GreyRiverGoldDredge_Email 150709

GREY RIVER GOLD DREDGE | Invitation to Purchase

GREY RIVER GOLD DREDGE

Request for registration of interest in the purchase of the equipment and business of the Grey River Gold Dredge operation.

• The largest remaining alluvial bucket gold dredge in the world• Last gold dredge operating on the West Coast• 25 years operations on the Grey River• Production ~60,000oz of gold from the Grey River to date• Estimated 150,000oz gold with a recovery rate of 71% within

current license and consent• At today’s price, $1600NZD/oz, value $170,400,000NZD• Additional revenue potential from:

– Other minerals including garnet, ilmenite, monazite and zircon– Sale of 610 hectares of high quality dairy land– Ongoing income of estimated $2.35Mpa from operating a dairy unit– Sale of the dredge and chattels

INVITATION TO PURCHASE • GREY RIVER GOLD DREDGE 1

The business includes existing mining licenses and resource consents along the Grey River, proven reserves, intellectual property and operating expertise. Equipment includes the dredge itself, a gold extraction plant and a range of support plant and machinery sufficient for carrying out dredging operations.

We invite you to review the following information to learn more about the dredge and its potential to deliver high yields over the next 10 to 20 years or more.

We look forward to hearing from you to discuss your interest in purchasing the Grey River Gold Dredge.

Please contact us via email: [email protected]

INVITATION TO PURCHASE

The current owners of the Grey River Gold Dredge invite you to consider purchasing the equipment and business of the Grey River Gold Dredge.

Dredge operations on true right bank of Grey River.

INVITATION TO PURCHASE • GREY RIVER GOLD DREDGE2 Above: Grey River Dredge (2012).


THE PREDECESSOR TO THE GREY RIVER GOLD DREDGE WAS ORIGINALLY CONSTRUCTED FOR THE KANIERI GOLD DREDGING COMPANY LTD AND WORKED IN THE HOKITIKA AREA FROM 1938 TO 1953, RECOVERING 175,000OZ OF GOLD (VALUED AT $NZD262.5M AT TODAY’S GOLD PRICE).

In 1957, the dredge, named the Kanieri, was relocated to Taramakau River where it recovered 202,000oz (valued at $NZD303M at today’s gold price) before being laid up in 1978.

In the early 1980s the Kanieri was dismantled and the salvageable machinery used in the construction of the Grey River Gold Dredge, using a new design that better addressed the conditions in which the dredge was to work.

Birchfield Minerals Ltd successfully operated the dredge from 1992 to 2004 when it was mothballed.

In 2008 Development West Coast approved a $NZD2.2 million business loan to Birchfield Minerals Ltd.

This loan supported the upgrade of the dredge’s mechanical and electrical systems, and incorporated modern electronic technology, enabling dredging of the Grey River near Ngahere to recommence in 2009.

During the time Birchfield Minerals operated the dredge, it produced ~60,000oz of gold, (valued at $NZD96M at today’s gold price ($1600NZD/oz).

YOU COULD OWN A PIECE OF HISTORY

The last of more than 100 dredges once operating on the West Coast, the Grey River Gold Dredge is also the largest remaining alluvial bucket gold dredge in the world. Unique in many ways, this is a golden opportunity to own a piece of history.

HISTORY: A REWARDING PAST

The Kanieri Gold Dredge, constructed in the New Zealand Railway Workshops, Dunedin, and officially opened on 9th December, 1938.

SOURCE: OLDPHOTOSNZ.WORDPRESS.COM

INVITATION TO PURCHASE • GREY RIVER GOLD DREDGE4

RETURN ON INVESTMENTThis opportunity includes gold mining, dairy operations and the creation of valuable real estate.

GOLD MININGAlthough the area has been extensively mined in the past, the previous extraction methods have not allowed for the exploitation of deeper gold distributed through the Grey River bed and surrounding land.

Specially designed and constructed to reach this untouched resource, and updated with modern computer positioning technology, the Grey River Gold Dredge has the capacity to deliver up to 8800oz of gold per year over the next 10 to 20 years.

