Maddens Flat Project

The Maddens Flat Group of Mines are located in Northern Queensland, Australia. The camp and mine are set on the banks of the West Normanby River, 90km by road south of Cooktown and 200km north of Mareeba. Access by road from Cairns is via the sealed Peninsula Development Road to within 24 km and then on graded roads.  The site also includes access for helicopters through which journey times are 30 minutes to Port Douglas and 45 minutes from Cairns.

Near-mine exploration

ECR considers that near-mine exploration across the Maddens Flat tenements represents a highly significant value creation opportunity for ECR and will be a primary focus alongside production development. The 50km² EPM 12375, which encompasses the seven MLs, covers a largely unexplored district but one which contains six known mine workings, of which only the Maddens Underground Mine and The Brothers Underground Mine have been partially developed.

In 1999 a historic JORC inferred resource of a total of 6,322oz (gross to projects) was prepared (under the 1996 edition of the JORC Code), which is described in further detail below, which was derived entirely from visible unstoped blocks within existing development headings. To date there has been no systematic drilling programme across the tenement, and as such, ECR considers that there is future upside potential across the district.

The high-grade quartz vein systems at the Maddens Underground Mine, which have historically produced at average grades of 25g/t Au and above, are characteristic of structurally controlled deposits where the potential for grade and continuity at depth and along strike remain open below the area covered by the JORC inferred resource at the Maddens Underground Mine. Together with North Queensland Mining Pty as its partner for the Maddens Flat Group of Mines, ECR intends to conduct systematic near-mine drilling and geological investigation targeting depth extensions below existing workings and along-strike continuity across the undeveloped tenements.

The potential impact of a successful near-mine drilling programme could be significant. In high-grade narrow vein systems of this type, ECR believes that a single significant intercept below existing mine workings has the potential to materially expand the asset base and that this could be achieved via a portion of the expected cashflow to be generated from ECR’s production plans. ECR views the exploration potential of the Maddens Flat district as a fundamental part of the investment case and intends to allocate capital accordingly once initial production cashflow has been established.

In summary, ECR believes that the material cashflows that the Maddens Underground Mine could generate from the nearer-term production can be re-invested in a project that has the potential to be of greater scale.

History of the Maddens Flat Group of Mines

The Maddens Flat area was opened up in the early 1980s. Tin was the target metal at the time. The project was close to commencing production when during 1985 the tin price collapsed, and the project was abandoned. Good potential for tin and alluvial gold mining still exists in this area.

The owners at that time then proceeded to study the gold prospects in the area, mainly the Prospector Mine now known as Maddens Undergrond Mine and also The Brothers Underground Mine that had ceased work in 1910.  The present mill and camps were built and the main adit at the Maddens Underground Mine was put in and hit the reef at 130 feet below the surface. The reef above the adit was stoped out and crushed for a recovered average of 14 g/t Au. Ownership changed in 1989 and then again in 1991 during which the floor of the original crosscut was mined for gold to finance the start of the decline (the downwards tunnel to access the ore body).  This was started back about 50 metres from the main reef and exposed an enriched zone of approximately 30 vertical metres. On continuing the decline around the end of the main stope, a new high grade reef was found and the ore crushed averaged 6-7 oz/tonne. Extensive development work and stoping followed through to 1994. During that period the owners also completed a small decline into the Sisters Mine and drove along the main reef for approximately 25 metres. A drive was also put into the You-Can-Tell-Us Mine and a reef exposed. 

At the end of 1993 a new decline was started at The Brothers Mine. It was found that the reef had pinched out in 1910, and that had been why the mine had closed. After only a few feet of sinking, the reef had regained its former size.

A historic JORC (1996 Edition) inferred resource estimate was prepared in relation to the Maddens Underground Mine, The Brothers Underground Mine and the You-Can-Tell-Us Underground Mine in 1999 by GR Ryan & Associates.  It was based partly on known unstoped blocks above and below existing development levels (rather than drilling).  A global gold recovery of 85% was applied to the resource (gravity only) which confirmed high grade stopes and probable increase in tonnes.  It was inferred that a total of 6,322oz of gold (gross) was present in future minable production at the Maddens Underground Mine, The Brothers Underground Mine and the You-Can-Tell-Us Underground Mine, which would have a total value of nearly A$38 million Au at A$6,000 per oz.  Since the JORC inferred resource estimate was published in 1999, the operator has reported mining approximately 1,000 tonnes of ore at a grade of 26 g/t Au in total from the Maddens Underground Mine’s unstoped blocks above the 450m level.

