2006 Mineral Resource & Ore Reserve Explanatory Notes

2006 Mineral Resource & Ore Reserve Explanatory Notes _______________________________________________________________________________________ CADIA V...
Author: Elwin Ramsey
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2006 Mineral Resource & Ore Reserve Explanatory Notes _______________________________________________________________________________________

CADIA VALLEY OPERATIONS Cadia Hill Mineral Resource The Cadia Hill Gold Mine has been in production since June 1998. The current resource model, re-evaluated for updated metal prices in 2006, is based upon a zero profit cut-off, which in turn is based on $600 per ounce gold and $1.60 per pound copper (previous resource $550 per ounce and $1.40 per pound copper) and current long term mining cost assumptions. The resource is constrained within a notional $800 per ounce gold pit-shell. The Mineral Resource was estimated by ordinary kriging using a DATAMINE block model approach and is based on extensive diamond drilling on a notional 50 by 50 metre grid. The Mineral Resource has been depleted for production to 30 June 2006 and re evaluated inside the new notional $800 pit shell at revised metal price assumptions. The net result is an increase in the Mineral Resource by 35 Mt for 0.38 million ounces of gold and 29 kilo tonnes of copper. Reconciliation to date indicates the resource model is performing well on a global scale. Ore Reserve The June 2006 Ore Reserve is derived from the re-evaluated 2006 Mineral Resource depleted for mine production during the year. Reconciliation of production demonstrates that the reserve model is performing well. Metal prices used for the Ore Reserve estimation were $600 per ounce gold price a $1.60 per pound copper price. The Ore Reserve estimate is assessed against a profit cut off. The profit calculation takes account of metallurgical recoveries and concentrator, site administration and realisation costs. In order to be classified as Ore Reserve material must have a profit value of greater than zero and must also be scheduled for milling in the life of mine plan. The Ore Reserve estimate was carried out using Whittle Four-X pit optimisation software to select the optimum pit shell for design purposes. After selection of the most suitable pit shell, the final pit extent was designed and then a number of pit cut-back stages were designed and scheduled to enhance net present value. The optimisation of net present value results in stockpiling of low grade mineralisation. This material is subject to oxidisation effects that, over time, reduce metallurgical recovery. Stockpiled material that has insufficient value to cover rehandling, processing and realisation costs is excluded from the Ore Reserve. The average recoveries expected from the concentrator for this Ore Reserve are approximately 82% for gold and 89% for copper.

Cadia Extended Mineral Resource The Cadia Extended gold/copper mineralisation is located on the north-west limits of the Cadia Hill Gold Mine. Mining of the Mineral Resource commenced in January 2003 and was completed in June 2004. There was no mining activity during the 2005/06 financial year The remaining resource for Cadia Extended is constrained within a notional $650 per ounce gold pit-shell and remains unchanged from the June 2005 resource. Further evaluation of this resource and potential for economic mining will be conducted during the 2006/07 year. 1

Ore Reserve No Ore Reserve is currently reported for Cadia Extended.

Cadia Stockpiles Stockpiles are reported separately and consist of ore mined from Cadia Hill and previously mined from the Cadia Extended pit inventory. The grades are based on in-pit grade control, which determines grade and other rock characteristics. There was a net reduction in the Cadia Stockpiles for the year of approximately 2.8 million tonnes for contained 30,000 ounces of gold and 6000 tonnes of copper. This result is net of mining additions and material reclaimed for treatment throughout the year. A standard attenuation calculation to account for oxidation within the stockpiles is added which results in a 5% write down in tonnes and a reduction in expected recovery for gold of 3% and for copper of 10%. This results in expected metal recoveries of approximately 60% for gold and 70% for copper.

