Gold
Established 1835
A supplement to Mining Journal
GOLD EXPLORATION
G
The search for gold Exploration for the precious-metal accounts for almost half of the total non-ferrous metals expenditure GOLD PROJECTS (sorted by contained gold in resource) Name e
Countr y
e ast
2
Target North
3
Oribi
4
Sukhoy Log
5 6
US South Africa South Africa
Status
Type
eas
OP
ty
Control
Ore Grade Contained resource (g/t) gold (t) (Mt)
Anglo American, 10,777 North Dynasty
0.31
3,337
Prefeasibility
UG
Harmony
310
6.74
,091
Conceptual
UG
Harmony
300
6.69
,006
Russia
Feasibility
OP
State of Russia
686
2.80
1,921
Sun South
South Africa
Conceptual
UG
Harmony
250
6.73
1,683
KSM
Canada
Prefeasibility
OP
Seabridge
,894
0.53
1,535
e o q
a stan
ty
OP
Antofagasta, Barrick, State
4,887
0.28
1,368
8
Donlin Creek
US
Feasibility
OP
Barrick, NovaGold
566
2.32
1,315
9
Mitchell
Canada
Prefeasibility
OP
Seabridge
,279
0.56
1,286
10
Central Ra Rand
out Africa
Conceptual
CentralRandgold
127
8.29
1,054
e
e
es t
eas
onceptua
12
Cerro Ca C a s a le
Chile
Prefeasibility
OP
13
Snowfield
Canada
Conceptual
OP
14
Salobo
ra z
eas
ty
Las Cristinas
enezue a
eas
16
Hinoba-an
17
Anglo American, North Dynasty arr c , Kinross Gold
,
.
1,874
0.51
956
Silver Standard
1,811
0.51
923
OP
ae
1,713
0.52
891
ty
OP
Cr ystallex
859
0.98
841
Philippines
Feasibility
OP
ENRC plc, Metorex
326
2.50
814
Caspiche
Chile
Conceptual
Exeter Resource
1,473
0.51
756
18
Detour Lake
Canada
Closed
OP
PDX Resources
597
1.17
698
19
Kibali
DRC
Feasibility
OP,, OP UG
Anglogold, Randgold, State
183
3.36
615
20
Metates
Mexico
Prefeasibility
UG
Chesapeake
1,071
0.57
611
21
Cadia East
Australia
Feasibility
OP,, OP UG
Newcrest
830
0.67
569
LOBAL expenditure on the search for non-ferrous metals rose for six consecutive years to reach some US$13 billion in 2008, according to Metals Economics Group (MEG). The financial crisis saw last year’ year’ss total expenditure retreat to under US$8 billion. However, the share of this amount spent on gold exploration increased to 48% in 2009 from a low of 40% in 2008 (having fallen from the proportional high of 50% in 2004); see graph. s no note te n t e artc e op oppo poss te te,, t e se sear arcc or go s g o a , w t t e epos t s e ng n g more w e y str ute t roug geo o g c a t me, an present n more geological environments, than the economic concentrations of any other metal. Yet spending on this search for gold represents a very real risk to investors, and and the risk-reward balance varies from country to country (and from region to region within individual countries). As a result, the exploration picture is decidedly mixed – as we examine in articles on each of the s ix continents, startng st artng on p . esee artc es su es summ mmar ar se t e mo most st significant recent gold-exploration announcements.) Apart from the variable prospectivity of the geology, politics play an important part in the destination of exploration dollars. There is also no doubt that the role of the State is increasing. As noted by David Humphreys in an article in this week’s Mining Journal there is growing government participation in the revenues and running of the mining sector. In some countries, such as India, Chile, South Africa, Zambia and Ghana, Dr Humphreys notes that this has mann es ma este te tse as ncre ncrease asess n m n ng ta taxe xess or roy oyaa t es es.. se sew w er ere, e, as n t e em emoc ocra ratt c ep epuu c of the Congo, Guinea, Sierra Leone and Madagascar, it has taken the form of a review by the state of previously-awarded previously-a warded mining licences. In still other cases, for example, Bolivia, Venezuela, Ecuador, Zimbabwe and Mongolia, it has expressed itself through measures to have the s tate, or nationals, take a larger stake in mining c ompanies operating within their borders. Despite this trend, overall exploration activity (as meas me asur uree y n ts pe ne ctv ty n ex ex;; , increased in May and June from a recent low in April. (PAI (P AI measures the level and direction of overall activity in the supply pipeline, incorporating significant drill results, initial resource announcements, project development milestones, and significant financings into a single comparable index.) This heightened activity was led by a s harp rise in the number of gold financings and the announcement of significant gold drilling results. In contrast, weaker weaker base-metals prices in recent months have kept
Source: Raw Materials Group, Stockholm, 2010
Published in September 2010 by: Aspermont UK Albert House, 1 Singer Street London EC2A 4BQ el: +4 +444 0)2 0)200 72 7211 0 0 Fax: +44 (0)20 7216 6050 editoria oriall min mining ing-jou -journal rnal.com .com E-mail: edit Website: www.mining-journal.com Supplement editors: hris Hinde, Katherine Welch Design and production: Tim Peters, Woody Phillips
Printed by Stephens & George Merthyr Tydfil, UK © Aspermont UK 2010
2
CONTENTS
Search for gold Deposits and methodology Exploration: Australasia Europe North America South America Africa Asia Focus: North-east Africa Russia
Mining Journal special publication – Gold exploration
2 3 6 8 10 13 16 21 25 27
Profiles: Archipelago Continental Gold Esperanza Gold Gammon Gold Kefi Mineral Mineralss Kingsrose Kopylovskoye Minera IRL Miranda Gold Pelangio San Gold
22 30 28 18 28 28 26 28 24 30 30
over:
Underworld Resources’ White Gold property in the Yukon Yuk on Territory Territory of northern Canada, with a selection f gold exploration images nsett rom ot er com nse companes panes
September 2010
GOLD EXPLORATION
$15
Non-ferrous exploration total
Gold’s share of total exploration 70%
) n b
$ S U ( l a t o t n o i t a r o l p x e s u o r r e f n o n e d i w d l r o W
60% $10 50%
$5 40%
) l a t o t e d i w d l r o w f o % ( n o i t a r o l p x e d l o G
Deposits and methodology BY RICHARD SILLITOE N N
30%
$0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005 2006 2007 2007 2008 2009 2009
The graph shows the aggregate annual nonferrous exploration budget total by the companies covered in Metals Economics Group’s (MEG) annual Corporate Exploration Strategies study and the share allocated to gold in each year. The study includes the budgets of companies spending at least US$100,000 on exploration in a given year (generally about 1,600-2,000 companies annually), which MEG estimates covers about 95% of commercially-oriented nonferrous exploration spending each year. e u get gures exc u e exp orat on or ron ore, coa coa , bauxite, uranium, oil/gas, and some industrial minerals Source: Metals Economics Group
base-metals activity relatively flat. MEG reports that the number of significant drilling results (in total) reported in the May to June period was up 26% from the previous two months, and nearly double that of a year ago. Gold results continue to far outpace base-metals announcements, as has been the case so far in 2010. rep epor orts ts t at t e me merr ca cass or ortt an ou outt remain the dominant regions for overall drilling activity, while significant results from Africa increased noticeably during May and June. MEG also notes that initial resource announcements (for both gold and base metals) continue to lag, still showing the effects of decreased drilling activity through early and mid-2009.The value of initial resources announced fell significantly as many of the deals were for smaller projects or new z ones/satellite deposits at existing projects. or t e secon consecut ve mont y per o , t e total amount raised in significant financings by junior and intermediate c ompanies increased, remaining evenly split between gold and base metals. Despite weakening metals prices, interest in the equity markets continued to show signs of strength, according to MEG, as the proportion of debt financings more than halved compared with the previous two months, giving up share to equity placements and IPOs. The average amount raised per gold financing rose slightly over the previous two months. e targets or or muc o t s un ng e ort are highlighted in the table opposite from Stockholmbased Raw Materials Group.
eptember 2010
G
OLD epo eposs ts are arg argua ua y mor moree widely distributed through geological time, and present in more geological environments, than the economic concentrations of any other metal. Hence, gold occurs in both a majority of countries worldwide and a spectrum of deposit types. Nevertheless, current production is dominated by mines in just four countries: China, Australia, the US ma n y eva eva a an out r ca . nese pro ucton exceeded 300t for the first time in 2009, while production ranged from 210t to 227t in the other three countries, each down from the amounts produced in 2008. Russia, Peru, Indonesia and Canada form the next tier of producers, with 95-185t in 2009; and Russian and Indonesian output levels have risen markedly.
TYPES AND DISTRIBUTION Gold deposit formation was maximised during two ma n pe perr o s o art st stor oryy, na namey mey t e ate ate Archaean (2,650-2,550 million years) and MesozoicCainozoic (200 million years to present). Archaean gold metallogeny is dominated by the palaeo-placer deposits of the Witwatersrand basin in South Africa, and and mesothermal lodes, which are the products of deeply-derived metamorphic or magmatic fluids that flowed along major crustal structures. In contrast, most of the Mesozoic and Cainozoic
Aerial ew o arrick’s ascuaama on the Andean idge
epos ep os ts we were re ge gene nera rate te at s a ow ower er cru crust staa ev evee s, n some cases through to the Earth’s surface, and were cent ce ntre re up upon on,, an c os osee y re re at atee to to,, vocanc an subvolcanic activity, typically in magmatic arcs. In order of present-day global economic importance, the principal deposit types are orogenic, porphyry, palaeo-placer, sediment hosted (Carlin type), high-sulphidation (HS) epithermal, intermediate- and low-sulphidation (IS and LS) epithermal, a variety of other intrusion-related types (pluton related, skarn and iron oxide-copper-gold deposits) and volcanogenc ma massve ssve sup es orm or me at or orm mer black-smoker sites on the seafloor. Some porphyry copper deposits, the main source of the world’s copper, also contain large amounts of co- or by-product gold, and a few of them (in Chile, Colombia and Turkey Turkey for example) even constitute gold-only deposits. Notwithstanding the broad geographical spread of gold deposits, there is a distinct tendency for them to
Barrick’s Pascua-Lama project in Chile-Argentina
Mining Journal special publication – Gold exploration
3
GOLD EXPLORATION e g y co conc ncen entr trat atee n reat vey re rest strr ct ctee re regg on ons, s, where the gold is commonly hosted by different deposit types formed during several restricted epochs. Classic examples include the Archaean Superior and Eastern Goldfields provinces of Ontario-Quebec and Western Western Australia, and the Cainozoic Great Basin of Nevada and Andes of nor thern Colombia, northern Peru and northern Chile. This preferential endowment suggests that the gold may be inherited from pre-existing, perhaps ancient, go concentrat ons eep w t n t e t osp ere. nter nt eres estt ng y, som somee g o a p ate rec recon onstr struc uctt on onss extend the gold-endowed Archaean lithosphere of the Superior province westwards beneath the Cainozoic Great Basin of Nevada.