Inferred Resource tabulation for the Maddens Underground Mine, The Brothers Underground Mine and the You-Can-Tell-Us Underground Mine (GR Ryan & Associates, 1999)

• Source: Report by GR Ryan of GR Ryan & Associates (1999). 
• The Inferred Resource estimates are reported in accordance with the JORC Code (1996 Edition)
• Current Estimates are illustrative, to reflect a reduction of 1,000 tonnes of ore  from the Maddens Underground Mine (on a gross to projects basis), given that the operator has reported mining approximately 1,000 tonnes of ore in total from the Maddens Underground Mine since the JORC inferred resource estimate* was published in 1999
• “Gross” are 100% of the Inferred Resource attributable to the stated projects whilst “Net Attributable” represents the 50% interest attributable to ECR upon exercise of the Option
• The operator of the Maddens Underground Mine, the Brothers Underground Mine and the You-Can-Tell-Us Underground Mine is North Queensland Mining Pty Ltd

Lucky Strike acquired the Maddens Flat Group of Mines some 15 years ago but, shortly after, its parent company entered into financial difficulties and funding for the development ceased. In 2016 North Queensland Mining Pty Ltd (“NQM”) acquired 50% of Lucky Strike and subsequently evaluated, recapitalised and refurbished many areas of the project. ECR is of the opinion that only a small amount of the overall Maddens Flat Group of Mines’ potential has been achieved and there is potential for enrichment zones to exist in most of the known mines and prospects, as regional geology suggests.

Although mining has taken place historically, the Maddens Flat Group of Mines have not generated turnover in recent years, due to activity at the mine site being focused on upgrading facilities in preparation for an expansion of operations rather than gold production.

Next steps at Maddens Underground Mine 

ECR has invested A$1 million in the Maddens Underground Mine as part of the exercise of the Option.  It is planned for these funds to be used to extend the Maddens Underground Mine decline another 120m to open up the next level. Based on historical grades produced, ECR believes that the next level (20m of backs over a shoot length of 100m) has the potential to generate around 2,500 oz gold.  Operations have commenced and it is expected that it will take some 3 – 6 months for production to start.  

The Maddens Underground Mine project exhibits a number of structurally complex high grade quartz veins 0.2m to 4m wide.  There are expected to be multiple zones with significant tonnage and grade available.  Past reported production exceeds 5,560oz gold averaging 25.0g/t Au.  Furthermore, additional un-mined opportunities are believed to exist beyond the current workings in the other five mines.  There is also potential for an alluvial project.

The Brothers Mine

A second mine within the Maddens Flat Group of Mines, The Brothers Mine, is planned to be opened up following production commencing at the Maddens Underground Mine. A decline was previously excavated exposing the face where the high grade ore indicated in the above historic JORC inferred resource was found. However, mining was not continued at that time as the focus remained on the larger Maddens Underground Mine. Since that time the decline has been flooded and will require de-watering and rehabilitation before ore can be accessed. While the tonnage generated at The Brothers is expected to be smaller than at the Maddens Underground Mine, the projected gold grades would be greater, if they are in line with the historic JORC inferred resource* at 38g/t gold.

By way of illustration, based on information from the operators of the Maddens Flat Group of Mines ECR believes that a single 20m stope per year in The Brothers mine has the potential to  generate around 1,780 tonnes of mineable ore for a minimum three years.  The ore body is a laminated quartz reef varying in width between 0.5m – 1.5m.  Previous mining and recent test work have indicated gold grades in excess of 25g/t.  Geological investigations have indicated a second reef within the decline which has the potential to significantly expand the opportunity.  Mined ore would be trucked to the Maddens Underground Mine for processing as there is no onsite processing at The Brothers.

Plant infrastructure

This comprises a run of mine pad, a feed bin, integrated crushing circuit, mill and gravity circuit which has received a recent upgrade including the inclusion of Knelson concentrators, a wet high pressure rolls crusher, pumps and a fine micron screen. Current estimated capacity is 15,000 tonnes per annum, with the ability to scale up to around double that, if required.  There is a sampling circuit including a crusher and gemini table for instantaneous sampling, testing and concentrate clean up as well as an on-site smelting capacity.

The site includes an equipped workshop with spare parts inventory for routine maintenance and fabrication, together with accommodation and support facilities (common area, mess, office, multiple sheds, five en-suite bedrooms and laundry).