Ridgeway Mineral Resource The current Ridgeway resource model was generated in April 2005 and is unchanged for this report other than updates to the long term cost assumptions. The Mineral Resource has been reported using metal price assumptions of A$600 per ounce gold price and a copper price of A$1.60/lb. A value cut-off of $16/tonne has been used for all material above 5040mRL (expected base of the Sub Level Cave operation) and at a value cut-off of $11/tonne below the 5040mRL level to reflect the intended change in mining method to a block cave. The Mineral Resource has been depleted for mine production to 30 June 2006. The material was depleted in its entirety, and remaining production stocks in the cave were estimated by a dilution algorithm utilising dilution entry curves. These factors were used to report the depleted and un-drawn blasted stocks tonnes and grade. The depletion due to production, updated metal price assumptions and changes in cut-off criteria have resulted in a reduction in the gold reported in the Mineral Resources of 280,000 ounces and a small increase in the contained copper of 12,000 tonnes. Ridgeway ore milled during the year was 5.54 million tonnes containing 427,000 ounces of gold and 44,000 tonnes of copper. The Mineral Resource was estimated using a DATAMINE block model. A geological model for major lithological and structural boundaries was constructed. This was used to help define a set of mineralised domains. These domains defined by gold and copper grade, mineralized quartz content and copper mineralogy, were used to control grade interpolation. Gold and copper grades were predominantly derived from 2 metre diamond drill hole samples (composited over 4 m intervals). The grades for each domain were interpolated separately using ordinary kriging. Ore Reserve The June 2006 Ore Reserve for the Ridgeway Gold Mine has been prepared based on the most recent version of the Mineral Resource model that was updated in April 2005. Depletion for processing has been taken into account when preparing the current Ore Reserve estimate. The major change in the Ore Reserve at Ridgeway is due to a change in mining method for the lower section of the orebody (below 5040RL) from SLC to Block Cave. The Block Cave method produces an improved financial outcome for the orebody as a whole, but results in a reduction in Ore Reserve of 0.38 million ounces of gold and 45 kilo tonnes of copper due to previous Ore Reserves falling below and to the west of 2

the Block Cave footprint. Work is in progress to determine if the previous Ore Reserve below the Block Cave can be mined economically and therefore brought back into reserve. For the SLC component of the Ore Reserve estimate (above 5040RL), value shells were outlined for each production level based on a value model developed using a $650/oz gold price, $2.60/lb copper price and “mine gate” values. The higher gold price was used to reflect estimates of metal prices during the short remaining life of the SLC before the Block Cave begins. The value model includes the impact of metallurgical recovery and realization costs (concentrate transport, smelter and refining costs). Ore selection used for purposes of generating the Ore Reserves involved incrementally adding material consistent with logical sub-level cave (SLC) design steps between the Total Production Cost ($25/t) and the current Marginal Operating Cost ($16/t). Life of Mine project cash flows were assessed for each increment and the incremental material included in the ore inventory if project cash flow was improved by the addition. Ridgeway has developed a DATAMINE macro for SLC draw simulation. The model is based on observed performance and research findings. The model utilises 10m x 10m columns throughout the orebody to determine draw rates and mined grades. The grade of the ore drawn is determined based on the combination of the ring grade and relevant draw column parameters. A percentage of the Measured Resources on higher draw percentages, has been classified as Proved Reserve to reflect the confidence level of the grade estimation and the operational characteristics of the SLC mining method. The average recoveries expected from the concentrator for this Ore Reserve is approximately 83% for Au and 89% for Cu. The Ore Reserve for the Block Cave component of the Ridgeway Gold Mine (below 5040RL) has been prepared based on the most recent version of the Mineral Resource model that was updated in April 2005. For this Ore Reserve estimate, value shells were outlined for each production level based on a value model developed using a A$600/oz gold and A$1.60/lb copper price and ‘mine gate’ values. The value model includes the impact of metallurgical recovery and realization costs (concentrate transport, smelter and refining costs). For the purposes of ore selection the Ore Reserve involved incrementally adding material consistent with logical Block Cave cumulative column profit value steps between $0M and $3M. Life of Mine project cash flows were assessed for each increment and the incremental material included in the ore inventory if project cash flow was improved by the addition For the Ore Reserve a DATAMINE macro based on current research and understanding of flow within a Block Cave was used. The DATAMINE macro utilises 18m x 16m columns throughout the orebody, these represent half the dimensions of the planned draw bells, to determine the drawn grades. The grade of the ore drawn is based on the amount of mixing relative to the height of draw. This methodology was compared to the industry standard method for block cave grade prediction, PCBC, and results of both methods were within 2%. A percentage of the Measured Resource on higher draw percentages, has been classified as Proven Reserve to reflect the confidence level of the grade estimation macro and the operational characteristics of the mining method. The average recoveries expected from the concentrator for this Ore Reserve are approximately 82% for Au and 88% for Cu.

