BLAIR NICKEL MINE

Australian Mines Limited (AUZ), through its 100%-owned subsidiary Blair Nickel Mine Pty Ltd (BNMPL), owns the Blair nickel sulphide mine, which is  located 30 km south east of Kalgoorlie and 32 km north of WMC's nickel milling operations at Kambalda in Western Australia.

The mine has been suspended indefinitely in December 2008 due to poor nickel prices. All underground infrastructure and mining equipment has been sold to pay out hire purchase contract and other creditors.

The Blair mine still contains a Measured, Indicated and Inferred Resource of 4,300 tonnes of contained nickel metal and could be re-opened if nickel prices improve sufficiently.

Blair mine also provides the Company with an exploration opportunity particularly in proximity to the area 57 orebody where the ore body faulted and pinched out.   

History of Geology at Blair (before suspension)

Ore on the main Blair shoots is typically found in up to 5 parallel shoots on the contact between the footwall basalt and first komatiite flow, and the ore shoots are typically ‘ribbon like’  with vertical plunge continuity in excess of 1,000 metres and open at depth. The strike of individual ore shoots when driven horizontally averages 20 to 25 metres, but can extend to as much as 50 metres. The ore thickness is quite variable up to a maximum of about 7 metres , and the type of ore can vary from disseminated (0.5% to 3.0% Ni), matrix (up to 6.0% Ni) and massive (up to 20% Ni). The ore is best described as ‘high tenor’ with the massive ore grading on average 12.0 % nickel.

The satellite Area 57 orebody appears to be located in a flanking position on the edge of the main komatiite flow channel which hosts the Blair Shoots. The sulphidic nickel ore was typically mined as a layer parallel band within banded cherty sediments, which appear to have been deposited at the top of the first komatiite flow in a quiessent period prior to the deposition of the second komatiite flow. The orebody has a strike length of about 300 metres , and a thickness varying from 10 - 20 centimetres on the edges to a maximum of 7 metres in the central portion of the orebody. The ore is best described as ‘low tenor’ with the massive ore grading on average 3.4 % nickel.  

 Figure 1: Blair Mine - Geology plan at 1059m Rl  overlain by development.

Production History

Operations were commenced at Blair in 1989 by WMC who continued mining through to 1999, when they sold the mine to MacMahon Contractors who mined it until 2001 when it  was placed on care & maintenance during a period of  low nickel price.The mine was subsequently purchased and re-opened by Australian Mines Ltd in November 2003 and mined until December 2008, when mining was indefinitely suspended due to a collapse in the nickel price and the underground equipment sold off.

The life of mine production from Blair Underground Mine under a number of owners since opening in 1989 is a total of 1,263,789 tonnes of ore at a grade of 2.62 % nickel for 33,098 nickel tonnes.

AML produced 230,676 tonnes of ore at a grade of 3.02 % nickel for 6,958 nickel tonnes between March 2004 and December 2008 when the mine was closed due to a low nickel price.

Table 1: Blair Mine – life of mine production including Australian Mines Limited (AUZ)

Resources

Table 2: Blair Mine – nickel sulphide resources, Nov 2009

Notes:
1.    Cut-off grade is 1% Ni
2.   Specific Gravity was estimated for each resource block by ordinary krieging of the composited sg values, which were calculated from core by using the ‘immersion method’.

The information in this report that relates to Exploration Results and Mineral Resources is based on
information compiled by Mr M Elias who is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr Elias is employed by CSA Australia Pty Ltd and is a Non-Executive Director of AUZ. Mr Elias has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Elias consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
   

Potential

Future mining of the Blair Deeps is contingent on a strong nickel price. The ore shoots have currently been mined continuously to a vertical depth of 1,060 metres, and there are sufficient diamond drillhole intersections below the deepest workings to indicate that the orebody continues on at depth.The  workings are accessed by a standard 5.5m in height by 5.5m in width decline which was driven in the more competent footwall basalt, and is  capable of taking low profile trucks of up to 70 tonne capacity.

There is potential for new flanking ore discoveries below Area 57.