Mining at Majors Creek,

New South Wales

Dargues Reef is approximately 60km southeast of Canberra, 13km south of Braidwood and immediately north of the village of Majors Creek. The Dargues Reef ore body was originally discovered in the early 1870’s by Mr. James Dargues, mining over the next 20 years consisted of sinking the Main Shaft and development of a small open cut. Additional shafts were excavated between 1870 and 1891 and then again between 1914 and 1916 by various parties.  Historic gold production from Dargues Reef is estimated at a minimal 2,000t at a grade of 14g/t Au.

Since 2004, in excess of 300 holes have been drilled at Dargues Reef. The identified resources and reserves within the Project were published in 2008 at 1.44Mt @ 6.2g/t (286,000oz of gold) the latest resource upgrade (June 2010) is 1.615Mt @ 6.3g/t Au (327,300 oz of gold). The recent scoping study confirmed that the project is cash positive at a gold price of $1,150/oz and an average grade of 6g/t Au. The study concluded that the Project would support a viable underground mining operation. Since the initial study a Definitive Feasibility Study and an Environmental Assessment has been conducted and the potential for an even more robust project identified.

Key outcomes of the Feasibility Study include:

• Ore production rate of 330,000tpa.
• Average annual production of 50,000oz pa.
• Production of 248,900 recovered ounces over an initial 6 year mine life.
• Estimated average life-of-mine cash operating cost of A$628/oz (excluding royalties and contingencies)
• Maiden minable inventory of 1.58Mt @ 5.12/t Au for 248,900oz.
• First year capital requirement A$42 million.
• Estimated gross sales revenue of +A$300 million over Phase 1 life of mine.
• Life-of-mine pre-tax operating profit of $80 million.
• Pre-tax NPV8% of A$47 million and IRR of 30% using an A$1,250/oz gold price.
• Pre-tax NPV8% of A$75 million and IRR of 42% using current spot price of A$1,400.
• 40% increase in recovered metal compared with Scoping Study, with a mineable inventory of 248,900oz of gold and 73,144oz of silver.

A$42 million pre-production capital cost estimate includes establishment of the box-cut and 6 months underground development, plant construction (including paste plant) and tailings dam construction.

Cortona have made the decision to mine the Dargues Reef ore body. The project has been awarded Major Project status under the State Environmental Planning Policy and the Environmental Assessment report has been lodged with the NSW Department of Planning.

Following the initial appraisal the resource has been “firmed up” with additional shallow and deep drilling conducted over numerous campaigns in the past year. Cortona are now targeting +500,000 ozs at Dargues and have intersected bonanza grade zones at depth. Cortona believe the first two years production will be in the measured resource category and the ore body will extend beyond 450m when the latest drill results are incorporated into the new resource calculation, due next year.

The Dargues Reef Gold Project will comprise an underground gold mine (decline), a run-of-mine (ROM) Pad, temporary waste rock emplacement, crushing facility, gold processing plant, tailings storage facility and associated infrastructure.

The application area for the Project infrastructure covers an area of approximately 403ha of freehold land owned by the Company.

main_shaft_364 main_shaft_in_rain_364

PROJECT OBJECTIVES

Cortona’s primary objective in constructing, developing and operating the Project are to safely and efficiently mine the identified reserves (248,900oz Au and 73,144oz Ag), and to operate the Project in a manner that would minimise surface disturbance and impact on surrounding community and the local environment, whilst in full compliance with all relevant statutory requirements and regulations. Cortona plan to achieve these objectives in a cost-effective manner that will ensure security of employment and the continued economic viability of the operation.

PROJECT DESCRIPTION

Mining practices will include the following.

  • Extraction of waste rock and ore material from the Dargues Reef deposit using underground sub-level open stope mining methods.
  • Construction and use of surface infrastructure required for the underground mine, including a box cut, portal and decline, magazines, fuel store, ventilation rise and power and water supply.
  • Construction and use of a processing plant and office area which would include an integrated ROM pad/temporary waste rock emplacement, crushing, grinding, gravity and floatation circuits, site offices, workshop, laydown area and associated infrastructure.
  • Construction and use of a tailings storage facility, a water management system and a site access road, ancillary infrastructure, including soil stockpiles, core yards, internal roads and tracks and surface water management structures.
  • Transportation of gold concentrate from the Project Site to customers via public roads.
  • Construction and rehabilitation of a final landform that would be geo technically stable and suitable for a final land use of agriculture and/or nature conservation.

OPERATION and SUMMARY

The Dargues Reef Definitive Feasibility Study for a +50,000oz pa gold operation has been completed. The underground mine and infrastructure design is almost complete and several underground mining contractors have been invited to submit quotes.

The operation will mine 330,000t pa using conventional long hole open stope mining methods via a decline and a back fill-past fill process in the stoped out areas, will allow maximum orebody extraction. Waste rock will also be used as stope backfill; this will limit haulage to surface and dramatically reduce surface tailings storage.

The plant is designed to extract half the gold via a simple gravity process and also produce a sulphide concentrate, containing the other half of the gold. No cyanide will be used at the Dargues Reef plant. The end result is a state of the art, modern, environmentally friendly gold processing facility designed on the principals of ecologically sustainable development that will boast a very small surface footprint.

The plant design and infrastructure development has been completed and a final mine design is in progress. The environmental assessment report has been lodged with the NSW Department of Planning and all necessary approvals and conditions are expected to be finalised in the coming weeks.

Cortona are on the verge of evolving from explorer to producer and plan to be in full operation and producing gold by the beginning of 2012.