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Cadia East An updated Mineral Resource and Ore Reserve estimate has been completed for porphyry related gold and copper mineralisation at Cadia East. The Cadia East deposit is located immediately adjacent to the Cadia Hill deposit. It represents porphyry gold-copper style mineralisation east of and below the Gibb Fault which separates the two deposits. The system extends up to 2.5 kilometres east of Cadia Hill from 14000mE to 16500mE (local grid). It is up to 600 metres wide and extends to 1.9 km below surface. The open pit portion of the resource extends from near surface where it is covered by post mineralisation Silurian Sediments to the 5150mRL. The upper section is dominated by zones of intensely disseminated copper and minor gold mineralisation. Toward the base of the optimised pit shell the resource is dominated by increasing zones of sheeted veins with an escalating gold grade. The underground component of Cadia East mineralisation extends from 700 to 1500 metres below surface, and this part of the resource remains open to the east, west and at depth. Mineralisation at Cadia East is comprised of a body of disseminated and vein controlled gold and copper that grades outward in a predictable manner. The underground component is focussed on a zone of higher grade vein and disseminated mineralisation with native gold, chalcopyrite and bornite as the main metalliferous minerals. Molybdenum is distributed throughout the deposit appearing in association with the other sulphide minerals and within and along vein boundaries. Mineral Resource During the period June 2004 to October 2005 approximately 40,000 metres of diamond drilling was added to the Cadia East open pit diamond drilling inventory. This drilling has been targeted at gaining additional confidence in the Cadia East Open Pit Mineral Resource to enable assessment of potential development scenarios for the open pit portions of the resource. Further diamond drilling has been completed to upgrade portions of the existing Underground Inferred Resource to Indicated Resource. As a result of this drilling an additional 100m of strike of the Cadia East underground orebody has been upgraded to Indicated Resource In addition to the changes in the resource models to reflect the additional drilling a re-evaluation of the resource using updated metal price and treatment and freight costs has been completed. The Open Pit Mineral Resource has been spatially constrained within a notional Whittle Pit shell estimated using $800 per oz gold and $2.00 per lb copper prices. The Mineral Resource has been reported above a calculated notional “zero profit” value using long term cost assumptions for transport and treatment charges and site costs, and metal prices of $600 per oz gold, $1.60 per lb copper and $7.00 per lb molybdenum. The Underground Mineral Resource has been evaluated using an in-situ net value cut-off of $9/tonne at a gold price of $600 per ounce and a copper price of $1.60 per pound. The evaluation has also taken into account the potential production of molybdenum as a component of the on site treatment process. Two conceptual mining shapes that represent feasible mining outlines have been developed for lifts starting on the 4350 and 4700 mRL levels with the top level projecting through to a cave back of 5150m RL which corresponds to the base of the Open Pit resource area. In addition to the gold and copper reported, the Open Pit Mineral Resource contains an estimated 55 kilo tonnes of molybdenum at an average grade of 127ppm and the Underground Mineral Resource 60 kilo tonnes of molybdenum at an average grade of 90ppm. Changes in classification have resulted in 2.7 million ounces of gold and 820 kilo tonnes of copper within the Open Pit Mineral Resource being upgraded to Indicated Resource from Inferred Resource. Changes to metal price assumptions and the resource pit shell in which this is reported have seen the overall Open Pit Mineral Resource increase by 1.5 million ounces of gold and 340 kilo tonnes of copper from the previous estimate. The updated Underground Mineral Resource also includes changes to classification with the Indicated Resource increased by 2.0 Million ounces of gold and 250 kilo tonnes of copper. The revised Underground 4