According to Metals Economics Group (MEG), the search for gold accounted for 48% of global non-ferrous exploration expenditure of US$7.7 billion in 2009, with the greatest amount being devoted to out mer c a, a, arge y n t e n ean or era. There, as throughout the circum-Pacific region, Tethyan belt of Eurasia and Altaid belt of the CIS, southern Russia, Mongolia and northern China, gold-rich porphyry and epithermal deposits are the prime exploration targets, although the pluton-related deposits are also sought in the Altaids and elsewhere. Sediment-hosted deposits remain the main focus in Nevada, but exploration for epithermal deposits is again increasing. Until three or four years ago, the world’s gold comp co mpanes anes te tenn e to s y awa wayy ro rom m eve venn t e go -rc po porp rp yr yryy ep eposts osts ec ecau ause se co copp pper er production was considered likely to prejudice the gold premium enjoyed by their stocks. However, today, most of the major and mid-tier gold companies, besides many juniors, are focusing on porphyry deposits because of the possibility of adding substantially to their inventories of the metal. Pre-eminent examples of gold-rich porphyry deposits, discovered discovered over the past decade, include Northern Dynasty Minerals Ltd and Anglo American p c s e e pro ect n as a some oz , van oe Mines Ltd and Rio Tinto’s Oyu Tolgoi Tolgoi in Mongolia (almost 27Moz), Exeter Resources Corp’s Caspiche in Chile (over 24Moz) and Antofagasta plc and Barrick Gold Corp’s Reko Diq in Pakistan (around 21Moz). High-sulphidation epithermal deposits, in effect the shallow parts of porphyry copper-g copper-gold old systems, are also targeted throughout the circum-Pacific region
4
Mining Journal special publication – Gold exploration
Barrick drilling at Alto Chicama
and elsewhere because of the large size of several known examples, such as Newmont Mining Corp and Buenaventura’s Yanacocha in Peru (43Moz) and Barrick’ss Pascua-Lama in Chile-Argentina (18Moz). Barrick’ Relatively recent epithermal discoveries include Barrick’ss Alto Chicama (14Moz) and Gold Fields and Barrick’ Buenaventura’s Cañahuyre project (perhaps 6Moz) an syst sy stem emss n no nort rt er ernn an sout sout er ernn er eru, u, respec res pectt ve y. Meanwhile, the IS and LS epithermal deposits are avoured targets for the junior companies because they commonly occur as discrete vein sets with the potential to host bonanza-grade gold and silver values as well as being relatively inexpensive both to delineate and develop. Well-known examples include Sumitomo Metal Mining Ltd’s Hishikari in Japan (11Moz) and Newmont’ Newmont’ss Waihi Waihi district in New Zealand (7Moz). oaescen oaesc ence ce o vens ca cann ea to mu mucc ar arge gerr, a e t still high-grade deposits, such as Comstock Lode in Nevada (8Moz; mined mainly in the 1800s) and Kinross Gold Corp’s Fruta del Norte (almost 14Moz), discovered in a little-explored region of Ecuador in 006, both IS deposits. Nonetheless, large-tonnage, low-grade, disseminated LS deposits are also known, such as Kinross and
Barrick’s joint venture Round Mountain (over 12Moz) Barrick’s and the recently outlined Crowfoot-Le Crowfoot-Lewis wis (8Moz) of Allied Nevada Gold Corp, both in Nevada. In the pluton-related category, International Tower Hill Mines Ltd’s Money Knob (Livengood) in Alaska (nearly 11Moz) is a just-announced, bulk-tonnage bulk-tonnage example. Orogenic deposits are perhaps not as widely sought as they were in the early decades of the 20t h century, although they are still the major producers and being actively explored for in the Archaean Archaean and younge you ngerr recam recam r an ter terran ranes es o ana a, est estern ern Australia, Ghana, Tanzania and elsewhere. However, deposit types more typical of the Mesozoic and Cainozoic are being increasingly recognised in these regions, such as Osisko Mining Corp’s Canadian Malartic porphyry gold deposit (11Moz) in the Superior province. Aggregate gold production from the Archean palaeo-placer deposits of the Witwatersrand goldfield is falling continuously as the mines become deeper deeper,, the grades lower and production cos ts higher. out r ca, or eca es t e wor s ma n go producer,, currently producer currently lies in fourth place. a eo eo-pace -pacerr ep eposts osts ar aree un unco comm mmon on wo worr w e, the only other major producer being the much younger Tarkwa deposit in Ghana, and therefore do not merit much focused exploration attention.
APPROACHES AND TOOLS Gold exploration, like that for most metals, is being conducted predominantly in brownfields settings, either near operating mines and defined deposits or y reap reappra pra sa o ex st ng pro prospe spects. cts. Greenfields exploration, particularly in frontier or emerging gold belts, is unpopular with the junior and major sectors alike because of the long lead times to discovery and eventual production, and the high real and perceived risks involved. Furthermore, most juniors avoid greenfield activities because the discovery t imeframe is incompatible with investor expectations. Tommy McKeith and colleagues (Society of Economic Geologists Newsletter Newsletter,, 2010) analysed the scov sc over eryy tr tren en s or go ep eposts osts ov over er t e pa past st years and noted a clear decline in the number of discoveries over the past couple of decades despite an increase in exploration dollars spent. The suggested causes are numerous, but include the major companies’ increased aversion to greenfield exploration and the need for quick results that is inherent in the business model of the juniors. The current reduced levels of greenfield exploration documented by MEG will continue negatively to affect discovery rates because, storca st orca y, t wa wass t s ac actt v ty t at acc ccou ount ntee or definition of new gold belts in the last century, such as the Carlin and assoc iated trends of Nevada, and El Indio and Maricunga belts of northern Chile. The few recent greenfield discoveries have further underscored the potential of several emerging gold belts, including the Andes of northern Colombia (AngloGold Ashanti Ltd’s Ltd’s La Colosa porphyry gold deposit; 13Moz) and southern Peru (Chucapaca), and the eastern margin of the Yilgarn c raton, We Western stern Australia (AngloGold Ashanti Ltd’s Tropicana; 5Moz). ucce uc cessu ssu ex expp or oraton aton to ay n a geoogca environments and for all deposit types is underpinned, as it has been for at least the past two decades, by a sound understanding of both the empirical and genetic models for the different gold deposit types
September 2010
GOLD EXPLORATION and the geology of the particular prospect under expp or ex orat at on on.. Reconstruction of three-dimensional district, and deposit-scale, geological relationships, embodying rock-type distribution, structural framework, and and alteration and mineralisation zoning, is a fundamental prere pr erequ qu s te. Isotopic dating to determine whether the gold prospect under study was generated during a highly-fertile epoch, and therefore offering maximal pote po tenta nta , s e ng nc ncrrea eass ngy ut se . Other tools, such as satellite imagery, geochemistry geochemistry an var o us us ge geop ys c a tec n q ue ues, prov e a t o na na data to integrate into the geological picture, and help focus both regional-, and district-, scale exploration. The characteristics of the shallow as well as distal parts of the different deposit types is becoming
particularly critical, given that many future gold sco sc overes w e ma e en enea eatt e t er pr pree- or post-m pos t-m ner neraa sat on cov cover er.. Since gold is commonly invisible to the naked eye, even with a hand lens, geological study needs to be dovetailed with geochemistry; indeed, conventional drainage, soil and rock-chip methods are just as effective today as they were 20 years ago. However,, top-of-bedrock geochemical samples, However collected by RAB or air-core drilling, are of increasing importance for gold exploration beneath post-miner post-miner-alisation cover. eop ys ca met o s ca can ass st w t geo o g c a un er erst stan an ng at ot reg on onaa an pr pros ospe pect ct sc scaa es es,, ut ca cann nnot ot rec ectt y et etec ectt go ; a t ou ougg t ey may define gold-bearing rock volumes rich in pyrite (chargeable or conductive), magnetite (magnetic) or quartz (resistive), for example. Despite the advances in geophysical techniques and their input to exploration over the past several
decades, Ken Ken Witherley Witherley argues in a Society of Economic Geologists Newsletter this year that geophysical tools are approaching their ultimate limits, and explorers should not be waiting for the apocryphal silver bullet to appear appear.. Rather,, much-improved Rather much-improved integration of the available data from all sources, with better communication between workers in different disciplines, is more likely to provide the major advances in the coming years. As with so many endeavours, gold exploration come co mess ow ownn to t e pe peope ope nv nvo o ve . e exp orat on commun ty may e su v e nto t e ene nergse rgse ea earrne ners rs,, t e oe oers rs an t e nsp nsp rer ers, s, and each of these groups is essential to long-term discovery success. Discoverers are a tiny minority and, when recognised, they they must be given the necessary support and freed from the bureaucracy that can so easily stifle innovation and calculated risk taking. Concurrently,, the exploration industry is faced Concurrently with the dichotomy of needing the most experienced people in the field in times when temporary econ ec onomc omc ow ownt ntur urns ns ea ea to ex expe pe en entt u ge gett an staff reductions that result in loss of this corporate a ty an memory. The essence of exploration programmes that maximise the chances of discovery remains detailed and imaginative, boots-on-the-ground geological fieldwork, preferably conducted by seasoned practitioners, who really are worth their weight in gold.
Richard Sillitoe is a past president (1999-2000) and Jeffrey Hedenquist Hedenquist is the current president of the Society of Economic Geologists. Detailed reviews reviews of gold deposit types and their distribution can be found in Society of Economic Geologists publications (www.segweb.org) (www.segweb.org)
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eptember 2010
Mining Journal special publication – Gold exploration
5
GOLD EXPLORATION
Australasia: stable and reliable
A
USTRALASIA is a well-established gold-mining region, with Australia and Indonesia ranking in the top ten gold producers (second and eighth) and Papua New Guinea (PNG) falling just outside, in eleventh place. ecaus ec ausee o ts re renow nowne ne ge geo o og c pot potenta enta , expp or ex oraton aton ac actt v ty n t e re regg on s g , an co contnu ntnu ng ng..
The Australian Bureau of Agricultural and Resource Economics (ABARE) forecast a significant increase in Australian gold production this year to 7.6Moz, followed by a further substantial increase in 2011 to 8.6Moz as new projects come onstream. In the first half of 2010, numerous new mines commenced operation. Newmont’s Boddington mine camee on str cam stream eam n ove ovem m er , an ts pro ecte levels of production are reached (1Moz/y) the mine is set to become Australia’s largest gold producer. Newcrest is also proceeding with development of its Cadia East mine in New South Wales, and the company has a potential total gold output from its Cadia Valle Valleyy operations of up to 800,000oz/y. AngloGold Ashanti Ltd’s Tropicana project in Western Newmont Miningdeveloped Corp's with partner Independence Australia (being Boddington Goldprogress mine, Western Group NL) will to a feasibility study this year Australia with commissioning of the mine expected to begin in earr y ea . In early 2010, 2 010, Tanami Gold NL purchased the t he Central Tanami gold project in the Northern Nort hern Territory Territory from Newmont to complement its existing operation on the Western Australian side of the Tanami. Tanami. The package gives Tanami an extra 500,000oz 500,0 00oz of resources, the Groundrush Ground rush plant and some 2,000km 2,000km of exploration exploration ground on which drilling has already commenced. Other gold operations coming on stream included Saracen Mineral Holdings Ltd s Carosue Dam, where where production of up to 30,000oz is expected in the June quaart qu rter er,, nera ne ra t s r g t ta tarr pro ect (30,000oz/y), Navigator Navigator Resources Ltd s Bronzewing
(100,000oz/y), Exco Resources Ltds White Dam (16,000oz in 2010), Catalpa Resources Ltds Edna May pro ec e ct , oz y an ange ver o t s reopened Mt Morgans project (40,000oz/y). Earlier stage projects include Vista Gold Corp’s Mt Todd project proj ect in the Northe Northern rn Territor Territor y, where a prefeasibility study was recently completed. Gold production at the former mine (which operated between 1993 and 1997) was forecast at 187,500oz/y at cash operating costs of US$476/oz.The study concluded that previous processing was poorly designed to handle the hardness of the ore, and that previous metallurgical problems were related mainly to t e cop coppe perr con conte tent nt o t e ore ore.. e new new stu stu y sugge suggests sts con conve vent nt ona ope open-p n-p t
mining techniques should be used to produce 18,500t/d of ore, at an overall mining rate of 22.9Mt/y 22.9Mt/y,, over ov er a m ne e o ust un er n ne ye years ars.. Meanwhile, a feasibility study of Integra Mining Ltd’s Randalls gold project near Kalgoorlie in Western Australia has outlined the potential for a 75,000oz/y m n ng op oper erat at on on.. Phase one development of the project, outline in the study, would involved processing ore through a conventional carbon-in-pulp processing processing plant at a rate of 800,000t/y for four years. Ore from the Salt Creek deposit would be delivered directly to a run-of-mine pad adjacent to the processing plant and Maxwells epost ep ost or oree wou e tr truc uc e m on exstng haulage roads, for blending.
