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									(")*+,' *#"-./0                                                                                    !"#$% &' CHARLES AMERY


The historically rich eastern Victorian gold fields are being reborn as the Morning Star mine
is just months away from producing gold for the first time in 45 years.

                              ORNING STAR GOLD               Morning Star has a sole focus and    same mine with a gold price at $900
                              NL, the Australian         one with an undeniably top-drawer        plus and it all has to do with what
                              Securities Exchange-       gold production pedigree – the           company managing director Nick
                              listed gold explorer and   historically high-grade targets in the   Garling says is “a very important
               mine developer, which takes its name      rich eastern Victorian gold fields at     historical anomaly” and one shaped
               from the mine, expects production         Woods Point.                             by tragedy.
               in late September from the 8-10,000           Its 100%-owned Woods Point gold          That anomaly is called the Gap
               tonne pilot mining program tagged         project, adjacent to the namesake        Zone and the current focus within the
               the Maxwell Project.                      historic gold mining town, is an area    re-established Morning Star mine.
                   Together with its maiden JORC         which has produced more than             Other targets have been identified on
               resource statement in July, the           5 million ounces of gold since the       the company’s expanded tenements in
               financial year start is looking strong     1890s at an average grade of more        the Woods Point dyke swarm where
               and confident for the Sydney-based         than 27 grams per tonne.                 there has been historical production
               junior.                                       Morning Star Gold has tenements      of around 2Moz from mostly shallow
                   The company will be the first to       covering 220 square kilometres           lodes.
               extract ore and produce gold from         with Woods Point as its operational          While many companies may be
               the Morning Star mine since 1963          hub. Woods Point is central to the       looking at old mines in their quest
               after production ceased following the     Walhalla-Jamieson synclinorium,          for resource riches, the Gap Zone is
               mine’s prodigious 25-year operation       a significant swarm of hundreds of        most definitely different and a story
               by Gold Mines of Australia (WMC)          diorite dykes dotted over 130km          in itself.
               between 1934 and 1959 with Lindsay        of northwest trending faults from            It is an underground area of the
               Clark at the helm.                        Walhalla in the southeast to Jamieson    Morning Star mine between levels
                   Everything is coming together for     at the northern tip.                     seven and 15 that was only very
               Morning Star, which took a new                WMC pulled out of the Morning        partially explored and from which
               name in 2005 (formerly Mt Conqueror       Star mine in 1959 citing low gold        there was no production despite being
               Minerals, a New South Wales-focused       prices and high power costs. In this     in a mine which yielded 883,000oz of
               base metals explorer). In 1993 current    period it shut down all of its gold      gold at more than 26.5gpt.
               chairman Max Garling changed              mines in the eastern states to chase         “There was loads of production
               the company’s focus with the addition     the nickel boom in the west. The         from surface down to seven level [250
               of the Morning Star mine as its key       Morning Star mine had about three        metres deep] and plenty between level
               asset.                                    more years of life operated by local     15 and level 21. The reason for no
                   Cashflow from the Maxwell              diehards under the banner of Morning     production right smack in the middle
               Project, plus a large options expiry      Star Mines NL.                           of the mine is that in January 1939
               at the end of the year, will make the         The gold price was then $35 an       the Black Friday bush fires devastated
               company cash positive, enabling it to     ounce, but now Morning Star Gold         the whole of eastern Victoria,” Nick
               push ahead with “some serious mine        is looking to ultimately extract tens    Garling told RESOURCESTOCKS.
               development and production” in 2009.      of millions of tonnes of ore from the        “At that time Woods Point had
                                                                                                  about 1100 residents. It was a disaster.
                                                                                                  Seventeen people died locally and the
 “This is the first ore extraction and gold                                                        town, mine and all infrastructures
                                                                                                  were burnt to the ground.
 production in this mine since 1963.”                                                                 “Leading up to that period,
                                                                                                  from 1934 to 1939, Western Mining
  !"#$ %&'("!%                                                                                    produced nearly 35,000 ounces at
  )+,+1.,1 $.#0(2"#                                                                               more than an ounce per tonne in
  )"#,.,1 %2+# 1"/$                                                                               an area immediately above the Gap