Based on estimates of recoverable gold reserves within the consented area*, this means potential revenue of as much as $154,950,400M (at today’s gold price, NZD), from gold processing operations alone over the first 11 years. With estimated costs of $30M over that time, the potential return on your investment is substantial.

OPPORTUNITY: A BRIGHT FUTURE

“We now have very valuable, flat, productive land where it once was scrub and rough ground, which would have been too costly/uneconomic for us to restore otherwise.”

– Craig Fayen (post dredge landowner)

Post dredge rehabilitated land, Blackball-Taylorville Road.


DAIRY OPERATIONS OR REAL ESTATE

Over and above the mining income, at the end of operations you will have up to 610 hectares of high quality pasture to undergo dairy operations or sell.

Post-dredged land is known to be ideal for dairy practice, especially when considering its high drainage capability during the high rainfall events frequently experienced on the West Coast. In addition, the dredging activity creates flood protection and the potential to establish permanent and ready to use irrigation ponds on the property, making this land very productive and attractive.

The land can be retained as an ongoing dairy business returning as much as $2.3Mpa (at today’s prices), or sold for capital return.

ADDITIONAL REVENUE STREAMS

Furthermore, additional revenues may be gained from sales of other minerals including garnet, ilmenite, monazite and zircon, and possibly from sale of the dredge and chattels, once mining operations cease.

READY TO GOThe Grey River Gold Dredge has been operating in this area for 13 years. It is currently on site, in care and maintenance, ready to be re-commissioned and to begin operations again.

All of the essential elements are in place:• The dredge itself and the gold

processing plant, and ancillary plant and equipment such as excavators and loaders, a bulldozer and grader, all in running order, are included in the package

• The current owner, the operator for over 10 years, has committed to continue running the operation for two years post-sale, and provide training and succession planning services

• A consent covering the full mining area, considered one of the richest sites in the Grey River, is in place

• A mining licence is in place

• Reserves of 150,000oz have been conservatively estimated from drill cores across the site*

• The venture has the support of local and regional authorities

• Labour is readily available due to recent coal mine closures

WHAT WILL IT TAKE?WE ARE SEEKING FULLY FUNDED FINANCIAL OFFERS TO TAKE FULL OWNERSHIP OF THE GREY RIVER DREDGE BUSINESS AND OPERATIONS.

ONCE YOU HAVE REVIEWED THE MATERIAL IN THIS INVITATION PLEASE CONTACT US TO DISCUSS YOUR INTEREST, FOR CLARIFICATION OF ANY DETAILS AND FOR PROVISION OF ANY FURTHER INFORMATION THAT YOU REQUIRE.

* Based on the analysis by Gold and Green Resources Limited principal, John Wood



ONGOING INCOME POTENTIAL• Gold

– Drilling investigations indicate a conservatively estimated 150,000 ounces of gold being accessible on the site

– Output rate (based on previous operations) estimated at 1.77oz gold per hour

– Dredge can operate up to 5000hrs per year (compliant with resource consent)

• Secondary minerals including garnet, ilmenite, monazite and zircon

• Dairy farm operating income (post-mining operations)

REVENUE TIMING• Consent and permit in place

– zero delay• Dependent on re-commissioning

requirements [~three months]

DEPENDENCIES• Gold price• Milk fat price• Land value

RISK

Unlike a start-up enterprise, risk in this operation is reduced as many uncertainties are mitigated through available information.

For example, production capability uncertainty is minimised, since the dredge has been in operation and producing to high levels for decades, in just this situation. The current owner, in contracting to continue managing operations, will provide the critical IP needed to operate the dredge productively.

Material uncertainty is mitigated through drilling surveys that provide estimates of available reserves.

Labour availability risk is lower than in other areas or other times due to the recent closure or downsizing of other similar operations in the region.