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6
Mining Journal special publication – Gold exploration
September 2010
GOLD EXPLORATION
Junior companies including including GGG Resources plc, Avoca Resources Ltd, La Mancha Resources Inc, Southern Gold Ltd and Crescent Gold Ltd have also been conducting exploration drilling on their projects in Australia. INDONESIA:: EXPLORATION SLOWS INDONESIA
Like Australia, Australia, Indonesia Indonesia has an established gold mining industry, being home, for example, to the world-class ras erg an atu au go m nes. Grass-roots exploration has fallen in Indonesia in recentt years, recen years, owev owever er,, poss y as many compan es wa t for new legislation (which has been slow to develop). Over the past ten years, grass roots exploration expenditure has averaged only US$20 million annually. By contrast, it is estimated that Indonesia needs up to an annual US$1 billion in exploration spending to find the new reserves that are needed to replace existing, depleting, reserves. But until the regulatory environment clears, and n on onees as po c es ar aree rou ougg t nto nto ne w t nterna nte rnatt ona est pra pract ct ce, exp ora oratt on act v ty w rema n s ugg s . Some companies are taking the plunge, however, with a small number of junior companies currently active in the country. Earlier this year, Intrepid Mines Ltd extended the known mineralisation at its Tujuh Tujuh Bukit project, intersecting a zone of copper, gold and molybdenum mineralisation in a new porphyry zone. Last year, the company increased the inferred resource estimate at t e pro ect to . t at an average gra e o . 4g t u and 16g/t Ag. Last month, Sumatra Copper and Gold plc completed a deal with Newcrest, whereby Newcrest took a share in Sumatra and a 70% stake in the Tandai Tandai project. Newcrest also has the option to take a 25% interest in t he Tembang Tembang project for a consideration of US$500,000. Other junior companies currently active in Indonesia include Robust Resources Ltd Southern Arc Arc Minerals Inc East Asia Asia Minerals Corp, Kalimantan Gold orpp an ros or osss an es esou ourrces t .
The Ok Tedi mine, owned by PNG Sustainable Development Program Ltd (52%), the PNG government (30%) and Inmet Mining Corp (18%), is PNG’s largest producing mine. The operation is nearing the end of its current mine-life, however, with activity expected to scale down or close after 2013. TAX REVISION REVI SION
ustr us traa as go ex expp or oraton aton com commu munn ty re receve ceve some favourable news earlier this year when the country’s proposed Resource Super Profits Tax (RSPT) was replaced with a Mineral Resource Rent ax (MRRT). The new MRRT is to be applicable at a rate of 30% only to iron ore and coal production, unlike the RSPT which was at a rate of 40% and applicable to all on-shore minerals. The country’s junior mining community said however,, that it was not fully involved in negotiations however over ov er t e new new tax. tax. Australia’ss Association of Mining and Exploration Australia’ Companies (AMEC) said it was disappointed with the negotiation process.
eptember 2010
A feasibility study is currently underway to extend the mine-life to 2020 through a combination of open pit and underground mining, and in November 2009 the PNG government approved a transaction for Inmet to exchange its 18% interest to a 5% net smelter royalty, royalty, enabling the remaining partners to conduct this feasibility study. study. According to the operating company, Ok Tedi Mining Ltd, the extended mine will be significantly smaa er n s ze t at t e exst ng op sm oper eraton, aton, ut s anticipated to produce 90Mt of ore containing close to 700,000t of copper and 2.3Moz of gold over the seven-year seven-y ear period. Early stage exploration is also continuing in PNG, with a number of companies currently working on exploration and drilling programmes. A new resource estimate for the Wafi-Golpu project, part of Harmony’s 50:50 joint venture with Newcrest (which also includes Hidden Valley), Valley), was released in July putting contained gold in Golpu at 8.8Moz (from 3Moz), 4. t o copper rom . t an an mo y enum at 55,000t (from 22,000t). Harmony is testing a target of 500-800Mt at 0.7-1.0% Cu and 0.5-0.7g/t Au. Other early stage projects include the Woodlark Woodlark gold project, wholly owned by Woodlark Mining Ltd, a subsidiary of Kula Gold Ltd and Pacific Road Capital Management. The project is being advanced towards a prefeasibility study and has an indicated resource of 4.6Mt at an average grade of 1.7g/t Au for contained 1.02Moz of gold.
“Because o its renowned geoo og ge ogic ic oten ot entitiaa , exp or orati ation on actitivi ac vity ty in t e region is i g , an continuing”
FORGOTTEN ISLANDS
Mining has been a neglected sector in New Zealand, but the election of a new government in 008 has promoted a shift t owards production and exports. As a result, exploration interests have begun to stir in this forgotten sector. sector. While the country does have some existing gold mines, exploration activity is focussed on the Waihi Waihi region of the North Island and the west coast and tago reg ons o t e out s an . ewmo ew mont nt as ee eenn nten ntenss vey ex expp or ng n t e Waihi district in the vicinity of its existing Martha mine, which has a remaining life of about four years. To the west of Waihi, Waihi, Heritage Gold NZ Ltd s evaluating the former Karangahake (Talisman) (Talisman) mine (the region’s second largest gold producer) where the company has established a 205,000oz gold resource at an average grade of 6.9g/t Au. Meanwhile, Glass Glass Earth Gold Ltd has carried out an extensive programme of airborne geop ge op ysca surv survey eyss an o ow ow-u -upp ex expp or oraton aton over the region south of Waihi Waihi and in the active Taupo Volcanic Zone of the central North Island. Its recent activities have been focussed in the Otago region of the South Island where it carried out a regional airborne magnetic and electromagnetic geophysical survey in 2007 with funding from the Otago Regional Council. It is now developing two placer gold-mining operations in Otago to help finance ongoing exploration.
Koza’s exploration team is everywhere in Turkey
KOZA GOLD OPERATIONS Inc. Ovacik Gold Mine Ovacik Village 35700 Bergama IZMIR - TURKEY Tel:+90 232 641 8775 Fax:+90 232 641 8019 Mastra Gold Mine Demirkaynak Village 29000 GUMUSHANE – TURKEY Tel:+90 456 247 1010 Fax:+90 456 247 1014
Mining Journal special publication – Gold exploration
7
GOLD EXPLORATION
Europe: precious metals exploration is on the rise
E
UROPE has witnessed a resurgence in exploration activity in recent years. s ac actt v ty as ocu ocuse se on t ree man regions; the western extent of the Tethyan Belt (extending across central and eastern Europe, Greece, Turkey and into the Arabian peninsular), the Iberian Pyrite Belt (covering Spain and Portugal) and Scandinav Scandinavia. ia. However, western Europe, including the UK, is also seeing an increase in exploration activity activity.. Euromines, the European Association Association of Mining Industries, estimates that total gold exploration in Europe amounted amounted to 30 million (US$38 million) million) in , w t stron strongg gr grow owtt poten potentt a or . The bulk of these funds are spent in the Nordic countries (Sweden, Finland, Greenland and Norway), which account for some 60% of total European expenditures. A lot of this is generated by local companies raising money on local stock exchanges and privately however. The Balkans also receive a large proportion of exploration spending (around 35%) while the rest of Europe (the Iberian peninsular and other countries) acco ac coun unts ts or us ustt o go ex expp or oraton aton sp spen en ng ng..
Gold exploration has not been the main focus in Scandinavia, where base metals and iron-ore dominate, but some companies are active in the region. Dragon Mining Ltd currently operates four mines (one in Sweden and three in Finland) and is developing a number of exploration projects in the region. The company is progressing with a feasibility study on the underground development at the Svartliden m ne n we en en,, an a ev evee op opme ment nt ec s on s ex expe pect ct-ed in September. An internal feasibility study has also been completed to determine the viability of developing an underground operation at the Jokisivu mine in Finland, and a development that would encompass both the Kujankallio Kujankalli o and Arpola deposits should commence this year. Golden Rim Resources Ltd is developing the Falun IBERIAN PYRITE BELT
terr se te seve vera ra yea years rs o ec ne, t e er an peninsular has also witnessed a revival of exploration in the past ten years, mainly by Canadian and Australian companies. The Iberian Pyrite Belt (IPB) remains an unquestioned target for exploration activity due to its historical importance (both quantitatively and qualitatively) qualitativel y) and because of recent mine developments. For example, Cadillac Ventures Inc is conducting exploration on seve se vera ra pr prop opertes ertes n t e , an rva rvana na ne nera ra s Corp acquired the El Valle-Boinás/Carlés Valle-Boinás/Carlés gold-copper project in northern Spain in September last year.
8
Mining Journal special publication – Gold exploration
project in Sweden, a former copper mine, as a joint venture with Drake Resources Ltd. e co comp mpanes anes ave ee eenn co conn uc uctt ng r ng at t e project with the aim of determining a gold and copper resource est mate. Nordic Mines AB completed a feasibility study at its Laiva project in Finland in March, and aims to begin gold production in the March quarter next year. The planned open pit operation is anticipated to produce 115,000oz/y of gold at cash costs of US$415/oz. In December last year Belvedere Resources Ltd announced a maiden resource estimate at its rs an anga gass go pr pro o ect n n an , com omprs prs ng t at 1.23g/t in the indicated category and 2.6Mt at 1.27g/t in the inferred category. Hirsikangas is one of three advanced gold properties Belvedere is currently developing in Finland. The company is also developing the Rantasalmi and Kiimala projects. TETHYAN FOCUS
The European extension of the Tethyan belt has received significantly significantly less attention that the eastern extent, w c osts numerous esta s e m n ng operations, including including Freeport McMoRan Copper and Gold Incs Inc s Grasberg mine, Inmet Mining Corp s Ok Tedi and Newmont Mining Corp s Batu Hijau. The European extension, which includes Romania, Bulgaria, Greece and Turkey, does however host significant potential as a gold-mining region. Exploration in Hungary and Bulgaria is still in the early stages, but a few international companies have initiated projects in the region. In Bulgaria, Dundee Precious Precious Metals Inc s rum ru mov ovgr graa pr pro o ec ectt s at t e eas eas ty stag agee an as the potential to produce up to 800,000oz of gold over the life of the mine. Euromax Resources Ltd and Cambridge Mineral Resources plc are also developing the Breznik and Trun and Tashlaka Hill projects, respectively. Romania’s current gold production is only in the region of 12,000oz/y, but a number of foreign companies are investing in exploration projects in the country, which, if developed, could make Romania Europe’s largest gold producer. a r e es esou ourrce cess t s os a on onta tana na pr pro o ec ectt could become Romania’s largest gold operation, producing an average 500,000oz/y over the life of the mine (and 626,000oz/y in the first five years of production). Development of the project has been stalled since 2007, however, when the Environmental Impact Assessment (EIA) was suspended as a result of a decision taken by the former Minister of Environment and Forestry. Meanwhile, in May this year, European Goldfields t rec ecee ve t e ast ast rem emaa n ng app pprrov ovaa or t e on onaa Urbanisation Plan at its Certej gold-silver project. The company is completing the final EIA for the project, which it says will be submitted to the authorities shortly.
Also in Romania, Carpathian Gold is developing the ovna a ey go -c -cop oppe perr pr pro o ec ectt o ow ng t e completion of a preliminary economic assessment earr er t s yea ea earr. e, a a a eso esour urce cess t as entered into a joint venture with Barrick Gold Corp on the Bratosin Hill property. -
Greece has the potential to become a near-term gold producer with a number of exploration companies active in the country. European Goldfields is developing a project nc u ng m n ng an process ng at t e our es gold-copper project, and the initiation of mining at the Olympias polymetallic project. The company has completed a feasibility study at Skouries outlining potential annual production of 200,000oz of gold and 40,000t of copper. Eldorado Gold Corp is developing the Perama Hill gold project through its wholly-owned subsidiary Thracean Gold Mining SA. In March, Eldorado Eldorado submitted a technical report on the project to the relevant authorities and the compan com panyy antc pat pates es startng startng constru construct ct on at t e property in 2011, at a capital cost of US$159 million. Once operational, Perama Hill is anticipated to produce 110,000oz/y of gold at a cash operating cost of US$278/oz. Australian-based Cape Lambert Resources Ltd meanwhile, is developing developing the Sappes gold project in north-eastern Greece. LEADING THE PACK
Turkey has the most established gold-mining industry w t n t e wes este tern rn et ya yann regon egon,, an t e cou ount ntrys rys gold production is expected to grow from last year’s 469,400oz to 650,000oz this year. For example, Eldorado is expanding production at its Kisladag mine to a steady rate of 300,000oz/y, commencing in 2011. Anatolia Minerals Development Ltd mined the first gold ore from the Manganese Mine Zone of its Çöpler project in December 2009. The 1.3Moz project expects to produce 175,000oz/y by 2011 at a cash cost of US$260/oz. mong mo ng t e un un or ex expp or orer erss an ev evee op oper ers, s, r an anaa esources esour ces p c and Stratex Stratex Internatio International nal plc stan stan out. Each has advanced projects in the country which they are seeking to develop in partnership with local compann es. compa
September 2010
GOLD EXPLORATION
Aldridge Minerals Inc and Mediterranean Resources Resources Ltd also both have a vance pro ects n ur ey w c t ey ave so ar pursue on t e r own. e ter terran ranean ean eso esourc urces es ann announ ounce ce n une, ow owev ever er,, t at t s n neg negot ot at ons w t a maor ur s m n ng co comp mpan anyy re rega garr ng a o nt ven entu ture re to pr prog ogre ress ss t e ac and Corak projects towards development. Mediterranean is currently working on a preliminary economic assessment at the projects, which is expected to be completed shortly. Other foreign-owned companies, such as Chesser Resources Ltd, Eurasian Minerals Inc and Kefi Minerals plc, are working up exploration projects either on their own, or through joint-ventures with Centerra Gold. These projects are all at drilling, or initial resource, stages. European Goldfields has also entered a joint venture with Ariana Resources on the Ardala project in the nor th-east of the country. Domestic company Koza Gold Operations Inc became the first national company to reach gold production in 2005. The firm has three operating mines, as well as the Kaymaz project, where where exploratory drilling has already been conducted.
