Augur: Study delivers positive results for Randu Kuning gold project

By Ruli Setiawan

ASX-listed Augur Resources Ltd said Tuesday that the original Scoping Study on its Randu Kuning deposit located within the Wonogiri gold and copper project, in Central Java has been updated to include the significantly enhanced project economics resulting from the aggregate potential of the project and current costings for fuel and equipment.

?The results of the internal Scoping Study confirm the potential for the development of the deposit at Randu Kuning,? Augur said in a statement.

As part of the update, a JORC compliant resource estimate of the Randu Kuning deposit was completed by Trevor Leahey of Computer Aided Geoscience Pty Ltd, Australia, a Competent Person as defined under JORC 2012, the results of which are detailed below.

Internal 2016 Scoping Study Summary
The Scoping Study was undertaken by Augur technical staff and based on comparable mining operations in Indonesia and Australia. Metallurgical data was provided by testwork completed by Pt. Geoservices in Jakarta under the guidance of qualified independent consultants MetChem Consultants of Perth, Australia and also PWA Limited of Kuala Lumpur, Malaysia.

Consultant	Study input
Computer Aided Geoscience Pty Ltd	JORC 2012 Mineral Resource
MetChem Consulting / PWA Ltd	Metallurgical testwork & Process costs
ALS Ammtec	Flotation processing testwork (2012)
National Land Development Pty Ltd	Operating & Mining Costs
Pt Archi Indonesia / Sumatra Copper & Gold plc	Operating & Mining Costs
Pt. Intertek	Assays
Pt. Geoservices Ltd	Metallurgical testwork and aggregate ASTM testwork
Various	Aggregate Market Study

The project is supported by a low strip‐ratio, good metallurgical recoveries, excellent access to infrastructure and national grid power. The study focused on an open pit mining operation with material treated by gravity concentration and flotation to produce a gold (+ silver)‐rich gravity concentrate and a copper (+ gold, silver bearing) concentrate. The Scoping Study assumed 50% of in‐pit waste rock would be sold as aggregate.

As Augur does not currently have adequate capital and operational finance to develop the Wonogiri project and scoping studies are not at a stage to secure project financing, the Company is precluded by the recently released ASIC Information Sheet 214 concerning forward looking statements by mining and resource companies from announcing details of the Scoping Study and its related cautionary statements.

Operating costs were estimated at a preliminary level based on local benchmarked costs and comparable mining costs. Capital expenditure costs to develop the project were estimated based on comparable mining industry costs with allowances for second hand equipment and local costs. No contingency was used in the capital cost estimates.

Mineral Resource and Mining Inventory
Despite the fact that, as outlined above, the Company is precluded from providing details about its Scoping Study, the enhanced economics result in a revised JORC 2012 compliant resource estimate for Randu Kuning, completed by Computer Aided Geoscience Pty Ltd, as follows:

JORC 2012 compliant Resource Estimate of the Randu Kuning deposit within the Wonogiri project. Refer to AuEq1 formulation in Statement of Compliance

Table: Resource using 0.5 g/t AuEq1 cut‐off grade

At 0.2 g/t AuEq1 cut‐off grade the total contained resource is 81.56 million tonnes at 0.38 g/t Au and 0.11% copper. This represents 1.15 million ounces of AuEq consisting of 996.5 thousand ounces of gold and 190 million pounds of copper. At 0.5 g/t AuEq1 cut‐off grade, the cut‐off grade used in the Scoping Study, the total contained resource is 20.95 million tonnes at 0.85 g/t Au and 0.16% copper. This represents 573 thousand ounces of AuEq1 consisting of 533 thousand ounces of gold and 74 million pounds of copper. Details of the resource estimate for Randu Kuning are as follows:

Metallurgy
Augur has previously reported on the metallurgical testing of the Randu Kuning Au‐Cu mineralised rock completed by ALS‐Ammtec in 2012. This work indicated recoveries of over 89.0% of gold and 95.0% of copper. Concentrates of up to 90.6 g/t gold and 21.2% copper were achieved during initial concentrate optimisation studies. Selected assays of concentrates have shown low arsenic and other deleterious elements.

The Scoping Study used a similar recovery model assuming 87% recovery for both gold and copper to produce a constant concentrate copper grade of 20% and a gold grade of between 60.0 g/t and 90.0 g/t.

Augur is currently completing additional metallurgical testing to evaluate optimising gold recovery via initial gravity concentration and increasing the Cu% in sulphide concentrate via suppression of pyrite during the flotation process. As reported previously approximately 54.3% recovery of gold by gravity and intensive leaching of concentrates; and 86.6% gold, 70.7% silver and 87.7% copper recovery by combined gravity + flotation of gravity tailings.

The completed testwork has also importantly confirmed that Randu Kuning tailings material will be non‐acid forming and will be a net acid consumer. As such there will be no acid mine drainage concern for the process tailings.

Aggregate from In‐pit Waste Rock Evaluation
General ASTM standard rock quality tests were completed at PT Geoservices laboratory in Bekasi, West Java, and are compiled in Table 1 below. Test work was completed on four bulk rock samples (and three sub samples) made from two waste rock composite samples collected from drill core from 3 drillholes within the Randu Kuning conceptual starter open pit. The results indicate that the Randu Kuning waste rock has the properties required to be highly suitable for a variety of stone aggregate uses including concrete. Specific concrete design testwork has not been completed.

The Company completed a regional market study in 2015 to assess current aggregate supply and demand within a 100-kilometer radius of the Wonogiri property. A total of 60 users and suppliers were visited, the results of which suggest that aggregate production from a 250 tonnes per hour crusher to produce approximately 600,000‐700,000 tonnes of crushed stone per year could be absorbed into the regional market for a variety of uses without price disruption. It is also clear from the market study and discussions with industry consultants that there is a strong demand for high quality aggregate throughout Java to supply ongoing and planned Government infrastructure projects as part of an extensive transportation upgrade initiative.

The Company is in discussions with third parties as part of evaluating several aggregate production scenarios. This includes offtake agreements and also initial production from stand‐alone quarries adjacent to the conceptual Randu Kuning open pits. The latter could provide a low capital cost opportunity to get early cash flow with which to advance development of the Randu Kuning mine and develop an aggregate market presence prior to expanded production upon Randu Kuning start‐up. Production of manufactured sand product from crushed rock dust may also be feasible.

2016 Work Program
Based on the results of the internal Scoping Study Augur plans to continue with completing advanced metallurgical testwork in regards to production of a Cu (+Au) concentrate via flotation processing. The potential to recover a significant portion of the contained gold (and silver) via gravity concentration will also be further evaluated as will further processing of a gold‐rich gravity concentrate at an offsite location using intensive leach processing thereby removing the requirement to obtain a permit for cyanide use at mine site. Commencement of initial geotechnical and hydrogeological studies will also proceed to confirm pit slope stability and a water use plan. Further inquiries into potential sale of Randu Kuning waste rock as high quality aggregate and development of a stand‐alone aggregate quarry adjacent to the conceptual pit will also be completed.

Editing by Reiner Simanjuntak