Mineral Resource has increased by 1.7 Million ounces of gold and 440 kilo tonnes of copper from the previous estimate. The updated resource estimates utilise all previous drilling on the Cadia East deposit that dates back to its discovery in 1994. The models have been estimated by ordinary kriging within a series of geological and grade constrained domains for gold, copper and molybdenum. The classification of the resource is based upon a combination of the density of drilling and geological continuity of domains for gold and copper. The approximate drill density of the Open Pit Indicated Resource is 80 m, on 50 m spaced sections along strike. An ongoing drill program targeted at upgrading the confidence of the Underground Inferred Resource will provide additional upgrades in resource classification over the next 12 months. Upon completion of these programs the resource estimate will be revised and additional mining studies finalised which will result in a further revised estimate. Cadia East Ore Reserve Based on pre-feasibility level mining studies and selection of a panel caving methodology, the underground component of the Cadia East Indicated Resource had previously been converted to Probable Reserve. Given the update in resource classification of an additional 100m strike length of the ore body, a revised Ore Reserve estimate has been completed. Panel and block caving methodologies are well established internationally for extraction of copper porphyry systems similar to Cadia East. Newcrest has undertaken specific studies and reviewed all relevant panel/block caves to compare rock mass characteristics and caving outcomes. Newcrest has a body of work that demonstrates that a panel cave extraction can be justified and the Reserve has been compiled based on this mining method. Metal price assumptions of $550 per ounce for gold and $1.40 per pound for copper have been used. This represents an increase in reserve estimate of 35Mt of ore for a contained 1.3 million ounces of gold and 110 kilo tonnes of copper relative to the previous estimate A full cut-off of $11/t was used to define the Ore Reserve plan footprint which is considered conservative relative to international standards. This covers all site costs including mining, processing & overheads after allowing for metal recovery and the deduction of transport, smelter, and refining and NSW royalty charges. A draw shut off $6/t was used to define the vertical draw limits within a 400m physical draw height limit. Established caving draw models have been used to estimate specific dilution impacts on a draw envelope by draw envelope approach. Infrastructure requirements are based on recent Australian and international caving projects. The estimate incorporates metallurgical recovery formulae derived from specific metallurgical test work at Cadia East and processing knowledge from treating similar Cadia Hill ores. Capital and operating costs are based on Newcrest’s direct experience at Ridgeway and detailed benchmarking. Operating costs used are well within industry practice. The Probable Reserve includes Indicated Mineral Resource only. A conceptual mine plan has also been developed using all the known Mineral Resources and a conversion program is underway to further increase the Ore Reserve. Surface drilling is continuing, evaluating western and eastern extensions of the high-grade core and surrounding lower grade mineralisation. Indications are that with additional drilling the underground reserve will expand. The Ore Reserve is within the existing mining lease containing the Cadia Hill and Ridgeway operating mines. Underground access has been permitted and commenced to advance investigation, feasibility studies and the project. The Ore Reserve for Cadia East Pit is based on the Cadia East Open Pit October 2005 resource model as described above. By definition, the Ore Reserve consists of Proved plus Probable Ore Reserves within the confines of the optimum pit. A further 5 Mt of material grading 0.88g/t Au and 0.27% Cu may eventually be included within the optimised pit reserves, but is still classified as an Inferred Resource. This material has been incorporated 5

into the base tonnages for optimisation and scheduling purposes, but excluded from the Ore Reserve statement in accordance with Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Newcrest has every expectation that planned drilling will upgrade this Inferred Resource. Metal prices used for the Ore Reserve estimation were $600 per ounce gold and $1.60 per pound copper . The profit algorithm used to estimate the in situ value of each block incorporates these prices, along with metallurgical recoveries, concentrate grades and takes into account smelter terms, payable metal and freight charges. This algorithm includes the latest ore processing data and assigns metallurgical performance on the basis of ore type. The Cadia East Pit deposit is a low grade uniformly mineralised orebody immediately to the south-east of the Cadia Hill mine. Mining will be by large scale, low cost mining methods consistent with current mining practices and experience on site. This approach matches the orebody geometries and rock mass characteristics. The optimum pit design is based on geotechnical modelling and practical mining considerations. This design was developed from Whittle Four-X optimisation shells generated at metal prices which provide a margin relative to forecast long term commodity prices. The modelling procedure used in converting the Mineral Resource to an Ore Reserve accounts for sub-grade material where it exists. The modifying factors used to convert the Mineral Resource estimate to the Ore Reserve estimate incorporate sub-grade and waste material as dilution. The dilution factor is based on the minimum selective mining unit as dictated by the proposed mining method. The optimum pit is designed to be mined to a depth some 500m below the valley floor level. Because of the massive, steep dipping configuration of the orebody, the overall pit design has been determined by geotechnical factors rather than orebody geometry. Overall pit slopes, as designed, are more conservative than those used for the adjacent Cadia Hill Gold Mine. A range of processing rates was assessed and the reserve estimate is based upon treating the Cadia East ore at a nominal rate of 14Mtpa. The estimate incorporates metallurgical recovery formulae derived from specific test work at Cadia East and processing knowledge from treating similar Cadia Hill ores. The metallurgical recovery varies with grade, but averages 79% for gold and 93% for copper. Sections of the orebody contain high concentrations of molybdenum and metallurgical test work indicates that production of a saleable molybdenum concentrate may be feasible. Work is progressing to incorporate molybdenum into the Ore Reserve. The average life of mine strip ratio is 3:1. Annual ore plus waste movements will be approximately 75Mtpa. Capital and operating costs are based on Newcrest’s direct experience at Cadia Hill. Detailed benchmarking and cost estimation were completed where Cadia Hill costs are not applicable. A sensitivity analysis has been performed using grade, recoveries and costs which have demonstrated the robustness of the project. The Ore Reserve is within the existing mining lease containing the Cadia Hill and Ridgeway operating mines. Waste dump consent conditions have been carefully incorporated into the design and tailing storage requirements taken into consideration.