The increasing price of gold has also contributed to a revival of interest in gold exploration in the UK over the past five years, with a particular focus on Scotland and Northern Ireland. In Scotland, the Cononish deposit near Tyndrum in Perthshire, 90km northwest of Glasgow, is being re-evaluated by Scotgold Resources Ltd. The company ant c pates an operat on pro uc ng aroun , oz y o go startng n . Meanwhile, since its release in 2007, high-resolution geophysical and geochemical data from the Tellus project for Northern Ireland, funded by the Northern Ireland Department for Enterprise, Trade and Investment, has underpinned a marked increase in mineral exploration in the province. Galantas Gold Corp has been reviewin reviewingg the resource at its Omagh mine, while Dalradian Gold Ltd continues its exploration at the Curraghinalt deposit 15km north-east of Omagh in County Tyrone. Conroy Diamonds and Gold plc, meanwhile, is exploring the Longford-Down Massif in Northern Ireland and the Republic of Ireland.
Yusufeli Gold Property – North Eastern Turkey m m nera ze tren – owne y e terranean our pr pro o ect ar areas eas w t ov over er squar squ are e ms un er cense cense •
Tac & Corak – Advanced Stage Projects Over 2.5Moz Au Eq. resource – 1.8Moz capped gold Preliminary Prelimina ry economic assessment to be completed October 2010 •
Celtik & Cevreli – Exploration Stage Projects eltik discovery discovery – 18.5m o 6.51g/t Au & 0.9% Cu Drilling campaign at Celtik par tially completed •
Less than 15% of the Yusufeli property explored to date Tac & Corak deposits – open for expansion Celtik & Cevreli projects – strong discovery potential •
CYANIDE USE TO CONTINUE
Earlier this year the European Commission rejected a proposed Europe-wide ban on cyanide use in mining after deciding that the ban was not justified from an environmental or health perspective. In a statement on behalf of the commission to the European Parliament, Janez Poto�nik, European Commissioner for the Environment, said: “The commission considers that a general ban of cyanide in mining is not justified from environmental and health point of views”. Mr Poto�nik added that a general ban on cyanide use would result in the closure of existing mines operating in safe conditions, and would have a detrimental effect on employment. e co comm mmis issi sion on urt urt er a e t at exist existin ingg egisati egisation on,, no nota ta y on t e management of extractive waste (Directiv (Directivee 2006/21/EC), includes precise and strict requirements ensuring an appropriate safety level of the mining waste facilities”.
eptember 2010
9
Contacts eter
uest,
. ng. President/CEO + -
John Walt Walter er, ommun cat ons anag ommun anager er Investor Relations + -
MNR- TSX MHM1-Frankfurt www.medresources.ca
GOLD EXPLORATION
orth American dream The US, Canada and Mexico remain attractive gold-exploration targets
T
HE mining jurisdictions of North America fare well in the rankings of investment target tar getss y t e anco ancouv uver er-- ase ra raser ser nsttu sttute te,, w c co conn uc ucts ts an an annnua survey of mining company executives. No fewer than seven North American jurisdictions appeared in the top ten places of the Fraser Institute’s last full survey (for 2009/10); Quebec, New Brunswick, Alberta, Nevada, Saskatchewan, Newfoundland and Manitoba; with the Yukon Yukon jumping into fourth place in a recently-released interim (smaller) survey. The dominance is split (in the 2009/10 ranking) only by Finland, Chile and South Australia (and the latter as su er eree re rece cent nt y ro rom m con conce cern rn ov over er t e cou countr ntrys ys mooted new resource tax).
Canada boasts more precious-metals exploration companies than any other country, and they are not short of prospective targets within their own borders. These targets have focussed on the Archaean Superior province of Ontario-Quebec and the country’s younger Precambrian terranes. As noted above, the Fraser Institute recently ranked erta er ta w t ts ex exte tensve nsve o an co coaa reso resour urce cess , Quebec, the Yukon and Saskatchewan within its top five places in the latest survey of mining executives
Core inspection at orthern Dynasty’s e e pro ec ec t (Finland was second in the investment ranking). Gold-exploration activity in Quebec has recently included work by Aurizon Mines Ltd, which updated the contained gold resource on its Hosco deposit in June by 35% to 1.73Moz. e epos t s part o t e oanna prop property erty,, ocate ocate 20km east of Rouyn-Noranda. The company revealed a measured and indicated resource of 40.6Mt at 1.33g/t Au (using a cut-off grade of 0.5g/t). The increase came from outside the pit outlined in the pre-feasibility pre-feasibili ty study, and from lateral extensions to a depth of 100m. Inferred resources have also been increased, by 11% or 91,000oz. Also in Quebec, Northern Star Mining Corp received assay assay results in April from drilling programmes at its Malartic-Midwa Malartic-Midwayy and McKenzie Break pro pr o ect ects. s. e res resuu ts com comee rom rom un erg ergro roun un o es at Malartic-Midwayy and surface drilling at McKenzi Malartic-Midwa McKenziee Break.
In April, Tawsho Mining Inc released the first NI 43-101 compliant resource for its Chevrier deposit ocat oc atee ne near ar ouga ou gama mau, u, ue ec ec.. et et-- em Canada estimated the Chevrier deposit, one of two deposits on the Chevrier property, to contain an inferred resource resource of 4.6Mt at an average grade of 1.99g/t Au, for a total of 295,000oz (cut-off of 1g/t, and is to a depth of 250m). The company also said that while the 19 holes on the Cheverier South deposit do not carry sufficient information, a 3D model by Met-Chem did allow for an estimate of 8.5-9Mt of mineralised material at 1.8-2.2g/t Au. t a ou outt t e sa same me t me me,, to entur entures es t an Pacific North West West Capital Corp released the results of the final three holes of the Phase 2 drilling
Also in Nevada, US Gold Corp released a scoping study in April for its Gold Bar project, indicating US$38.2 million of capital expenditure and annual production of 57,000oz. The mine would have an initial life of six years, although the company plans to continue explorat on on t e pr pro o ec ectt t s ye year ar,, to ncrea ncrease se t e e to eight years. At the end of March, US Gold incorporated over 100 new holes drilled in 2009, increasing the measured and indicated resources at Gold Bar to 975,000oz. Five of Miranda Gold Corp’s twelve twelve exploration properties lie in the Cortez Trend Trend of the Battle Mountain-Eureka Gold Belt. These properties include the Red Canyon project, which which is a sediment-hosted gold deposit in Eureka County. In Alaska, two projects (Pebble and Donlin ree ave ac acco coun unte te or ov over er a o expora exporatt on expe ex penn tur turee rece recent nt y. NovaGold Resources Inc co-owns the Donlin Creek gold project with Barrick. The deposit contains some 33.6Moz of gold, contained in 468Mt at an average grade of 2.23g/t Au. Northern Dynasty Minerals Ltd’s Pebble copper-gold-molybdenum copper -gold-molybdenum project is possibly the largest, and most controversial, project currently under development in the US. Northern Dynasty is developing the project in par tnership with Anglo mer can p c, w c s requ re to spen up to US$1.5 billion on the project’s development development towards permitting and operation to retain its 50% nterest.
Pebble is estimated to contain up to 25Mt of copper, 67Moz of gold and 1.5Mt of molybdenum. However, the project has received strong opposition, particularly from environmental and fishing groups that are concerned about potential impacts on nearby salmon fishing grounds. so n as a, an anco couv uver er-- as asee nt nter erna natt on onaa Tower Hill Mines Ltd (ITH) recently reported results from the latest 22 holes at its Livengood project near Fairbanks.The results included assays from holes at the new Olive prospect near t he Core zone. ITH is operating five drilling rigs at Livengood, three using reverse-circulation methods and two diamond drills. The company claims that the project will be able to support production of 00,000oz/y. ITH had announced a mineral resource update at ven engo goo o n un une. e. e n ep epen en en entt st stuu y, y Reserva International LLC, incorporated the results from the winter drilling programme of 420 diamond and reverse-circulation reverse-circulation drill holes (a total of 121,212m) received up to May 25. In Montana, an independent scoping study was announced in June for development of Atna Resources Ltd’s Columbia gold project. The study outlined the potential to produce 70,000oz/y of gold from an open-pit operation feeding a 5,000t/d processing plant. n out out aro na na,, ste tepp-ou outt r ng n pr at at Romarco Minerals Inc’s Haile gold mine intersected further mineralisation north and west of the South pit, and at the newly-discovered Horseshoe zone.
US EXPLORATION SCENE
According to Metals Economics Group, exploration expenditure in the US fell 42% to US$510 million in 009. The two most prominent states remain Nevada (the fourth-largest gold-producing region in the world) and Alaska, but both of these states saw exploration expenditure fall as companies struggled to acce access ss nanc ng. s a resut, resut, exp exp ora oratt on act act v ty ast ye year ar was was primarily focused on sites with previouslypreviously-defined defined resources, or at polymetallic sites, which received a greater share of exploration funding. In Nevada, Barrick Barrick Gold Corp has been developing the Cortez Hill project, which is in the final stages of commissioning (the project received a setback in December when a US appeals court told Barrick that further work should be done on the project’ project’ss environmental impact assess ass essmen mentt . ewmo ew mont nt s co conn uc uctt ng ex expp or orat at on wo worr n Nevada at the Greater Leeville-Turf, including a surface exploration programme extending well beyond known mineralisation. Early results from both surface and underground exploration programmes suggest significant potential for resource expansion. Newmont said it expects to spend over US$75 million this year in Nevada on advanced project development and nearnear-mine mine exploration. ye atc o orpp an or anno noun uncce n un unee t at ts reve re vers rsee-cc rc rcuu at on r ng pr prog ogra ramm mmee at t e co gold-silverr property in Nevada had demonstrated gold-silve an expansion of a high-grade zone.
