Youle. Two drill programs at the Browns prospect commenced following results from previous drilling (see press release dated June 22, 2020). The Swallowtail program is exploring a Youle style environment below the Browns historic mine and the Bogong program is investigating a parallel mineralized horizon. These programs will continue into Q1 2021. As well as the continuing programs, drilling of the Cuffley Deeps Resource and the underlaying Fox Fault prospect are due to commence in Q1 2021.

As at December 31, 2020, Mandalay’s total Proven and Probable Mineral Reserves totalled 799,000 ounces of gold and 21,900 tonnes of antimony, compared to 752,000 ounces of gold and 17,800 tonnes of antimony at yearend 2019, a 6% and 12% increase, respectively year-on-year. These Mineral Reserves were added at an exploration cost of $23.24 per gold equivalent ounce.

RESERVES AND RESOURCES

Costerfield Mineral Reserves 2020

• NOTES

Costerfield Mineral Resources Inclusive of Mineral Reserves 2020