Vector Resources is pleased to announce that it is finalising studies aimed at establishing a potentially lucrative toll treatment operation at its Gwendolyn Gold Project near Southern Cross in WA. The studies will assess the technical and financial viability of toll treating ore from the high-grade lodes at Gwendolyn. This will include a detailed review of the Gwendolyn resource to ensure the model is optimised for a high-grade toll treatment project. As part of this, Vector has held advanced discussions with a nearby processor, the details of which will be disclosed when the findings of the studies are available.

To help fund the studies and other work at Gwendolyn, Vector will undertake a one-for-two rights issue at 3c per share to raise $3.9 million. Vector believes that a toll treatment project has the potential to generate far superior returns for shareholders than a conventional project development. The Company believes the financial advantages of this option are also boosted by the ability to target Gwendolyn’s high-grade lodes, which will further reduce operating costs, maximising margins and cash generation. In comparison to previously reported resource estimates, the latest resource model is the most comprehensive and detailed resource model constructed to-date. The new resource model on Gwendolyn has delineated five different mineralisation domains, compared with the previous single domain. The identified geological, alteration and structural controls were used to constrain this current resource model. These five domains are as follows: the main, laterite, pods, flats, and fault lode domains.

The high grade ‘flats’ domain is possibly caused by gold leaching out from the water table within the oxide zone. The ‘pods’ are discontinuous mineralised entities separate from the main domain and there were more pods intersected with the additional drilling above the main domain. The ‘main’ domain is still dipping approximately 30 degrees to the west and having a shallow plunge to the SW. It has been classified as a low grade shear zone domain which bears most of the mineralisation in Gwendolyn. The ‘laterite’ zone is a low grade flat lying zone, located just above the main zone.

The domain identified recently with additional drilling was the ‘high grade lodes’ or blow out zones running along a series of structural faults striking in a NW and NNW direction cross cutting the main fault running NE-SW. The mineralisation on these structures as tested appeared discontinuous and with high variability in gold grades. This domain was isolated from the surrounding domains in order to prevent the high grades present in this geological domain from influencing the surrounding domains. The majority of these identified blow out zones are in the shallow portion of the oxide zone.

The method used for estimating the latest resource model is Ordinary Kriging. The uncut total resource for this geologically constrained model is 6,018,000 tonnes at an Au grade of 1.0g/t containing 193,000 oz of gold. The capped total for this resource as reported by Ravensgate Mining Industry Consultants (Ravensgate) is 6,018,000 tonnes at an Au grade of 0.8g/t containing 149,500 ounces. The capped values for this resource from Ravensgate differ for each domain as shown. With the improved understanding of the mineralisation controls a capped value was used for each domain using a 99th percentile analysis of each domain.

The resource using the capped values and a 1.0g/t bottom cut is represented below in table 2 which Ravensgate has estimated a total mineral resource at a 1.0 g/t cut-off and using the 99 percentile capped values for the Gwendolyn Project of 1.297Mt at an average grade above of 2.0g/t for 84,900 ounces of metal. The total resource consists of Indicated Mineral Resources of 0.790Mt at 1.6g/t Au for 39,800 ounces and an additional Inferred Mineral Resource of 0.507Mt at 2.8g/t Au for 45,100 ounces using a cut-off of 1.0g/t Au (Table 2) for the Gwendolyn Project.