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Mining Journal special publication – Gold exploration
September 2010
GOLD EXPLORATION
NovaGold Resources Inc launched a pre-feasibility study in April at its 50%owned Galore Creek copper-gold-silver project in northern BC
programme on their Destiny gold project in Quebec. The results were incorporated into a database for the next ne xt sta stage ge o wo worr . The Yukon was placed fourth in the Fraser Institute ranking. Activity in t he province has included exploration by Capstone Mining Corp, which which reported in June that it had found a new copper-gold zone near its Minto mine. The Wildfire Wildfire zone was intersected by three holes. Also in the Yukon, Atac Resources Ltd completed the first phase of diamond-drilling in August at the East zone within its Rau gold property. A new stratabound gold occurrence, called the Upper Tiger zone, zo ne, wa wass nter nterse sect ctee n ve o t e o es es.. The first two holes drilled at Kaminak Gold Corp’s Coffee property in the Yukon Yukon during May intersected “intense alteration and mineralisation over wide intervals”, according to president and chief executive Rob Carpenter. In April, Northern Tiger Resources Inc raised C$2.5 million from the private placement of shares and share-purchasee warrants to finance exploration on the share-purchas company’s gold and copper projects in the Yukon. In Saskatchewan, St Eugene Mining Corp received assay ass ay res resuu ts n une une rom rom a r ng pr progr ogramm ammee e ng conducted by Claude Resources Inc at the jointventure Amisk gold property. St Eugene holds a 35% interest in the joint venture. In Ontario, the first holes drilled on Bayfield Ventures Corp’s Rainy River property intersected gold mineralisation recently. recently. The property lies adjacent to, and along strike from, gold deposits held by Rainy River Resources Ltd. The latter company reported in May that infill drilling at its 5Moz Rainy River gold deposit had identified mineralisation up, and down, p un unge ge o t e re reso sour urce ce at ea eave verr on . Lake Shore Gold Corp reported recently that drilling at the Vogel prospect, 3km from its Bell Creek mine and mill facilities, has intersected gold mineralisation with potential for open-pit mining. In July, VG Gold Corp received additional results (described as “the most significant to-date”) from drilling aimed at defining an open-pit resource at its Paymaster West gold property in Timmins, Ontario. Also, an independent scoping study for Treasury Metals Inc’ss Goliath gold project in Ontario found the deposit Inc’ cou e ec econ onomc. omc. owee rec ow ecom omm men e t e continuation of work towards completion of a prefeasibility study with a view to exploiting the Thunder Lake deposit. Also in Ontario, Creso Exploration Inc intersected
eptember 2010
g -gra e go m n er era sat o n ur n g r ng at ts ts nto nt o pr prop opert ertyy ur ng un une. e. e tw twoo- o e am amon on drilling programme yielded best results from the second hole, which returned almost 66m at 18.2g/t from 49m down-hole. An independent feasibility study in May concluded that Detour Gold Corp’s Detour Lake project in Ontario could support average annual gold production of 649,000oz, peaking at more than 800,000oz. The proposed 55,000-61,000t/d open-pit operation was est m at ate to cost m on t o u , w t an additional US$580 million in sustaining capital estimated to be needed over the 16-year life of the mne. In May, Moneta Porcupine Mines Inc intersected narrow,, high-grade gold mineralisation at the 55 Zone narrow prospect, part of its Golden Highway property in Ontario.The holes tested a structural interpretation as part of a 30,000m programme. In April, assay results were announced for the Hardrock gold property in Ontario owned 70% by rem er o t an y o sto tonne esources nc. e r ng ta tarrgete open p t an un ergroun styy e m ne st nera ra sa satt on on.. A prefeasibility study for Tyhee Development Corp has reduced the gold-production forecast for a 3,000t/d open-pit and underground operation at the Yellowknife project in Canada’s Northwest Territories. A scoping study two years ago suggested an operation could support average annual gold output of 163,500oz over seven years, but the prefeasibility study found that at t he same 3,000t/d throughput, the output wou e on y , oz y on average. At the end of July, Spanish Mountain Gold Ltd confirmed a near-surface higher-grade higher-grade gold zone at its eponymous project in British Columbia, and North Country Gold Corp announced the discovery of a zone of gold mineralisation at the Antler prospect, part of its Three Three Bluffs property in Nunavut. Indicated Indicated resources at Three Bluffs are estimated to contain 508,000oz (based on almost 6g/t Au) and inferred resources containing 244,000oz. Results in July from initial diamond-drilling at Silver tann ar es ta esou ourrces ncs ru ruceac ceac go pro ect n confirmed continuity of high-grade gold-silver mineralisation. Brucejack is adjacent to Silver Standard’s Snowfield project. In June, the company reported that the capital cost of the polymetallic project had been estimated at US$3.4 billion by an independent scoping study.The mining inventory captured by the open-pit design was estimated at 966Mt at forecast mill-feed grades of 0.64g/t Au, 1.67g/t Ag, 0.105% Cu and 0.009% Mo, for
Capstone’s Minto copper mine
20Moz of gold, 51.9Moz of silver, 1Mt of copper and 892,000t of molybdenum. Also in BC, drilling at the former gold operation at Dunwell intersected further gold mineralisation in July, according to Mountain Boy Minerals Ltd. The latest holes in the second phase of drilling tested an area 40m from the discovery holes. In May, Imperial Metals Corp increased the resource estimate for its Red Chris copper-gold deposit in BC after including data from recent drilling nto ts ca cu at on ons. s. e co comp mpan anyy sa t e ates atestt resource contained 31% more tonnes in the com ne measure an n cate resource categories, and 89% more in the inferred category. Metals contained within the measured and indicated categories at Red Chris were estimated to have increased increased by about 586,000t of copper and 2.73Moz of gold. Inferred resources were estimated to contain 622,000t of additional copper and 2.54Moz more gold. The majority of the increase came from the drilling completed at the East zone, which esta s e m ne n era sat o n at a out m, ou ou e t e eptt pr ep prevousy evousy nt nter erse sect ctee . Abacus Mining and Exploration Corp agreed in May to form a joint venture with KGHM Polska Miedz SA to progress the former’s Afton-Ajax copper-gold project in BC. KGHM will spend US$37 million to fund a feasibility study, receiving a 51% interest in return. NovaGold Resources Inc launched a pre-feasibility study in April at its 50%-owned Galore Creek copper-gold-silver project in northern BC (Teck Resources Ltd owns t he remaining equity). The project s manage y a ore ree n ng orp, w c as been reviewing a number of optimisation scenarios. In April, the results of a prefeasibility study for development of Seabridge Gold Inc’s KSM gold project in BC defined “the largest gold reserve in Canada”, according to the company’s president and chief executive, Rudi Fronk. The independent study, by consultant Wardrop, was based on exploiting reserves at three separate open-pits at the Mitchell, Kerr Kerr and Sulphurets deposits. In Nova Scotia, a definitive feasibility study has been com ompp et etee on sta tage ge on onee o t an antt c o s Touquoy-Cochrane Hill project. The company said the study, which covers the Touquoy deposit, would provide the basis for “further advance discussions” with potential financiers. Proven and probable ore reserves of 9.6Mt at 1.48g/t Au will be extracted, producing producing 422,000oz over the five-year mine life. In Manitoba, Alexis Minerals Corp intersected gold mineralisation in the Main and No3 zones in June at its Snow Lake project. The programme was designed in support o t e ongo ng eas eas ty stu y. Also in Manitoba, San Gold Corp operates the Rice Lake and recently developed Hinge gold mines, 230km north-east of Winnipeg, adjacent to the town of Bissett.The former has produced 1.4Moz since 1932. San Gold is conducting exploration of the area to improve its understanding of the regional geology. In Nunavut, additional drilling at Llama Lake, part of Sabina Gold & Silver Corp’s Back River project, returned more intersections of gold mineralisation in June at the company’s new discovery. discovery. astt mo as mont nt , om omma mann er es esou ourc rces es t re repo porte rte the intersection of further mineralisation on the Malrok gold zone at its Baffin Island gold property in Nunavut Territory. AngloGold Ashanti Ltd is earning a 51% interest in the project.
Mining Journal special publication – Gold exploration
11
GOLD EXPLORATION since 1999, with a focus on the Ocampo land package. The company transformed the grass-roots exploration property to one of the country’s largest gold-silver gold-silver mines, and is using the cash flow to implement a strateg strat eg c re- nve nvestmen stmentt programme. Current work includes a scoping study at the Guadalupe y Calvo project in southern Chihuahua State. In April, April, Gammon signed an option agreement to acquire the 4,491ha Venus Venus property just 2km north of Ocampo, and has initiated geochemical analysis. ne n er erss or orps ps ags ags p o or ores es m ne n exco commenced production of gold and silver in November 2008, and is expected to produce more than 1.7Moz of gold and 64Moz of silver from heap-leach operations over a 16-year mine life. The company’s precious-metals exploration projects include La Bolsa in Sonora State, where a prefeasibility study has concluded that 228,000oz of gold, plus silver, could be recovered over a six-year period. Other gold exploration in Mexico includes work by e ment o orp, w c ast mont announce t at t a rece ve an n epen ent pre m n ar ary assessment (scoping study) for development of its San Antonio project in Baja California Sur. The study found that resources within an open-pit outline (generated using a gold price of US$900/oz) could support a heap-leach operation capable of recovering about 673,000oz over a mine life of about n ne years. years. In June, Kimber Resources Ltd reported that an independent scoping study had designed a combined
Even after some 500 years of mining in Mexico, exploration is booming and Canadian companies are leading the search (they make up 75% of all explorers, according to the Mexican Chamber of Mines). This activity is not focused entirely on silver. Last year, for example, Yamana Gold Inc gave the go-ahead to develop the Mercedes gold-silver project in Sonora, with an anticipated start up in late 2012. The project is anticipated to produce 120,000oz of gold equivalent over ov er an n t a s xx-ye year ar m ne e. First Majestic Silver Corp recently acquired the famous Real de Catorce mine with the aim of restarting production, and Vista Gold Corp is developing the Paredones Amarillos gold project in Baja California Sur. Once in production, output is expected to average 143,000oz/y of gold during the first five years, and an estimated 1.2Moz of gold over the proposed nine-year mine life. Argonaut Gold Inc is a new Canadian gold producer with a mine and advanced exploration projects in the state sta te o ura urango ngo,, as we as gra grass ss ro roots ots pr pro o ect ectss n t e State of Sonora. In Durango, Argonaut owns 100% of El Castillo, an open-pit, heap-leach heap-leach gold mine which hosts some 0.8Moz of proven and probable gold reserves and 1.2Moz of measured and indicated resources.The company’s main exploration property, La Fortuna, is also located in Durango. Numerous high-grade intersects have already been reported, and additional drilling is planned for later this year. Gammon Gold Inc has been active in the country
un er ergr grou ounn an op open en-pt -pt m n ng op oper eraton aton to to ex expp o t its Monterde gold-silver project in Sierra Madre. Under the mine plan, the operation would extract mineralisation from the Carmen and Veta Minitas deposits at an initial rate of 2,500t/d using both underground and open-pit methods. In May, Corex Gold Corp reported that it had discovered discover ed copper-gold-silver copper-gold-silver mineralisation at the Benjamin zone of its Santana property in Sonora State. The mineralisation is adjacent to oxide and sulphide go - ear ng zones. so n ay ay,, evon esources t ntersecte further polymetallic mineralisation at the 51%-owned joint-venture Cordero Cordero property. property. The holes tested the Pozo de Plata diatreme target, returning evidence of new limestone replacement mineralisation. The remaining 49% interest in the property is held by Valley High Ventures Ventures Ltd. Grayd Resource Corp reported in May that successful drilling at its La India gold deposit has allowed calculation of an independent resource est mat mate. e. t a .4g t u cut cut-o -o , t e re resou sourc rcee con conta ta ns 760,000oz of gold in measured and indicated categor categ or es. Results from a preliminary economic assessment in April for the Metates gold-silver gold-silver-zinc -zinc project provided sufficient encouragement to Chesapeake Gold Corp for it to plan a US$3 million prefeasibility study. study. The independent assessment found that measured, indicated and inferred resources totalling 852Mt within an open-pit (designed using US$900/oz gold price) could support a 27-year operation.
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12
Mining Journal special publication – Gold exploration
September 2010
GOLD EXPLORATION
Mixed fortunes in South America The continent represents the extremes of investor sentiment
T
HERE is no doubting the potential for discovering precious metals in South America. The Andes of northern Colombia, northern Peru and northern e, n part part cu ar ar,, o er att attrac ractt ve geology.. Indeed the continent still accounts for the geology greatest share of the global search for gold (itself almost half of the total exploration budget for non-ferrous metals). This search is despite a marked shift to t he left in the politics of the region. The sentiment of investors is reflected in the Fraser Institute’ Institute’ss annual survey of mining executives, with the continent contributing five countries in the bottom ten of last year’s ranking by the Fraser Institute; Venezuela was bottom (of the 72 ur s ct ons eva u at ate , cua or st, o v a t , Honduras 65th and Guatemala 64th. However, Chile continues to rate highly in the Fraser Institute ranking (7th last year), and Brazil, Colombia and Peru have much to offer exploration compann es. compa EXPLORATION IN BRAZIL
Less than one-third of Brazil’s territory has been studied thoroughly but the country’s mineral potential is extraordinary extraordinary.. ng o o s ant t a r ea ea y operates two go m n es es n raz ; one t roug su s ar y ras Mineração, and the second a joint venture, Serra Grande, with Kinross Gold Corp. AngloGold describes Brazil as “the cornerstone” of its regional growth plan, which is designed to take production in the Americas from around 800,000oz/y to more than 1.1Moz/y over the next four years. Key to AngloGold’s growth strategy is the São Bento property, which was acquired in 2008 from Eldorado Gold Corp. Purchase Purchase of the existing plant at o ento cou spee eve opment o t e ne g ouring Córrego de Sítio project, where where production of 140,000oz/y is anticipated from 2013. The company expects to have made significant progress toward reporting a reserve by the end of this year. Yamana Gold Inc, which currently operates three gold mines in Brazil, announced earlier this year that it plans to go ahead with development of its Ernesto/ SIGNIFICANT WORK IN CHILE
Some US$366 million was spent on minerals expp or ex orat at on n e as astt ye year ar ac acco corr ng to et etaa s Economics Group), making the country the world’s seventh-largestt exploration destination (behind seventh-larges only Peru in South America). Although primarily spent by the major companies, with a focus on copper copper,, there is also significant precious-metals activity. For example, Exeter Resource Corp is exploring the Caspiche porphyry deposit, in the Atacama region, under an agreement with Anglo American Chile Ltd and Mantos Blancos SA (an affiliate of Anglo American). Exeter announced n ay t at urt er r ng at aspc e a exp expan e t e ce cent ntra ra g -g -gra ra e zo zone ne.. e epos epos t wa wass estimated to contain 14.3Moz of gold, 33.6Moz of silver and 1.6Mt of copper in indicated resources.