COSTS• Purchase price• Re-commissioning costs, estimated at

between $100,000 and $200,000• Operating costs, annual, estimated at

$NZD3M, including:– Labour– Maintenance– Land lease– Administration– Power– Monitoring– Meeting Council obligations and

compliance– General costs (note costs do

not take into account any compensation pay-outs or compensation agreements to affected parties)

• Land rehabilitation and reforming, to comply with consents, including contouring, addition of topsoil and sowing. Note that this cost is largely incurred through normal dredging operations and can be considered a sunk cost. As the average rate for standard dairy conversion is $15,000-$20,000NZD per hectare, dredging

activity carried out on the 150ha of unconverted land will offset the estimated cost of undertaking general dairy conversion (~$2,250,000NZD). The dairy component of this project will also involve the costs associated with developing and operating a dairy unit and will include the following factors:– Stock feed – Fertiliser– Insurance – Labour– Dairy shed/associated equipment

• Purchase of adjoining land (two parcels are currently for sale as going concerns). Current consent conditions may be reduced or eliminated with ownership of this land, and additional mining areas may be released. Also, combining the two units has the potential to create a more economic dairy operation.

EXIT• Sale of converted land that is farming-

ready and contiguous with existing dairy land (an estimated additional 330 hectares may result from dredging operations, although this final area total is dependent on a number of factors)

• Sale of dredge and chattels

BUSINESS INDICATORS

INVITATION TO PURCHASE • GREY RIVER GOLD DREDGE8 Above: Resting bucket line.


THE TECHNOLOGY USED IN THIS OPERATION IS WELL PROVEN, WITH FULL PRODUCTION HAVING BEEN CARRIED OUT ON THE GREY RIVER FOR DECADES.

Importantly the equipment is specially adapted and appropriate for the extraction requirement, being able to reach previously inaccessible gold deposits up to 30m below ground level.

Modern computer technology provides much improved positioning control.

DREDGEThe Grey River Gold dredge is a bucket line dredge with 104 in-line buckets.

Overall, the dredge is 170m long and 30m tall, and weighs 3500 tonnes. The dredge floats on a pontoon 80m long and 36m wide.

The dredge is of all-steel construction. It is moved around its 300-metre-wide pond by five computer-controlled positioning winches operated through DC electric motors.

EXTRACTION

The bucket-line is powered by two 1000hp DC motors. Each of the buckets has a capacity of 0.57 cubic metres or about a tonne of gravel, filling at the rate of 25 buckets per minute.

At full capacity, the dredge can dig up 60,000 cubic metres or 120,000 tonnes of rock and gravel per week from the bottom of the 20-metre-deep pond on which it floats.

The bucket line is currently capable of mining up to 30m deep.

Importantly this deep excavation depth enables the dredge to reach previously inaccessible gold deposits.

The dredge and its pond advance at the rate of about 3m/day. After reforming as level ground the tailings are bedded down under quality dairy pasturage.

PROCESSING

The dredge washes up to 600m3 or 1200 tonnes of gravel an hour through a 3.6m-diameter screening trommel lined with polyurethane. Any material bigger than 12mm is rejected as coarse tailings that are carried by a conveyor belt to a tailings stack behind the dredge, while the rest is washed through two circular jigs mounted on either side of the screening trommel.

The gold-bearing concentrate then passes into a hopper from where it is pumped to secondary and tertiary jigs, and finally to the concentrate bin.

As this is a gravity separation process no chemicals are used.

TECHNOLOGY

INVITATION TO PURCHASE • GREY RIVER GOLD DREDGE10 Above: Rehabilitation of Ford Creek, true right side of Grey River.


MINERALSThe Grey Valley has been a hugely gold-rich area with mining being a significant aspect of its history. The unique combination of the topography and geology has resulted in gold being abundant and easily accessible.

The current consented site (MP 41933) is considered one of the richest sites in the Grey River and is an ideal setting for a dredging operation.

Although the area has been extensively mined in the past, the previous extraction methods have not allowed for the exploitation of deeper gold washed located throughout the Grey River bed and surrounding land.

The total minerals permit area contains approximately 85 million cubic metres of gravel.

The consented area has been explored with drilling surveys, providing a conservative estimate of 150,000oz of gold being accessible on the site*. The average grade of the recoverable gold in the consented area has been estimated to be 129mg/m3 at an average depth of 26.1m (see appendices for report details).

