Ongoing drilling at Crater Gold Mining’s operating HGZ mine in Papua New Guinea has identified elevated gold grades in the central zone and confirmed that this zone continues to depths. HGZ forms part of the company’s Crater Mountain project.

Development at HGZ in 2015 covered an approximate extent of 60 metres NS and 30 metres EW identifying those structures considered to be controlling the gold mineralisation and confirming the results of diamond drilling carried out in 2014.

An important development was the identification of a strong link structure trending roughly NE-SW linking the prominent NS structures thought to have controlled the gold mineralisation.

Reinterpretation of geological mapping and alteration shows a central core of massive crystalline silica with strong presence of structurally controlled manganese oxide associated with hematite and limonite. The brittle nature of this zone has been conducive to formation of tension cracks allowing the introduction of mineralising fluids.

More visible gold has been observed with a higher frequency of elevated gold grades in this central zone than elsewhere in the system. This is validated by bonanza grades reported in development in November 2013 and another drill hole which passes through the middle of this zone, which returned 9.0 metres @ 30.8 grams/tonne (g/t) gold from 28.5 metres, including 5.0 metres @ 33.1 g/t and 2.5 metres @ 44.3 g/t.

The highest grades encountered in the Link development are interpreted to coincide with the intersection of several flat dipping, cross cutting EW structures which terminate on the JL and NVI structures either side.

Drilling confirms that this zone continues to depth and can be accessed from future lower level development.

This fresh geological interpretation with resultant improved understanding of the controls to mineralisation will enable mining to be focused within the zone described above. This will allow delineation of the extent of the shoots so they may be mined up and down dip. Mining rates during exploration development were restricted by low compressor capacity.

Upgraded mining plant comprising two new hammer mills, two high speed centrifugal concentrators, gravity separation shaking tables, a new compressor and rail mounted rocker-shovel are scheduled to be airlifted to the HGZ shortly.

When the company reaches mining plant capacity, it anticipates producing 10,000 ounces of gold in the first full year of production, at an all-in cash cost of below $400 per ounce average over the mining lease term.

While the current focus remains on the HGZ mine, there remains potential to increase the current JORC compliant resource of 24 million tonnes at 1.0 g/t for 790,000 ounces at the nearby Mixing Zone project at Crater Mountain.

Crater Mountain is 50km southwest of Goroka in Eastern Highlands Province.