eptember 2010
Corriente Resources’ Mirador copper-gold project in Ecuador Pau-a-Pique project. Reserves are currently over 0.7Moz, with indicated resources of almost 0.9Moz, with production expected to start in late 2012. The flagship project of Colossus Minerals Inc is the gold-platinum-palladium gold-platinum-pallad ium Serra Pelada deposit, which is at t e re reso sour urce ce-- e ne neat at on st stag age. e. e pr pro o ec ectt s e ng a van ancce to tow war pr pro o uc uctt on n a o nt vent ntur uree w t Coomigasp. In March, Colossus acquired 774ha of additional ground contiguous to Serra Pelada (ownership of the total land package remains 75% to Colossus and 25% to Coomigasp). Other companies expanding their gold-exploration projects in Brazil include Beadell Resources Ltd, whose drilling programme at the Tucano Tucano gold property last month returned further intersections from metallurgical and resource-definition holes. sew ere, ar arpa patt an o nc rep epor orte te n u y a sharply increased gold content for its Riacho dos Machados project. Overall resources contained within both open-pit and underground mine plans were estimated to contain just over 1.5Moz. Also in July, Rio Novo Gold Inc reported that the drilling programme at its Almas property in Tocantins Tocantins continued to intersect gold mineralisation. Eldorado Gold Corp liked the Tocantinzinho gold project so much it bought the holding company, Brazauro Resources Corp, and has prepared an updated reso re sour urce ce es estt ma mate te ou outt n ng mo more re t an oz o go n measure an n cate resources. so ncu ncu e n t e agreement are two further exploration projects (Ague Branca and Piranhas) that are located nearby. In May, Jaguar Mining Inc announced that a pre-feasibility pre-feasibili ty study for its Gurupi project had outlined a US$225 million mine producing 154,000oz/y.The open-pit operation would exploit probable reserves estimated at 63.4Mt at an average grade of 1.14g/t Au. Indicated resources were were estimated at 63.4Mt at an average grade of 1.14g/t Au (cut-off grade of 0.3g/t Au). razaur raz auro o eso esour urces ces orp rec recee ve a sco scopp ng stu y in February for the Tocantinzinho Tocantinzinho deposit, raising the forecasted gold output to 145,000oz/y. Eldorado holds an option t o buy a 60% interest in Tocantinzinho Tocantinzinho for US$40 million.
In April, Crusader Resources Ltd said it has received positive results on metallurgical work for the Borborema gold project in Rio Grande do Norte. The company has the option to acquire 100% of the project.
ere s ext ere extens ens ve pre precc ous ous-me -meta ta s act v ty n Argentina. For example, NGEx Resources Inc continues to explore its Vicuña-area copper-gold copper-gold deposits in the high cordillera, straddling straddling the Chilean border. Japanese firm Jogmec has a joint venture on this project, and an option on the Josemaria property, where 460Mt at 0.39% Cu and 0.30g/t Au were previously outlined. In Santa Cruz, Extorre Gold Mines Ltd is advancing permitting and preliminary economic assessment for t e er erro ro or oro o pr pro o ec ect. t. n t e sa same me pr prov ov nc nce, e, n ea eann esou es ourc rces es t re receve ceve en enco cour urag ag ng re resu su ts ea earr er this year from drilling at its Cerro Negro gold-silver project.The holes tested the Mariana Central vein, northwest of the Eureka We West st deposit that contributed to the feasibility study for a +200,000oz/y mine. Also in Santa Cruz, Andean Resources Ltd is looking at development of the Cerro Negro gold-silver project.A mine plan envisages a ten-year operation exploiting three deposits, using both underground and open-pit mining methods; Eureka West, Bajo Negro an e n one. one. Mariana Resources Ltd is drilling to define a gold-silver resource at its Calandrias Calan drias project, and in June intersected further wide zones of mineralisation on the project’s Calandria Sur target. Mariana is also exploring Los Amigos in a joint venture with Hochschild. Patagonia Gold plc reported in June that its Tranquilo gold-silver property in San Juan had returned high-grade results from the Cap Oeste and COSE prospects. A resource estimate for Cap Oeste outlined more than 655,000oz of gold, 88% within n ca cate te res esou ourrces es.. In the Puna region of Salta province, Mansfield Mansfield Minerals Inc is applying for a mining permit at Lindero to produce 161,000oz of gold during the first five years of an estimated nine-year mine life.
Mining Journal special publication – Gold exploration
13
GOLD EXPLORATION Artha Resources Corp is exploring for precious metas me tas at a ecto an rq rquu ta tass n uuy. uuy. n t e sa same me province, Soltera Mining Corp is exploring bot h lode and eluvial gold placers at El Torno, and has an agreement with Goldlake Group to develop the placer gold deposits at El Torno. Golden Peaks Resources Ltd continues to explore its Fortuna gold property in Chubut where significant areas of low-grade, disseminated gold mineralisation have been discovered. Elsewhere, Yamana Gold says t at t s un e y to eve eve op ts gu guaa ca epost epost n Catamarca as a stand-alone mine, and that a future integration with Minera Alumbrera makes the most econom econo m c sense. Troy Resources NL’s reassessment of its Casposo gold-silver project has continued, with a revised reserve and production plan announced in May. The company plans to use both open-pit and underground methods to exploit a probable reserve of 2Mt at 5.2g/t Au and 171.5g/t Ag.
One of the biggest gold producers in Spanish colonial times, Colombia hopes to attract almost US$50 billion in mining and energy investment over the next five years.This objective is thought to be obtainable now that the army is winning back mineral-rich areas from drug cartels and rebel paramilitary forces. Unlike in neighbouring Venezuela, Venezuela, Colombia can boast eight years of political stability and rising investment. The country is one of South America’s success
Patagonian Gold Patagonian exploring in Argentina
stories, and Ventana Gold Corp is a good example of the interest generated. Ongoing drilling at the company’s La Bodega gold property supports the theory that a high-grade area lies within the overall La Bodega zone. Earlier this year the company reported that it had nine rigs at La Bodega, with further rigs planned for the Baja project In other recent news, the Colombian Ministry of the Environment, Housing and Territorial Development in June annulled its request for a new environmental mpact asses assessment sment or rey reystar star esour esources ces t s ngos ng ostu tura ra go -s ve verr pr pro o ec ect. t. e or g na req reque uest st related to those parts of the planned mine above 3,200m (a modification in February to the mining law that set this elevation as the lower limit of a mountain ecosystem called Páramo). Greystar subsequently outlined its underground resource at the project for the first time. The company said that it had delineated 8.9Moz of gold and 59.6Moz of silver within measured and indicated resources contained by the proposed open-pit outline, and an
additional 831,000oz of gold and 3.8Moz of silver in t e sam samee cat categ egores ores un un er ergr grou ounn . Vancouver-ba Vancouv er-based sed Miranda Gold Corp owns the Pavo Real property in Tolima, 20km from Ibague. Channel sampling of outcrops and old workings returned what the company described as “very “very encouraging” results. Red Eagle Mining Corp subsequently signed an exploration deal whereby it can earn a joint-venture interest in the property. The main asset in Colombia of Toronto-based Toronto-based ontne tnennta o t s t e g -gra e urtc pr property, but the firm also owns numerous other gold projects in t e co coun untr tryy. es esee ncu e t e er n pr pro o ec ect, t, w c produced over 413,000oz (at 16g/t Au) historically. In April, Seafield Seafield Resources Ltd announced that it had taken its first step in a plan to consolidate exploration targets in Colombia’ Colombia’ss Quinchia district. The Toronto-based Toronto-based company also announced an initial inferred resource resource of 776,000oz at the Miraflores deposit in the area. Seafield had acquired properties in the district in arcc rom prva ar prvateytey-ow owne ne ar ea eann op oppe perr an Gold Corp, and subsequently completed an option agreement with the Association of Miners of Miraflores to acquire 100% of the Miraflores property (which includes a 124ha mineral exploitation contract and hosts a small underground mine). PERU: GOLD ALSO IMPORTANT
Peru is the world’s largest silver-producing nation, and is the second-largest producer of copper and zinc. Peru is also the largest producer of gold in South
From Exploration to Development... Assay Results Include 70.70 Metres of 53.59 g/t Gold, 20.77 g/t Platinum & 31.30 g/t Palladium Colossus Minerals Inc. is a development-stage mining company with a unique high-grade gold, platnum and palladium project in Para State, Brazil. Located in an area of excellent infrastructure, this project once hosted the largest precious metal rush in Latn American history. With the recent grantng of the Installaton and Mining License, and the acquisiton of the down plunge extension of the mineralized zone, Colossus is forging ahead with an aggressive exploraton and development program.