As well as gold reserves a number of other minerals are to be found in the gravels including: ilmenite, monazite and zircon.

PEOPLEDelivering full productivity from a large and complex operation such as this requires skills and expertise of an experienced operator.

MANAGEMENT

The owner and operator for almost 23 years, Allan Birchfield, is willing to continue leading the operation, under contract, for at least two years from the date of sale. Importantly, he will pass on his knowledge and expertise to management and staff who will continue the operations after he retires.

STAFF

When previously operational, the dredge directly employed 17 or 18 local people as well as trades staff and subcontractors. Given the recent spate of downsizing and closures in related industries in the region, there is an abundance of suitable labour available to staff the dredge.

RESOURCES

* Based on the analysis by Gold and Green Resources Limited principal, John Wood

INVITATION TO PURCHASE • GREY RIVER GOLD DREDGE12 Above: Aerial photograph of the Grey Valley, West Coast.


POLITICAL

In recent times, with a rapid decrease in coal production, the region’s economy has suffered profoundly. This has resulted in gold mining projects being encouraged throughout the region in order to stimulate economic growth in local communities and businesses. This particular venture will be looked on favourably by local and regional authorities as an opportunity to provide jobs.

This sales process is being directly supported by West Coast Regional Council, through its wholly owned subsidiary, VCS Environmental Ltd.

A good relationship has been maintained with local authorities throughout the consenting process outlined below.

MINING PERMIT

The current mining permit (MP41933) for this site is held by Birchfield Minerals Ltd. It covers a 713ha area stretching along 6km of riverbed (See Appendices). The permit applies to multiple commodities including metals, non–metals and

industrial rock/building stone. A range of minerals is covered by the permit including:• Gold• Garnet• Ilmenite• Monazite• Zircon

The permit was granted on 08/08/2006 and has duration of 20 years, expiring on 08/08/2026, with the potential to be extended if needed.

Due to variations in grade and depth more than one extraction method may be required for optimal mineral recovery. Accordingly the permit takes this possibility into account, allowing for dredging and land based mining operations.

As noted above, two adjoining parcels of land within the mining permit are currently for sale. While no drilling survey of these areas has been carried out, investigation may reveal additional reserves covered by the existing consents.

CONSENTS

Importantly for an operation such as this, which causes considerable environmental change, all required consents are in place.

The resource consent was completed by VCS Environmental, which incorporated the work of numerous experts to ensure the robustness of the conditions and to gain agreement from affected parties and local authorities.

The consented area consists of a section of river bed and pockets of adjoining land (see Appendices).

Most opposition submissions related to noise and amenity issues, and these concerns are addressed through the consent conditions, which are reasonable. In some cases the impact may be ameliorated and some conditions relaxed with agreement from affected parties.

Also, as two adjoining parcels of land covered by the mining permit are currently available for sale, it is possible that existing consent conditions may be reduced or eliminated with ownership of this land.

REPORTS

The following reports were carried out in order to achieve a successful resource consent application. Copies of these reports are available on request.• Extension to Mining Permit 41933

Grey River: Birchfield Minerals Ltd by Gold and Green Resources Limited

• Blackball Creek Aquatic Macro invertebrate Results by Richard Montgomerie (Freshwater Solutions)

• Acoustics Assessment by Aaron Staples (Marshall Day)

• River Engineering Report by Neville Higgs (Higgs Design Ltd)

• Grey River Gold Dredge: Landscape Report by Chris Glasson (Chris Glasson Landscape Architects Ltd)

POLITICAL/REGULATORY



APPENDICESAPPENDIX 1 | Package Summary

APPENDIX 2 | Production/Revenue Estimates

APPENDIX 3 | Equipment and Chattels List

APPENDIX 4 | Area Covered by Mining Permit MP41933

APPENDIX 5 | Adjoining Land for Sale (1)

APPENDIX 6 | Adjoining Land for Sale (2)

APPENDIX 7 | Map Showing Location of Properties Currently For Sale in the Area

APPENDIX 8 | Area Covered by Resource Consent

APPENDIX 9 | Dredge Drilling Map

APPENDIX 10 | Extension to Mining Permit 41933 Grey River: Birchfield Minerals Ltd

INVITATION TO PURCHASE • GREY RIVER GOLD DREDGE16 Above: Dredge operations on true right bank of Grey River.