TELFER Mineral Resources Gold and copper mineralisation at Telfer is hosted by reef, stockwork and shear zones within Proterozoic sediments. Mineralisation has been intersected in drill holes in Main Dome and West Dome as well as satellite deposits within the Telfer district. These deposits form the basis of the Open Pit, Underground, Satellite and Stockpile Mineral Resources at Telfer. The Open Pit Mineral Resource is based upon sample data from reverse circulation drilling (RC), surface and underground bulk sampling, development mapping and sampling and diamond drilling (in areas beyond the practical limitations of RC drilling methods). The data used in the Underground Mineral Resource is derived 6

from diamond drilling, underground bulk sampling and underground development mapping and sampling. Satellite Mineral Resources are based on surface RC and diamond drilling data. All RC and diamond core is logged and core is photographed. Typical sample length for resource definition RC and diamond samples is one metre down hole. Drillhole collars, hole paths and diameters were routinely surveyed. Density for each domain was determined using down hole logging techniques and validated using Marcey and air pycnometer techniques. Systematic quality control is applied to all data produced, from the point of collection, through to validation after which it is stored in a comprehensive relational database. All sampling protocols are derived from both ore heterogeneity and geostatistical studies. The grades of gold, copper, cyanide soluble copper, sulphur and other minor elements were analysed using either in-house or commercial assay laboratories. In-house personnel and consultants validated all data used in the Mineral Resource estimate. Extensive statistical and geostatistical analyses were undertaken to determine the suitability of the estimation techniques and to provide appropriate inputs to the interpretation processes. Internal and external review supported the interpretation of the mineralised domains used for the estimate of gold, copper, cyanide soluble copper and sulphur. The Mineral Resource contains updated interpreted domains and estimates for arsenic and cobalt, with the addition of nickel and lead estimates in the Telfer Deeps Resource. The resource estimation technique selected for generating the Mineral Resources was also supported by the reviews. Information and evaluations which influenced the generation of the 30 June 2006 Mineral Resource statement include: •

Ore material mined from the open pit, up until the last quarter of the FY0506, was restricted to mineralisation in areas adjacent to the previous mined oxide pit for Main Dome. The mineralised remnants were dominantly located within the weathered / transitional domains and are representative of the upper portions of the orebody. During the last quarter, mining sourced ore material from an internal pit cut-back which extracted ore from the deeper transitional and upper levels of the sulphide / fresh mineralisation.



Newcrest completed multiple bulk samples, drilling program evaluations and reconciliation of performance against the Ore Reserve and mill production. These were all subject to extensive internal and external audits during the past 12 months (refer to table of FY0506 Audits).



Bulk sample results continue to support the calibration of grades in both the Open Pit and Underground Mineral Resource estimates. The magnitude of the upgrade is variable and dependent upon the sample type, sample spacing, sample grade, and rock type.



A significant program of work was also completed in the last half of the FY0506 year to determine the mill feed grade. This program, termed the mill head feed sample (MHFS) program, was designed by external sampling experts and supported by multidisciplinary teams within Newcrest. A 417 thousand tonne parcel of ore material was mined and processed through the MHFS circuit from areas in the open pit representative of ore delivered to mill during FY0506. Results from the MHFS confirm the Mineral Resource, Ore Reserve and grade control reverse circulation (RC) drilling in two of the areas and returned a variance to the expected outcome in the third area. Subsequent investigation of the third area identified that high grade ore was blasted into open underground stopes during the blasting process. The loss of the high grade ore contributed to the inconclusive result returned from this area. Results of the program were subject to internal peer review and external audit which supported the findings of the program.



The MHFS program also identified that the RC grade control provided improved sample quality, with respect to blasthole sampling, as well as the ability to more accurately define ore material from waste, and drill within areas of old underground workings. As a result, the open pit operation modified the grade control procedures from blasthole sampling to RC sampling from November 2005. Since the last quarter of FY0506, all the open pit ore material has been defined using RC grade control. 7



Reconciliation of grade control data with the Feasibility Study resource estimate indicated an overestimation in the Feasibility Study estimate for the metal in the weathered / transitional domains mined to date. As a result, and in line with Newcrest internal audit recommendations, the low case calibrations defined during Feasibility Study were applied to the weathered / transitional domains of the estimate.