WWW.COLOSSUSMINERALS.COM
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Mining Journal special publication – Gold exploration
TSX:CSI
[email protected]
September 2010
GOLD EXPLORATION mer ca mer ca.. e m n ng n us ustr tryy con ontr tr ut utee over 60% to Peru’s exports (by value) in 2009, and the Ecuador is seen as having some of the least friendly government remains committed to the promotion policies towards miners worldwide. However, there of new investment in the industry. have been signs of progress. This support is reflected in the ongoing activity in For example, in May, Canada’s Dynasty Metals & the country. Mining Inc completed the substitution of all its mining Gold Fields Ltd and Cia de Minas de Buenaventura titles with the Ministry of Non-renewable Natural have confirmed the Canahuire gold-copper-silver gold-copper-silver Resources, and reconfirmed its previously-held discovery at the Chucapaca joint venture as a major concessions at the Zaruma, Jerusalem and Dynasty deposit, containing containing about 5.1Moz of gold, 75,300t of projects.The latter is the company’s latest discovery discovery,, copper cop per an oz o s ve verr. e part partner nerss re report port w c t e eves as t e po pote tenta nta to to os ostt a ar arge ge 83.7Mt in inferred resources within an open pit design, bulk-mineable gold resource, with initial estimates of at an average grade of 1.9g/t Au, 0.09% Cu and 8.2g/t over 420,000oz of measured and indicated gold, plus Ag. Canahuire Canahuire was discovered about 18 months ago by 427,000oz in the inferred category. category. Buenaventura, which was earning into the property. International Minerals Corp’s assets in the country Gold Fields exercised its back-in right, and now holds a include the Rio Blanco gold-silver deposit, which which has 51% interest, with Buenaventura holding 49%. been described as ‘production ready’ but has not so Minera IRL entered option agreements in July to far received the necessary permits. purchase the Killincho gold exploration project from Kinross Gold Corp, however, has full government Ingerieria y Tecnologia Minero-Metalurgica sa. The deal support to press ahead with its Fruta del Norte would consolidate eight properties into one project deep in southern Ecuador. The size of the exp ora oratt on pr pro o ect n sou soutt ern eru eru.. ner neraa own ownss t e epost, ep ost, t e ewe ewe n cu cuaa ors m ne neras ras cr crow own, n, m g t 1.3Moz Ollachea project, 150km away, which is on the avee som av somet et ng to o w t t. ast ye year ar,, nro nross ss same gold-bearing geological formation. A pre-feasibili- up upgr graa e t e m ne nera ra reso resour urce ce es estt ma mate te t er eree to ty study on Ollachea is expected during the first three 15.9Mt grading 11.2g/t, for 5.7Moz of contained gold, months of 2011. plus an inferred resource of 24.3Mt at 7.85g/t, for Minera also recently released results from phase 6.1Moz. Kinross Kinross bought the project in an US$815 one of its exploration at the Bethania project. Six drill million deal in 2008 through its takeover of Aurelian Aurelian holes intersected broad zones of gold-copper gold-copper-molyb-molybResources. denum mineralisation. Cornerstone Capital Resources Inc has three An optimised feasibility study in May for Andean Andean 100%-owned gold properties in the country, and a American Mining Corp’s Invicta polymetallic VMS strategic gold alliance with Newmont Mining Corp. In pro pr o ec ectt c an ange ge me meta ta ur urgg ca oreca orecast sts. s. e re revv se ay,, orn ay orners erston tonee ann announ ounce ce t at t a een ss ssue ue proc pr oces esss ng as res esuu te n a s g t y ower ower go a number of key permits needed to re-start recovery but much higher recoveries for the other exploration activities in Ecuador, as well as approval of metals contained within the deposit. Invicta Invicta is the environmental management plan and water permit estimated to contain 7.8Mt in probable reserves, at an for its Gama project. average grade of 2.1g/t Au, 18.8g/t Ag, 0.5% Cu, 0.4% Another positive sign comes from Ecometals Ltd’s Pb and 0.3% Zn. Rio Zarza gold project, near near Fruta del Norte. The A feasibility study has been completed for the San project was also put on hold for much of 2008 and Luis gold-silver project owned by Silver Standard 2009 owing to the moratorium on mining, but the Resources Inc and Esperanza Silver Corp. The small, company says it is now able to explore again on its high-grade deposit will support a 3.5-year underground diamond-drilling targets, and and that signs are good operat on o n pro uc ng n g 4 t o or ore or or , oz o go go eno noug ug to eep on w t t e pr pro o ec ect. t. and 1.86Moz of silver. The capital cost is estimated at US$90 million with average cash operating costs of US$313/ oz of gold In Bolivia, Republic Gold Ltd has completed a (excluding silver credits). Silver Standard has satisfied feasibility study for development of its Amayapampa Amayapampa conditions of the joint-venture deal to vest a 70% gold project, designing a seven-year operation that interest in San Luis, and it can earn a further 10% would produce about 680,000oz. interest by paying all costs required to put the proposed In Guyana, Sandspring Resources Ltd reported in operation into production. June that the resource resource at its Toroparu gold-copper Focus Ventures Ventures Ltd was ‘reactivated’ under new deposit had been updated to contain a total 3.9Moz management early last year to target advanced gold of gold (all categories). pro ects n eru. n m t e company acqu r e n osta ca, a court n osta ca sm sse an op optt on to ac acqure qure t e sm smaa , g -g -gra ra e, un er er-challenges against the permits at Infinito Gold Ltd’s ground Nueva California gold mine for US$3 million Crucitas gold project. The ruling in April meant that in cash, and first-phase drilling was undertaken during the company could recommence construction after the second half of last year. Nueva California has been nearly 16 months of inactivity. in operation for 26 years but Focus plans to turn it Radius Gold Inc is focussed on precious metals in into a bulk-tonnage surface operation. Central and North America. In Guatemala, Radius’s Focus is currently extending its geophysical work joint venture partner B2Gold Corp is exploring exploring the to the south, and will undertake drilling to test a new Trebol bulk-tonnage deposit, and Radius has a royalty interpretation of the geological system. An additional interest in the Tambor Tambor gold deposit.The latter is under acquisition has been the nearby Chúcara project, development by Kappes Cassidy & Associates, with w c s n a er ta ta str ct an es on t e same pro pr o uc uctt on ex expe pect ctee at ater er t s year ear. geological belt as Nueva California. The project covers n ts ts own r g t, a us s nv nvest gat ng t e w o ymost of the old Chuvilca mine (Ag-Pb-Zn), which owned Banderas gold-silver property.The deposit operated from 1974 to 1981, but the deposit had was discovered in 2002 (up to t o 2g/t Au outcropping) never been tested for gold nor been drilled. but no deep drilling has been conducted to date.
eptember 2010
Mining Journal special publication – Gold exploration
15
GOLD EXPLORATION
African dichotomy No other continent has such a disparity between the ranking of its mineral wealth and its socio-political attractiveness to mining inv investors estors
G
OLD deposits are widely distributed throughout the world (as described in the article on page 3), but the pa ae aeoo-pp ac acer er ep epos os ts o ou outt Africa’s Witwatersrand basin dominated the gold-mining scene of the 20th century. More recently, the deposits of west and east Africa have come into play (see page 25 for details of the latter). Unfortunately,, the political scene in Africa is not so Unfortunately encouraging.The continent regularly scores badly in the annual survey of mining company executives by the Fraser Institute. This organisation, which aims to establish how m nera en owment an pu c po cy a cto ctorrs suc as taxation and regulation) affect exploration investment, ranks African African countries as amongst the least attractive to nvestors. For example, in last year’s survey, there were no African countries in the Fraser Institute’s top ten countries, but there were two (Zimbabwe and the Democratic Republic of the Congo) in the bottom ten. Despite its mineral wealth, South Africa dropped 12 places to 61st out of the 72 jurisdictions ranked.
The decline in South Africa’s ranking by the Fraser Institute for 2009/10 contrasts sharply with its position of 27 out of 47 jurisdictions in the 2003 survey.
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Mining Journal special publication – Gold exploration
This decline in the rankings has coincided with changes in the country’s minerals legislation. However, the outlook currently looks brighter, with the epartme epa rtment nt o ner neraa eso esour urces ces s ow ng re reaa commtme co mmtment nt to t e m n ng se sect ctor or.. n ee , n st ster er Susan Shabangu has called for the countr y’ y’ss mining laws to be amended by early 2011. The improvement can’t come too soon. A study in April by Citigroup Global Markets concluded that the country is one of the most under-producing regions in the world, with an average resource life of 184 years. Citigroup confirmed South Africa as the world’s richest country in terms of the value of its in-ground mineral resources (excluding energy). or ex exam ampp e, t e co coun untry try as ne near ar y o t e world’s PGMs, and these metals contribute US$2,200 billion of the country’s total resource value of US$2,494 billion. Despite the recent political difficulties, there has been continued gold-exploration activity in the country. Examples Examples include recently-reported news from Pan African Resources plc (PAL) and Great Basin Gold Ltd. The latter reported last month that overall resources at its Burnstone gold project were est mate to conta n a out oz . oz previously). However, the independent estimate calculated a smaller amount of resources within the measured category. PAL describes describes its focus as being on “strategic
alliances”, rather than exploration. PALR’s main asset is the cluster of operations in the Barberton area of east South Africa (the mines of Fairview, Sheba and New onssor on ortt , an t s a so nves nvestt ga gatt ng w at wou e Mozambique’ss first gold mine – the Manica project. Mozambique’
Investors in the DRC have endured a problematic past year, none more so than First Quantum Minerals Ltd. The Vancouver-based company saw the government cancel its contract to mine the Kolwezi copper-cobalt tailings licence (this is now subject to international arbitration), and witnessed threats to its exploration rights. ese exp o ra rat on r g ts are e t roug oc t de Développement Industriel et Minier du Congo (Sodimico), and and include land around First Quantum’s Frontier and Lonshi mines. More positively, AngloGold Ashanti Ltd signed a joint venture agreement agreement earlier this year with state-owned l’Office des Mines d’Or de KiloMoto (Okimo) over development of the Kilo gold project.AngloGold will hold an 86.2% interest and Okimo 13.8%, with exploitation permits over 6,000km of the Ituri district district being transferred transferred to t e o nt ve vent ntur ure. e. Also, Randgold Resources Ltd announced in July that the Kibali gold project could achieve production in mid-2011, six months ahead of schedule. Probable Probable reserves were estimated to contain 9.2Moz of gold,
September 2010
GOLD EXPLORATION indicated resources 13.9Moz and inferred resources 5.8Moz. Randgold and AngloGold Ashanti each hold a 45% interest in Kibali, with the DRC government holding the remaining 10% (through Okimo). Recent results in the DRC have included a resource upgrade at Mwana Africa Africa plc’s 80%-owned Zani-Kodo property.. The results extended the mineralised zone property by 150m from the previous resource envelope. The company said the resource related to 700m of strike of a 9km-long trend, which it considered had potential or mor moree m ne nera ra sa satt on on.. In Namibia, Auryx Gold Corp has begun drilling the Otjikoto orogenic gold deposit. The resource is currently an estimated 25.4Mt at 1.34g/t Au (indicated) and 17.2Mt at 1.28g/t Au (inferred).Auryx (then named Tova Ventures Inc) bought Otjikoto for US$28 million through a competitive bidding process (completed in June) from the delisted Teal Mining & Exploration (jointly owned by South Africa’s Africa’s African Rainbow Minerals Ltd and Brazil’ Brazil’ss Vale Vale SA). Auryx subsequently listed on the TSX, and aims to pro pr o uc ucee a ne new w re reso sour urce ce es estt ma mate te or t ot oto o y end- 2010.
The countries of west Africa have enjoyed a resurgence in exploration and mining activity, especially for gold, in the past few years. For example, in August, Perseus Mining Ltd intersected further gold mineralisation during drilling at its Central Ashanti project in Ghana. Elsewhere in the country, Signature Metals Ltd
A Burnstone headset in South Africa
comp et e te n t a r ng u r ng ng u y at t e oa e roo South zone of its Konongo gold deposit. The company was testing an 800m strike length of mineralisation to the south of an historical open-pit in the Ashanti gold belt. A reverse-circulation drilling programme at Azumah Resources Ltd’s Kunche-Bepkong target on the Wa project has confirmed a zone of mineralisation 100m west of the main 212,000oz deposit. The most recent drilling was designed to follow up an nte nterse rsect ct on o m at a mos mostt g t rom rom m. further zone in a still relatively untested area, midway midway etw et wee eenn t e un uncc e an ep on ongg ep eposts, osts, as as a so been confirmed by drilling. The company’s drilling programme this year is expected to total 100,000m. Pelangio Exploration Inc is focused on a 290km land package in Ghana beside AngloGold Ashanti’s Ashanti’s Obuasi mine. The Canadian company has confirmed that the gold-bearing structures at Obuasi traverse at least 15km of its property, and initial drill results have been
enco en cour uragng. agng. urt urt er r ng s on ongong. gong. Pelangio is also exploring on the 100km Manfo property in the country. The property lies on the same fault structure as the Ahafo and Chirano mines, operated by Newmont and Red Back, respectively. Elsewhere in Ghana, a preliminary economic assessment for development of Keegan Resources Inc’s 90%-owned Esaase gold deposit indicated in April that it could support a ten-year open-pit operation. The study was based on indicated resources of . oz, p us u s n er e rre resources o . oz us us ng ng US$850/ oz and a cut-off grade of 0.4g/t). In Burkina Faso recently, Channel Resources Ltd reported a new gold discovery at its Tanlouka Tanlouka property, and Avocet Mining plc has received drilling results from the first phase of the programme at its Dynamite prospect.The latter is part of the Souma Trend, a gold-in-soil geochemical anomaly near Avocet’s Inata gold mine. In July, Volta Resources Inc announced a maiden NI 43-101 compliant resource for its Kiaka project. The estt ma es mate te,, co comp mp e y onsut on sut ng ng,, wa wass as asee on more than 25,000m of drilling by Volta Volta and the prevous pr evous ow owne nerr an go es esou ourc rces es t . Indicated resources contain some 1.38Moz of gold, with a fur ther 0.48Moz in the inferred category.The estimate incorporates a strike length of just over 1km and to a maximum vertical depth of 230m. Also in Burkina Faso, Etruscan Resources Inc has intersected high-grade gold mineralisation during reverse-circulation revers e-circulation drilling at its Ouaré prospect, part Continued on page 20
from exploration to development Our Mining Group, working from our domestic Canadian offices and our international bases in London, China, the United States and the Gulf Region, have been involved in transactions on every continent involving involving a wide range of commodities. Our client base spans the spectrum from major multinationals to junior exploration companies. companies. We We act for mining companies and the banks and underwriters that finance them on mergers and acquisitions, joint ventures, listings, equity and debt financings and project finance. The team has carried out numerous secondary listings, re-domiciles and financings for Australian and other non-Canadian companies.