The following items will be included in the sales and purchase agreement:• Services of existing operations manager (2 year employment contract)

(salary not included in price)• Dredge• Gold processing lab + equipment• All associated equipment and machinery (refer to Equipment and Chattels list following)• Rehabilitated land (106 ha), valued at $2million NZD• Mining permit #41933• All required resource consents• Cost of adjoining land available for purchase for Dairy Conversion (610ha)

~$8.8 million NZD

APPENDIX 1 | PACKAGE SUMMARY

INVITATION TO PURCHASE • GREY RIVER GOLD DREDGE18 Above: Gold from Grey Valley.

SOURCE: ALLAN BIRCHFIELD

INVITATION TO PURCHASE • GREY RIVER GOLD DREDGE 19* Based on the analysis by Gold and Green Resources Limited principal, John Wood

APPENDIX 2 | PRODUCTION/REVENUE ESTIMATES

PRODUCTION ESTIMATE

The average grade of the recoverable gold in the consented area has been estimated to be 129 mg/m3 at an average depth of 26.1m

The dredge is able to process 600m3 of gravel per hour.

Production Calculation: • 600m3 x 129mg of gold

= 77400mg (77.4g)• 77.4g /31.1035

= 2.48oz of gold per hour• 2.48oz x 0.71 (recovery rate) = 1.77oz

Hours worked will depend on the requirements of the purchaser. The following figures are based on past annual gross incomes:• 3000hrs per year @ 1.77oz/hr

= 5310oz annual production At $1600NZD/oz, annual gross

revenue = $8,496,000NZD• 5000 hrs per year @1.77oz/hr

= 8850oz annual production At x$1600NZD/oz, annual gross

revenue = 14,160,000NZD

ESTIMATED REVENUE FROM GOLD RESOURCE

Drilling surveys have produced a conservative estimate* of 150,000 ounces of recoverable gold within the available mining area.

Total worth of gold in consented area = $240,000,000NZD

The following calculations have factored in the recovery rate of 71% resulting in an hourly gold recovery of 1.77oz.• Gross revenue at 5000 hr/y =

14,160,000 x 10 years (consent period) = 141,600,000NZD

• 10 years of costs ~$30,000,000NZD• Net revenue $141,600,000NZD -

$30,000,000NZD = $111,600,000NZD*

DAIRY OPERATIONS REVENUE ESTIMATES

High quality converted land can be created as a by-product of the mining operation. The neighbouring areas are favourable for dairy farming, with high demand for well-draining land. This opportunity has significant revenue potential, with a suitable outcome.The units can be operated for a long term stable source of income or sold immediately for significant return.The following annual income estimate is based on the 3rd year of a standard 5 year business plan once the farming units have been fully converted and developed.

Total area of properties 610

No. of cows per hectare 1.8 (x610ha)= 1098

Annual milk solids per cow 420

Current pay out NZD $5.10

Total Gross income ~ $2,350,000NZD pa

It is important to acknowledge that a farming unit of this scale and intensity would require a minimum of two seasons to establish desired production and that the pay-out used is lower than average.


APPENDIX 3 | EQUIPMENT AND CHATTELS LIST

• Mining dredge • Associated mining equipment including:

– Workshop equipment and stores– Gold processing lab + equipment– 3# Excavators – 1992 Hitachi Ex 1100 (110T)– 2014 Komatsu PC 450 (45T)– 2011 Komatsu PC 300 (30T)– 1992 Bulldozer Dresser TD40 (65T)– 1985 Caterpillar 988 loader– 2000 Kubota wheeled loader (3T)– Truck Mounted Drilling rig – GMC 1970 20T– Grader caterpillar 12 (10T)

• Vehicles– 2No Nissan Navara 2010– 3No Toyota Hilux 2010 (approx)– 2No Ford Courier 2000 & Ranger 2010