Further to this, reconciliation of 1.2 million tonnes of the sulphide resource has demonstrated close correlation between grade control and the Feasibility estimate. As a result, no change was made to the likely case calibrations applied to the sulphide resource.



Narrow vein reef estimates are calibrated in line with actual historic mill production over 5.5 years of processing reef ore during the previous underground operation.

The Telfer Mineral Resources have been the subject of a comprehensive internal and external audit process. Expert advice has been routinely obtained on the subjects of sampling theory, diamond drillhole assay calibration, application of geostatistical methods and mineralisation controls, resource estimation techniques, grade control and mining practices. The following table outlines the major internal and external audits undertaken during FY0506. Table of FY0506 Audits

DATE

AUDIT TYPE

TOPIC

July 2005

External

30 June 2005 Resource Audit

July 2005

Internal

Resource to Reserve, Grade Control, Mill Reconciliation

July 2005

External

Metallurgy, Mine to Mill Reconciliation

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Mineral

August 2005

External

Investigate sampling and sampling procedures (plant and head grade), design and establishment of Mill Head Feed Sampling protocols

December 2005

External

Resource to Reserve, Strategic Review, Mine to Mill Reconciliation

February-March 2006

External

FY0506 2nd Qtr Mine to Mill Reconciliation, Grade Control and Mining Processes

March 2006

Internal

Metal Quantity, Reserve Modifying Factors, Grade Control Factors and Practices, Management

March 2006

External

Blasting, dilution, ore loss in open pit operation

April 2006

External

Forecasting and Management Reporting, including Mine to Mill reconciliation

June – July 2006

Internal

4 week review of Resource, Grade Control and mining procedures, Mine to Mill Reconciliation

The Open Pit Mineral Resource is the remaining in-situ resource, having been depleted for mining to the end of the 2006 financial year. The open pit Mineral Resource is based on a revised resource estimate which has been adjusted to better reflect the results of mine to mill reconciliations over the preceding 19 months since the mill commissioning in November 2004. The revised estimate is based on a combination of the likely case estimate reported during the Feasibility Study (as per the 2005 Mineral Resource Statement) for the sulphide portion of the resource, and a low case estimate also defined during the Feasibility Study for the weathered / transitional portion of the resource. The Stockpile Mineral Resource includes all material stockpiled for planned treatment as of the end of the 2006 financial year. The stockpiles have been generated from ore material mined from the weathered / transitional portion of the resource, and as such have been adjusted to reflect changes made to the resource estimate in these domains. There was a net increase in the Telfer stockpiles during the FY0506 of 4 million tonnes for contained 8,000 ounces of gold and 2,000 tonnes of copper. This result is net of mining additions and material reclaimed for processing. The Open Pit and Stockpile Mineral Resource is reported within geological boundaries and constrained within a pit shell defined using a gold price of $800 per ounce and a copper price of $2.00 per pound determined based on the application of bulk open pit mining methods. The open pit mineralisation is typically constrained within sharp geological boundaries which are not affected by cut-off grade. Evaluation of the reported Mineral Resource is done using a profit algorithm approach. The profit algorithm is a calculation of revenue net of site processing costs and off-site costs including transport, smelter and refining. The profit calculation is based on a gold price of $600 per ounce and a copper price of $1.60 per pound.