122                 !"##$ %&'()*+,- ./*/-(0 1 2+3)-(&4 +5 !"#$%!&"#'$&(# *6768/,(                     !"#"$% &''( RESOURCESTOCKS
    The outbreak of World War II           the tonne, which will provide a nice
followed soon after Black Friday and       profit.
with a shortage of men and                     “We’ve proved there is high-grade
infrastructure, WMC assigned a shaft       gold in the Gap Zone.
sinking crew to access high-grade              “I would be very disappointed if
targets beneath level 15.                  we are not pouring gold by quarter
    Gold had been produced in the          four. We can process 2000 tonnes of
1940s and 1950s from the lower levels      ore a week so if we get out the 8000 to
of the mine beneath the Gap Zone,          10,000 tonnes it is a maximum five-
including the prodigious Achilles and      week production process.
Exeter floors.                                  “The biggest restricting factor is
    The upper levels were barely           how much we can cart to the surface,
touched until just before the mine’s       which will be about 80 tonnes a day.”
closure, where a lack of planning              Morning Star Gold owns several
and exploration success by those           surface and underground drills in
following WMC conspired to finally          its own right and has its own work
shut the mine down in 1963.                force in place and a priority focus to
    From the Morning Star investment       continue proving up some ounces in
perspective there is a vertical shaft      its regional tenements.
running through the entire mine,               “We have a large option expiry at
including eight levels (the Gap Zone)      end of year, which will raise about $17
where there has been little exploration.   million if all exercised and that, along
    Only five historical drillholes         with the JORC resource coming out
exist in a massive area of host diorite    and the cashflow from the Maxwell
dyke rocks, estimated to be at least       pilot mining project, will mean we
60 million tonnes.                         start next year with $17-18 million in
    “The fires and the war conspired        the bank,” Garling said.
against that part of the mine being            “This will pay for a decline shaft
developed,” Garling said.                  to get some serious mining happening
    “After GMA/WMC exited the              next year which will cost about
mine, the new owners brought in a          $9-10 million to go down to 300 to 350
senior geologist who, in his report,       metres. It would also fund a gravity
pointed to areas of the mine that          plant underground at Morning Star.
should be looked at.                           “The planned decline takes us            Drilling at      MORNING STAR
    “We are really following his plans     around the edge of the Gap Zone via          Morning Star’s   GOLD
which were that the Gap Zone should        some high-grade extension prospects          Victorian
be investigated.”                          in areas sampled over 2007 including         tenements
                                                                                                         AT A GLANCE
    Morning Star Gold has now              Burns, Campbells and Whitelaws
refurbished and dewatered the mine to      Floors [4-7 levels]. It would also
beneath level 10, about a third of the     enable an exploration drive to our
way into the Gap Zone and conducted        Waverly deposit nearby.”
drilling where it got significant hits of       The Waverly dyke on the expanded
reef gold, which will be revealed in the   Morning Star Gold tenements is 900m
announcement of a JORC statement.          from the Morning Star mine with
    It was when Morning Star Gold          narrow outcrops over a 6km strike and
conducted underground drilling that        likely to be at least a kilometre deep.
the company discovered new reefs               “We have a full-time drill crew
including the Maxwell reef very close      there and are currently drilling our
to the vertical main shaft where there     fifth diamond drillhole,” Garling                              HEAD OFFICE
was access to cart ore out.                continued.                                                    )*+*, -
    The Maxwell pilot mining project           “The Waverly originally yielded                           &' )./012 $03**0
is now the one which will provide          50,000 ounces of gold at 1 ounce a                            $456*4 7$8 &'''
                                                                                                         9:; <=> & ?&@& A=??
the first production in 45 years from       tonne in very shallow workings so it
                                                                                                         BCD; <=> & ?&@& AE?E
the mine and the first cashflow for          is very exciting. It hasn’t been mined                        FGCH,; H6/.IG.36H6J20C3J.,5KL.GKC1
the company looking at taking up to        since 1905.”                                                  8*M; NNNKG.36H6J20C3J.,5KL.GKC1
10,000t from the reef.                         The top 20 shareholders of Morning
    “This is the first ore extraction and   Star Gold control about 65% of the                            DIRECTORS
gold production in this mine since         company and have been the source of                           OCD #C3,H6JP 7HL:.,C2 #C3,H6J
1963,” Garling added.                      most funding in the last five to six years,                    OC,L.,G QH35P R*// 8H,,HCG2
    “We’ve had some very high hits on      which has seen it spend $11 million on                        S3 9*0*3 RCLT2.6
Maxwell reef including a couple more       the Woods Point gold project.
than 500 grams to the tonne over               Money, it would seem, well spent                          MARKET CAPITALISATION
                                                                                                         U&( GH,,H.6 VC0 W3*22 0HG*X
20 centimetres, so if we included all      as the company moves into a positive
those we would be talking 40 grams         cashflow position and the money for                            MAJOR SHAREHOLDERS
to the tonne, but we are conservatively    a serious tilt at the rich veins that lie                     7HL:.,C2 #C3,H6J &>Y
confident the head grade will be            in the Gap Zone at Morning Star and                           ZH5J*+H*N 7.GH6**2 -K@Y
12 to 14 grams to the tonne and know       elsewhere in the historic Woods Point                         [C3C65H \6+*20G*602 -K>Y
costs are fixed at about 8 grams to         mining area.                                                  ]H0HL.3W 7.GH6**2 AK(Y

!"#"$% &''( RESOURCESTOCKS                           !"##$ %&'()*+,- ./*/-(0 1 2+3)-(&4 +5 !"#$%!&"#'$&(# *6768/,(                       123

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