• Rehabilitated land (106 ha) (valued at $2million NZD)


APPENDIX 4 | AREA COVERED BY MINING PERMIT MP41933


26/06/15 1:53 pmGreg Daly Real Estate Limited - Find Real Estate in Greymouth | Paroa | Hokitika | Reefton | Ikamatua

Page 1 of 1http://www.gregdalyrealestate.co.nz/index.cfm?pagecall=printBrochure&propertyid=2841056&propertyStatus=active

5 2 4

109 Camptown Road NGAHERE For Sale

600 Cow Grey Valley Farm Property ID 2841056

Price - $6,850,000.00

Land Size: 354.4666 hectares

Inspection TimesBy Appointment Only Agent DetailsMr Greg Daly 027 4783594 [email protected]

Located 20 minutes North of Greymouth in the desired GreyValley this developing unit still has plenty to give.Production to 210,000kgs milk solids. Approx milkingplatform 320 hectares and 25 hectares LINZ lease forsupport.Substantial 5 bedroom brick homestead and two 3 bedroomcottages. 50 aside herringbone cow shed with 600 capacitycircular yard.480 cows to be wintered on. 20 hectares green feed oatsand 450 baleage made on the farm. On-going re-grassing program with 20 hectares

This information has been provided to us by third parties and we do not accept any responsibility for its accuracy. You should make your ownenquiries and check the information so as to determine whether or not this information is in fact accurate. You must make your own assessmentand obtain professional advice if necessary.

APPENDIX 5 | ADJOINING LAND FOR SALE (1)

Opportunities currently exist to purchase land adjoining the mining site in order to expand the land available for mining activity and dairy conversion. The following properties are currently for sale and there is potential for future property purchases.


26/06/15 1:54 pmGreg Daly Real Estate Limited - Find Real Estate in Greymouth | Paroa | Hokitika | Reefton | Ikamatua

Page 1 of 1http://www.gregdalyrealestate.co.nz/index.cfm?pagecall=printBrochure&propertyid=2484931&propertyStatus=active

1753 State Highway 7, Arnold Valley NGAHERE For Sale

Grazing/Run-off/Conversion $2M Property ID 2484931

Price - $2,000,000.00

Land Size: 207.0833 hectares

Inspection TimesPlease Contact Office

Agent DetailsMr Greg Daly 027 4783594 [email protected]

Approx effective area 150 hectares. All flat fertile river silt.Currently utilised as a dairy run-off with 600 cows, 150 R1heifers and 25 empty cows wintered on. Approx 45ha wintercrop grown annually, usually kale and oats. Have grownturnips, swedes, rape. Approx 200,000kgs dry matter pitsilage and 270 bales baleage made on. Majority propertyre-grassed last seven years.Three bedroom wooden homewith large wooden deck area of approx 50m2. Goodcomplement farm buildings including workshop wi

This information has been provided to us by third parties and we do not accept any responsibility for its accuracy. You should make your ownenquiries and check the information so as to determine whether or not this information is in fact accurate. You must make your own assessmentand obtain professional advice if necessary.

APPENDIX 6 | ADJOINING LAND FOR SALE (2)


APPENDIX 7 MAP SHOWING LOCATION OF PROPERTIES CURRENTLY FOR SALE IN THE AREA


APPENDIX 8 AREA COVERED BY RESOURCE CONSENT


APPENDIX 9 DREDGE DRILLING MAP


APPENDIX 10 | EXTENSION TO MINING PERMIT 41933 GREY RIVER: BIRCHFIELD MINERALS LTD


APPENDIX 10 | CONTINUED


APPENDIX 10 | CONTINUED


CONTACT US

VCS Environmental Jessica Pullen

021 674 504

03 768 9674

[email protected]

Randal Beal

021 702 591

[email protected]

Birchfield Minerals Ltd Allan Birchfield

021 340 750

[email protected]

Greg Daly Real Estate Greg Daly

0274 783 594

[email protected]

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GreyRiverGoldDredge_Email 150709