Comparative Costs of Drilling

Because it is less complex, time consuming and has faster penetration rates RC drilling (Reverse Circulation) is usually 25 – 40% cheaper than diamond drilling, although RC is more expensive then RAB (Rotary Air Blast).

However RAB drilling gives a less accurate sample and is primarily used in initial exploration in unconsolidated ground limited to depths of approximately 100m. Diamond drilling consumables are also more expensive as they are custom made to suit the rig.

There are also significant cost and time reductions in the overall RC sampling process. RC drilling can also used as a precollar to diamond drilling and there are two ways of doing this.

One option is using a multipurpose rig doing both techniques consecutively on the same hole or if initial assay results from RC Drilling are promising and deeper samples are required returning to use the initial RC hole and commence diamond coring to greater depths. RC Drilling offers this flexibility which makes it the most cost and time effective
drilling method.

Average Cost Per Foot Drilled

Drilling cost per foot is the total drilling cost per footage drilled. This value is used for evaluating drilling projects, bit performance, drilling performance, etc. Depending on where you are in the world this may also be calculated as the average cost per metre drilled.

Exploration Drilling in Australia

Levels of Exploration Drilling in Australia

Exploration drilling totaled 9.756 million metres in 2007-08, an increase of 1.301 million metres (15%) from 2006-07. This continued the trend of increased exploration drilling evident since the trough in mineral exploration in 2001.

Drilling levels remain below the peak in 1996-97 which was associated with large amounts of shallow drilling for gold. The 2007-08 drilling data show a continuing strong emphasis on brownfields exploration that has become most pronounced since 2003 with only 40% of drilling last year targeting new deposits. Source, Australian Government Geosciences Australia

Exploration Expenditure (other than for petroleum)

The seasonally adjusted estimate of mineral exploration expenditure rose 12.3% (or $118.8m) to $1086.0m in the March quarter 2012. The largest rise this quarter was in Western Australia (up 19.0% or $95.5m) followed by Queensland (up 13.4% or $31.7m).

In original terms, mineral exploration expenditure fell 15.1% (or -$156.3m) to $876.1m in the March quarter 2012. Queensland had the largest fall (down 22.4% or -$57.5m), followed by Western Australia (down 7.9% or -$41.8m).

In original terms, exploration on areas of new deposits fell 23.2% (or -$75.0m), while expenditure on areas of existing deposits fell 11.5% (or -$81.3m).

In original terms, the largest fall by minerals sought came from expenditure on iron ore exploration (down 14.1% or -$43.9m), with the largest fall occurring in Western Australia. The next largest fall came from expenditure on coal exploration (down 18.5% or -$40.2m).

Metres Drilled (other than for petroleum)

In seasonally adjusted terms, total metres drilled rose 4.0% in the March quarter 2012. In original terms total metres drilled fell 23.1% Drilling in areas of new deposits fell 42.2% and drilling in areas of existing deposits fell 13.3%

Comparative cost of Exploration Program and Budget for a standard project in 2011

Follow-up exploration will be staged and conducted over a 12 to 24 month period and should include but not be limited to:

• A total of 5,000 soil and rock samples collected across the property;
• Prospecting and mapping over the newly granted tenements;
• A 10 hole combined RC and diamond drill program in 2011 to test the continuity and extent of gold mineralization intersected during 2008 at the Wealth of Nations Prospect;
• To test a number and variety of quality gold in soil anomalies specific target areas;
• A number of RC or diamond drill holes are required to test the airborne and subsequent ground EM targets identified in association with surface gold at the target areas.

Calculating Drilling Costs

The estimated cost to conduct the surface sampling program is $AUD500,000. Proposed at an all up cost of approximately $AUD 120 per metre for 12,500 metre of RC drilling and $200 per metre for 2,250 metres of diamond drilling, it is anticipated that the drilling program will cost up to approximately $AUD 2,000,000 to complete. This may vary depending the pricing and supply of drilling consumables. The program will be staged and conducted over a 12 to 24 month period.