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The Underground Mineral Resource for 2006 is comprised of the Sub-level Cave (SLC) Mineral Resource, and the Telfer Deeps Western Flank Mineral Resource. The SLC Mineral Resource is reported inside breakeven boundaries which reflect the application of bulk underground mining methods and is based on a gold price of $500 per ounce and a copper price of $1.20 per pound. The Telfer Deeps Western Flank Mineral Resource details are not changed. Ore Reserve The June 2006 ore reserve is based on a gold price of $600 per ounce and a copper price of $1.6 per pound. The Mineral Resource used to generate the reserve is that described above. The new resource has a lower calibration in the Main Dome supergene area than that used in previous Ore Reserve estimates. All other areas use the same calibration factors as used in previous Ore Reserve estimates. Arsenic and cobalt models have been added to the West Dome and Telfer Deeps models. The Open Pit Ore Reserve is based on use of conventional bulk mining methods to expand the Main Dome and West Dome pits. Processing rates have been assessed based on the latest experience from the concentrator which indicates specific ore types can be treated at a higher throughput rate than in the feasibility study. The Telfer Open Pit Ore Reserve is constrained within pit designs based on detailed geotechnical modelling and practical mining considerations and depleted at 30th June 2006. These designs were developed from pit optimisation shells generated at metal prices which provide a margin relative to forecast long term metal prices. Reserves are defined using cut-off grades assessed using a profit algorithm approach. The profit algorithm is a calculation of revenue less processing and realisation costs. Cost and recovery estimates have been made based on experience to date, feasibility study information and anticipated performance in the future. The combined impact of increased metal prices, modified Mineral Resource, depletion and modified cost and metallurgical models at Main Dome has been to decrease the Ore Reserve by1.6 million ounces of gold and 105 kilo tonnes of copper. The combined impact of increased metal prices, modified cost and metallurgical models at West Dome has been to increase the Ore Reserve by 0.82 million ounces of gold and 15 kilo tonnes of copper. Within the pit designs there is a small amount of additional mineralised material which is classified as Inferred Mineral Resource. This Inferred Mineral Resource will be tested by further drilling and some or all of this material may be converted to Proved or Probable Ore Reserve through this additional resource definition activity. A small proportion (approx 5 percent) of the open pit reserve falls within a pit increment which is dependent upon the inclusion of Inferred Resources to meet the economic criteria for production. Newcrest has every expectation that the further drilling that is planned will upgrade these Inferred Resources. Copper grades and in situ copper tonnes only apply to those ore tonnes that are treated by flotation methods through the concentrator (i.e. exclude dump leach). Gold grade and in situ ounces reflect the sum of both concentrator and dump leach ore. The Telfer Deeps Mineral Resource is amenable to a SLC mining method. The mine is in the process of ramping up to full production following commissioning of the hoisting system. SLC mining outlines for Telfer Deeps were determined based on breakeven boundaries and using the latest SLC recovery and dilution information calibrated to test work at the Newcrest Ridgeway operation. Practical mining considerations were considered in determining the outlines. The Telfer Deeps Ore Reserve was based on the Feasibility Study resource model with no additional positive or negative factoring of grade and assumes current reserve factors are correct. The calibrations contribute approximately 40% of the gold metal within the total Mineral Resource. A comprehensive review of development reconciliation with the resource model is underway. The breakeven boundaries reflect the application of bulk underground mining methods and are based on a gold price of $600 per ounce and a copper price of $1.60 per pound. Mining costs are commensurate with a mining rate of greater than four million tonnes per annum with underground crushing and haulage by shaft, and co-treatment of the underground ore with the Telfer Open Pit material. 10

The Telfer Deeps reserve has increased by 0.3 million ounces of gold primarily due to the increase in mining outlines associated with the higher commodity prices. The grade has reduced due to the application of the latest Ridgeway recovery curves and the inclusion of lower grade ore from the higher commodity price. Studies continue to evaluate mining strategies for the potential extensions to the Telfer Deeps mineralisation in the West and below the SLC. These studies are based on results from bulk sampling and drilling to the west and beneath the proposed SLC and on the new Western Flank Mineral Resource.

GOSOWONG PROVINCE Gosowong is located on the island of Halmahera located in North Maluku Province in the eastern part of the Republic of Indonesia. Gosowong is owned and operated by PT Nusa Halmahera Minerals, a joint venture between Newcrest Singapore Holdings Ltd (82.5%) and PT Aneka Tambang (17.5%). Tenure over all Gosowong deposits is covered by a 6th generation Contract of Work No.B.143/PRES/3/1997. Precious metal mineralization in the Gosowong Province is characterized as low sulphidation, epithermal in nature. The tenor of gold grade is very high and is associated with similar levels of silver. Gosowong Province ores mined to date have proven to be very clean without contamination issues and metallurgical recoveries greater than 95% have been demonstrated through conventional leaching methods. Tailings are subject to a detoxification process prior to storage in a conventional dam system. Waste rock contains some potentially acid forming material (PAF) which is identified and classified in the mining process before encapsulation in design specific cells located within conventional valley fill waste dumps. These dumps are progressively rehabilitated and revegetated as sections are completed. The resource definition process applied at Gosowong is based on systematic diamond drilling with some infill reverse circulation used when appropriate. It has been established that shoots drilled to a notional spacing of approximately 50 x 50 metres can generally be classified as Inferred Mineral Resource as defined by the JORC Code. Similarly drill spacing of 25 x 25 can normally support an Indicated classification. Due to the extremely high grades present at Gosowong resources are not normally classified in the Measured Resource category unless they have been drilled to 12.5 x 12.5 or grade controlled. Diamond core is logged and photographed prior to sampling. Sampling protocol is based on heterogeneity testing undertaken from time to time and is generally based on half core. Most core intercepts are HQ in size by design however a minor percentage of smaller NQ intercepts are present in the database due to drilling difficulties that can occur in the Gosowong environment. Core recovery is monitored carefully. Samples are assayed for gold and silver at the on site laboratory using fire assay (FA50) with AAS finish. Where fire assay indicated gold grades are greater than 80g/t, a gravimetric method has been applied. Selected samples are sent off site for analysis of minor elements and base metals by ICP scan. Each batch is submitted with blind standards, repeats and blanks. Results from these control samples are used to generate routine QA/QC reports which can be used to control the process and to demonstrate the veracity of the database at any time. This process is audited both internally and independently on a regular basis.

