The Merlin kimberlite field is situated on the eastern side of the North Australian Craton, ~100km south-west of the coast of the Gulf of Carpentaria. The Merlin kimberlites are Devonian in age (382 million to 352 million years ago) and intrude mid-Proterozoic shales and dolomites of the McArthur Group and the unconformably overlying Cambrian Bukalara Sandstone. Thin deposits of Cretaceous sediments and laterite overlie the pipes.

The Merlin pipes are small, with the diameter of the upper levels varying between 50m–125m. At surface the shapes of the pipes are circular to elliptical and maintain their regular shape and near vertical sides within the Bukalara sandstone. In the softer sediments beneath the Bukalara/ Proterozoic unconformity, some pipes increase in diameter. In the case of Palomides and Sacramore they coalesce into a larger single vent named PalSac.

The kimberlites are strongly weathered to 60m - 80m depth from surface and appear to have sunk back down into the craters, that have been in-filled with Cretaceous sediments that are up to 40m thick. The sagged nature of the infill sediments, the upturned edges with associated slickensides, the presence of a basal non-kimberlitic conglomerate and the thickened iron pisolite profiles, all suggest that the Cretaceous aged sediments have subsided into the pipe structures possibly due to solution weathering of the kimberlite.

The pipes are located within four main clusters over an area of ........

Two different but complementary mining methods for the Merlin kimberlite pipes have been planned.

Initially each deposit will be mined by conventional open pit mining. When the open pit has been completed to the planned depth, vertical pit mining (“VPM”) will be used to deepen the mine below the base of the open pit.

There is potential for viable underground mining beneath the VPM on certain pipes, however this has not been included in this Scoping Study and is the subject of a separate scoping study currently underway.

Open Pit Mining Method
The Scoping Study has assumed conventional load and haul operations by a mining contractor for the open pit mining of each pipe. Drill and blast will be employed for all waste rock and for kimberlite below the weathered zone. In the weathered zone, kimberlite will be free dig. The use of 120t class excavators and 40t articulated dump trucks (“ADT’s”), mining 2.5m high flitches has been assumed. With a selective mining unit of 5m x 5m x 5m, a 2.5% ore loss factor was applied to the resource model. No dilution factor has been applied as the resource grades are based predominantly on historical recovered grades. In all cases the open pit mining will be extending the depth of existing open pits, except for the Bedevere pipe, which has not been mined previously.

Design parameters assumed for the open pits included batter face angles of 75 degrees, batter height of 20m, berm width of 10m, dou ........

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Process make-up water will be primarily sourced from the nine current open pits on the mining lease, plus the new Bedevere open pit.

Water will be pumped from the pits that are being mined at the time to maintain working areas in a sufficiently dry condition for operations to proceed. Any additional requirements will be pumped from selected pits not being mined and potential circumferential pit dewatering bores and other bores.

Heavy rainfall occurs during the wet season, which extends from November to April, that together with seepage from the Bukalara sandstone aquifer will result in some recharge of the open pit water levels.

Water will be transferred between pits by pumping to maximise the use of pit water and minimise discharge requirements from the pits.

A more detailed hydrological and hydrogeological model will be developed following the current geotechnical drilling program which includes hydrogeological testing and the necessity for any pit dewatering around the perimeter of the pits will be determined. This would provide an additional water source.

Water usage will be minimised by recycling via a tailings dam and return water dam. Make-up water to replace evaporation and other losses is estimated at 0.5m3 per tonne treated and this will be pumped from the working and non-working open pits.

The nine existing open pits will provide water storage and rainwater collection whilst not being mined. Potable water will be sourced from existing bores at the camp and plant sites.