Paulsens Gold Mine

 Northern Star Resources Ltd 100%
 

Paulsens is an operational underground gold mine located 190 km west of the mining town of Paraburdoo on the border of the Ashburton and West Pilbara Mineral Fields, Western Australia. 

It has an Indicated and Inferred Mineral Resource estimate of 1,268,000 tonnes @ 5.3g/t for 226,000 ounces of gold. (see table 2)

The Ashburton and West Pilbara Mineral Fields host a number of WA’s significant resource projects, with a resurgence currently occurring in the region on the back of exploration and development of iron ore, gold and base metals projects.

Two Joint Ventures were also part of the acquisition;

Mt Clement (Artemis Resources Ltd 80%) and Hardy Junction (Cullen Resources Ltd 20%).
 

 The mine commenced production in 2005 and has operated for the past 5 years at an average cash cost of A$538/oz. Total mine production as at 1,650,000t @ 7.9g/t for 418,000 oz (as at EOM Sept 2010) with the mine consistently producing 70-80,000 ounces per annum.

Paulsens was established on a nameplate capacity of 240,000 tonnes per annum, however it has for 5 years consistently produced in-excess of 340,000 tonnes per annum.

Table 1 - Historical mine performance on gold sold

The Apollo zone was defined by exploratory development after production had commenced in 2005 and sits outside the main mineralisation corridor highlighting the potential for adjacent mineralisation not related to the Paulsen quartz/gabbro geological model.

The December 2010 Resource Estimation prepared by Hellman & Schofield increased previously announced figures to 226,000 ounces. 

The increased resource figure, which compares with the previous estimate of 128,700oz, (Nov 2009 - Voyager 1 only) comes despite Northern Star mining  71,000oz at Paulsens during 2010. This represents a 122% increase in resources year on year.

The new 226,000oz resource estimate includes the 120,200oz Voyager 1 lode, 30,200oz of remnant mineralisation in previously mined shallower Paulsens lodes, 64,500oz from the recently completed Paulsens open pit optimisation study and 11,100oz in stockpiles(see table below). 

Table 2 - December 2010 Hellman & Schofield Resource Estimation Totals

This increased resource estimate excludes the Voyager 2 lode at Paulsens, which Northern Star discovered last year. The Company believes Voyager 2 has the exploration "target" potential to add a further ounces based on the outstanding drilling results achieved so far. Later in 2011, the Company expects to be in a better position to define a maiden resource for Voyager 2.

The Paulsen deposit lies within the west-northwest trending regional Wyloo anticlinal dome. Archaean Fortescue Group metasediments and metavolcanics of the Hamersley Basin are exposed in the core of the dome and form the host rocks of the Paulsens deposit. Paulsens is a mesothermal, orogenic lodestyle gold deposit with mineralisation occurring within a structurally controlled quartz vein, hosted by a folded, sedimentary sequence. Gold is associated with quartz, carbonate and pyrite with high grade gold commonly associated with massive sulphide zones. The mineralised zone plunges northwest at a declination of about 30 degrees.

The main body of mineralisation comprises an Upper (UZ) and Lower (LZ) Zone located on the hanging wall and footwall contacts respectively. Drilling has defined a down-plunge extent in excess of 1000 metres to around 550 metres below surface. The mineralisation is cut in places by a series of steeply dipping dolerite dykes that vary from one to ten metres in thickness.

Stage 1:

"Pay off Acquisition"

• Mine 65,000 oz Au from Voyager 1 to the 705m RL, payout all debt and Intrepid Mines.
• Include more of the Voyager 1 Resource into current mine plan.
• Review unmined and remnant resources in the upper levels.
   

Stage 2 :

 "Maintain Profitable Production"

• Stage 2 is the depth extension of the Voyager 1 lode below the 705 level (currently comprises an Inferred Resource of 110,000t @ 11g/t for 39,000oz Au).
• Develop decline and build drill drive on the 705m RL.
• Capital development and resource/ grade control drilling to ensure production beyond 2011.

Stage 3:

"Find and Develop 3-5 year mine life"

• Target Voyager 2 lode (the plunge extension of Paulsens mineralisation).
• Define an initial Stage 3 resource for Voyager 2 by early 2011.