Toguraci Open Pit Mineral Resource The Toguraci deposit is located approximately 3km to the west of the Gosowong plant site. It comprises a number of shoots including Damar, Midas and Kayu Manis which all strike north/south and dip subvertically. Bod is an additional shoot that is located to the west of Damar. Bod strikes northeast and dips around 60 degrees to the southeast. Host rocks at Toguraci are a brittle package of basalts with diorite intrusives. Veins are highly visual and discrete in nature with sharp boundaries. They range in width from 1 to 5 metres and are able to be mined selectively with minimal dilution. Shoot grades are in the order of 30g/t with hangingwall and footwall stockwork veins variably present. 11

The Mineral Resource is based on a minimum of 25 x 25 metre diamond drilling. The Bod Vein has been drilled out to 12.5 x 12.5 metre centres using the RC rig that is used for pre-production grade control drilling at Toguraci. The estimates are based on a 2D (two dimensional) metal accumulation modelling method and ordinary kriging. Application of top cuts can be demonstrated to be not appropriate at Toguraci and therefore have not been applied. Exploitation of the Toguraci Open Pit was complete at 30 June 2006. The remaining resource associated with the Midas Shoot is based on a conventional 3D block model kriged with support from 12.5 x 12.5 metre spaced HQ diamond drilling. The Midas pit was exhausted during 2004/05 however the remaining resource may be amenable to underground extraction. This option will continue to be evaluated in the coming year for Midas and other residual Toguraci resources which remain following completion of the open pit mining. Figures in the Mineral Resource at Toguraci include all material above a 2g/t Au marginal break even cut-off grade and contained within the relevant pit shell and the surveyed end of June 2006 topography plus surveyed run of mine stockpiles. The Mineral Resource is spatially constrained by a notional US$487 pit shell (equivalent to A$650). Ore Reserve The Toguraci Open Pit was complete at 30 June 2006 and the remaining Ore Reserve was written back to Mineral Resource.

Kencana Underground Mineral Resources are located in three epithermal structures at Kencana and these structures are designated K1,KL,and K2. Mineral Resource The K1 structure strikes in a NW/SE direction and dips on average at 45 degrees to the NE. The K2 structure roughly parallels K1 and is located further south. KL appears to be a “link” structure which occurs between K1 and K2 and is less significant than either of the other two structures.. The resource estimates have been based on the definition of several mineralized domains, namely Main Zone (MZ), Sheared Zone (SZ), Hangingwall Stockworks (HWSW) and Footwall Stockworks (FWSW). The MZ contains the majority of high grade mineralization and is of variable thickness and grade. The MZ is characterized by massive to brecciated chalky white quartz-adularia-sulphide banded veining that is locally overprinted by dark green chlorite-sulphide banded veins and minor late stage black sulphide. SZ mineralization is characterized by moderate to intense shearing, breccia and puggy clay after adularia. This brecciated mineralization typically contains wallrock and MZ fragments and quartz content varies between 0 and 100% dependant upon the amount of brecciation. SZ mineralization typically forms at the top (hangingwall) of the MZ, but is also present at other locations within the package. Stockwork mineralization occurs in both the hangingwall and footwall of the MZ and is characterized by stockwork veining with minor breccia zones. The veining is typically crystalline quartz with minor quartz-adularia banding and occurs in significant volumes with grades typically

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