NEW YORK CHICAGO * Associated Office
eptember 2010
MONTRÉAL LONDON
OTTAWA TORONTO CALGARY VANCOUVER BAHRAIN AL-KHOBAR* AL -KHOBAR* BEIJING SHANGHAI* blakes.com Blake, Cassels & Graydon LLP
Mining Journal special publication – Gold exploration
17
COMPANY PROFILE
Gammon Gold focuses on stategic growth in North America Gammon Gold Inc, active since 1999, steps up exploration in Mexico Since 1999, the company’s key focus has been developing the Ocampo land package. This prospective area has been transformed from a grass-roots exp ora on pr pro ope perr y o one o e arg arges es gold-silver mines in Mexico. Today, the Ocampo mine generates significant positive cash flow from operations. This robust cash flow has allowed the company to implement a strategic re-investment programme t at en ances s are o er va ue. s n t atve as nc u e a ca capp ta ex exppan anss on programme at Ocampo as well as an aggressive exploration programme programme at all the company’s assets in
Mexico. These strategic programmes continue to deliver promising results that bode well for Gammon’s future growth. The company’s exploration programme is led by an expe ex perr en ence ce te team am o seasoned professionals.Their expe ex pert rt se a ow owss t e com compa pany ny to fully leverage the potential of our assets by developing a pipeline of properties that supports a longer longer-term -term growth plan. Strategic exploration programmes have been launched at Ocampo, as as well as the company’ company’ss a va vannce eve op opme ment nt property, Guadalupe y Calvo. Grass-root programmes have been launched at new properties the company acquired in 2010. The acquisition of these new
“Su Suppport rtee y a 010 u get o US US 2830 mi ion t at inc u es 142 m o ri ing, t e company is we posi po sitition onee to ev evee op ititss grow gr owin ingg por portt o io o properties in Mexico”
CALVO PROJECT, CHIHUAHUA The Guadalupe y Calvo gold-silver exploration project is Post-Mineral Tuffs a 4, a property n t e 2008 Drilled Resource Guadalupe y Calvo mining Volume district of southern Chihuahua Drill Spacing 25 x 40m State, a prolific past-productive gold-silver district. A scoping study is under way that is expected to be completed during the fourth quarter of 2010. As part of this scoping study, recent Pla Planne nned d Dri Drill ll Pat Pattern tern to 100 x 100m bottle-rolls metallurgical work completed to date on four sampes sa mpes as s ow ownn pr proms oms ng recoveries for gold (93%) and silver (69%) for -100 mesh ores. Additional test work is taking place . The 2010 drilling programme at the Guadalupe y Calvo property launched in April has focused on extending the known mineralisation northwest from the outcropping deposit drilled in 2008.The northwest extension is covered by a sequence of post-mineral tuffs typical of the Sierra Madre Occidental. The 2010 programme has c ompleted of 3,459m of drilling on the Rosario Vein Vein system to date and has extended the Rosario mineralisation by about 350m along strike and 100m furt her at depth. Assays received have been highly encouraging and include bonanza-grade intercepts at Hole GC-0185, with 1.1m grading 62.37g/t gold and 56g/t silver silver,, or 63.39g/t gold equivalent(1) and Hole GC-188, with a 0.7m interval grading 48.25g/t gold plus 525g/t silver silver,, or 57.80g/t gold equivalent(1). The latter drill hole intercept is at 1,810m elevation, 100m below previous drilling on this vein. This year’s programme exten s prev o us us r ng resu t s comp e te te n nc u ng o e - 4, w t . m gra ng .4 g t gold equivalent(1) and Hole GC-135, with 1.0m grading 17.83g/t gold equivalent(1). The company is now in-fill drilling this new extension to the Rosario Vein Vein under the pos t-mineralisation rocks with the goal of defining an underground-mineable orebody. orebody. OG-182 1.0m @ 2.06 AuEq
OG-183 1.0m @ 11.83 AuEq
OG-185 1.1m @ 63.39 AuEq
OG-186 2.0m @ 3.30 AuEq
OG-188 1.4m @ 30.51 AuEq
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Mining Journal special publication – Gold exploration
proper prop ertt es as ncr ncrea ease se t e co comp mpan anys ys an po poss t on in Mexico by more than 59%, to over 131,000ha. Supported by a 2010 budget of US$28-30 million that includes 142km of drilling, the company is well positioned to develop its growing portfolio of properties in Mexico. The company also began to dedicate resources to evaluate and strategically invest in high-quality companies and assets, as well as to consider other accretive opportunities.
Ocampo is t he company’s flagship operation, which includes an underground mine complex, a series of five open-pit mines, a 3,300t/d mill and a heap-leach facility. In 2009, after several years of inactivity, the company launched an aggressive exploration programme in and around the Ocampo mine to extend known deposits and discover new ones. The programmee has consisted of building a new programm exploration explor ation model for t he district, extensive geologic an geoc em c a wor an a targete r ng programme. During the past 18 months, the company has focused on drilling new exploration targets both by extending the underground mined-vein, and by exploring newly defined targets from surface. Since launching the drilling programme in 2009, more than 176,800m have been completed with an additional 60,000m of drilling targeted for the second half of 2010. As a result of this drilling campaign, new deposits were discovered at the Las Molinas open-pit/ un er ergr grou ounn ta targ rget et,, a ser ser es o ta targ rgets ets at t e Altagracia area, on the extreme southeast part of t he district, as well as underground vein targets at Santa Juliana, Belen, Picacho Deeps and Molinas Northwest. Resource estimation and reserve conversion for these discoveries is planned for 2010. The investment in exploration has demonstrated that the Ocampo district is open to expansion in all directions and that ore-grade mineralisation has been delineated over 700m vertically vertically..
, Gammon signed an option to buy the 4,491ha Venus Venus property, just 2km north of the Ocampo properties, in April 2010 and immediately began basic geology and geochemistry. This work has already discovered an
September 2010
COMPANY PROFILE
outcropping direct target for underground and open-pit-style mineralisation at the La Boleta vein system. This system has surface dimensions of 400m long by up to 150m wide, within which, there are a myriad of small veins and sheeted vein occurrences similar to the ores being mined in the Ocampo district to the south. Of the 234 surface geochemistry samples collected on the target to date, 101 (43%) contained over 0.2g/t gold equivalent using a go -to-s ver rat o o : an go va u es es are capped at 8g/t, these 101 samples average 1.55g/t gold equivalent using a gold-to-silver ratio of 55:1. Maximum values in the first pass sampling were 25.08g/t gold and 210g/t silver silver.. A core drilling programme is being launched to test the La Boleta target. The company also is continuing its district-wide geology and geochemistry programme, and and anticipates that other high-quality drill targets will emerge from this programme.
, Gammon also completed another strategic option agreement to buy 43,229ha of mineral rights from Valdez Gold Corp covering the Los Jarros properties north, east and southeast of the Ocampo land package. The property surrounds portions of Ocampo, Pinos Altos (Agnico-Eagle) and Concheño (Frisco) land packages as well as a high-sulphidation epithermal system 25km southeast of the Ocampo mine. Historical drilling by Valdez Valdez discovered disseminated gold mineralisation in a breccia, with the best ntercept gra ng . g t go over a . m r e length from 1.5m depth, including 26.1m grading 0.70g/t gold from 81m depth. Basic exploration initiatives were launched in August 2010 with a drilling programme targeted for next year year..
eptember 2010
, The Mezquite Project, in Zacatecas State, covers 460ha and lies 45km southeast of Goldcorp’s Peñasquito property and 22km northeast of Camino Rojo, which was recently acquired by Goldcorp. The property lies on a 70km belt with over 27.4Moz of gold and 1,611Moz of silver, or about 57Moz gold equivalent at a gold-to-silver ratio of 55:1, in published reserves and resources in all categories. Gammon has recently completed a ground mag agne nett c su surv rveey an a poe- poe n uc ucee polarisatio polar isationn (IP). (IP).The results results,, nterprete nterprete n t ree dimensions, show a distinct magnetic body b ody near the centre of the claim, with a halo of high IP chargeability response partly within as well as outside the magnetic body. The target, as presently conceived, is about 500m in diameter. Drill Drill permits are under application for this project and the company plans to initiate drilling in the third quarter of 2010.
STRATEGIC INVESTMENTS ammo am monn as ever everag agee ts st stro rong ng ca cass po poss t on to ma e str strate ategg c nves nvestm tmen ents ts n g po pote tent nt a pro pro ec ects ts.. To date, the company has completed two investments including a 5% investment (C$8 million) in Golden Queen Mining Ltd (GQM), and a 12% (C$ 3.2 million)
investment in Corex Gold Inc (CGI). The Golden Queen investment exposes the firm to the positive advances at the Soledad Mountain Project in Kern County, California. This prospective property has a mineable reserve of 46.1Mt grading 0.70g/t gold and 13g/t silver silver.. The Corex investment exposes the company to Corex’s Santana Project in Sonora, Mexico, where where recent drilling has discovered an extensive system of breccias bodies and silicification with grades typical of open-pit mines in the region.
Executive Office 56 Temperance Temperance Street uite 500 oronto, ON Canada M5H 3V5 E-mail:
[email protected] el: +1 416 646 3825 www. gammongold.com gammongold.com
Mining Journal special publication – Gold exploration
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GOLD EXPLORATION ont nu ont nuee ro rom m pa page ge of the Bitou exploration permit, about 40km from the company’s Youga mine. In Mali, Randgold Resources Ltd began a feasibility study in May for development of its 80%-owned Gounkoto project. Randgold Randgold said the open-pit design for the project had to be revised following information from infill drilling, raising the stripping ratio from the scoping study’s design, and preventing the capture of resources. e ep epost ost as pr pro o a e re rese serv rves es es estt ma mate te at 7.47Mt at 6.83g/t Au. Also in Mali, Reverse-circulation Reverse-circulation drilling at North Atlantic Resources Inc’s FT gold project during June intersected gold mineralisation in areas previously thought to be unmineralised. In the Ivory Coast, Perseus Mining Ltd intersected further high-grade mineralisation earlier this year at the Sissingue deposit, part of its Tengrela project. In Liberia, African Aura Mining Inc has intersected high-grade gold mineralisation during drilling on a new zone zo ne at ts ew ert ertyy m ne. e at zo zone ne a re reaa y extends for 235m and remains open at depth. In Senegal, Axmin Inc received drilling results in June from Mineral Deposits Ltd (MDL), which is earning a 51% interest in Axmin’s Axmin’s tenements in the country.The holes tested the Gora property, located about 25km from MDL’s Sabodala processing plant. Oromin Explorations Ltd reported earlier this year that drilling at its OJVG project in Senegal has extended the Kourouloulou deposit to 300m depth and expanded the Maki Medina deposit.
As outlined on page 25, the Nubian side of the Nubian-Arabian Shield, comprising Egypt, Sudan, Eritrea and Ethiopia, represents a large geological opportunn ty opportu ty.. The shield comprises late Proterozoic volcanosedimentary units, and high levels of magmatic activity have created significant potential for mineral deposits, including a current gold endowment of more than 20Moz. n gypt, gypt, entamn entamn gy gypt pt t nc ncrrea ease se t e resource estimate for its Sukari gold project once again in June, raising gold contained in measured and indicated resources to about 11Moz. The mine poured its first gold earlier this year, and an expansion from 4Mt/y throughput to 5Mt/y is underway. In May, Alexander Nubia Inc announced further details of its intention to list on the TSX venture exchange by reversing into Chrysalis Capital VII Corp. The company acquired two concessions in Egypt in March 2008; Fatiri (in the Eastern Desert) and Abu araawa ar watt pr prevousy evousy e y entamn entamn gypt gypt t .
20
Mining Journal special publication – Gold exploration
Over US$3.5 million has been spent to-date exp or ng t e two pr mary tar target gets; s; at u ara arawat wat an at amama. In Saudi Arabia, Citadel Resource Group Ltd has received the mining licence for its 50%-owned Jabal Sayid copper-gold project, which lies 350km north-east of Jeddah. In Eritrea, Sunridge Sunridge Gold Corp has begun prefeasibility studies for development of its Asmara polymetallic project. The latest study found that potential existed for early production of direct-shipping copper mineralisat on rom t e e ar arwa wa epo poss t w t seec seectt ve m n ng ng.. Later development of the lower-grade mineralisation in conjunction with copper-zinc mineralisation in the Adi Nefas and Emba Derho deposits was found to be possible. In addition, oxide gold mineralisation from these three deposits responded well to cyanidation recovery,, so a central leaching plant would be possible. recovery Combined indicated resources at the project were estimated to contain 580,000t of copper, 1.1Mt of zinc, 1Moz of gold and 31.8Moz of silver. a ce o nes t sa says t at ts o a go project in the north of the country could support production of more than 100,000oz/y. Consultant Lycopodium has designed an open-pit operation feeding a gravity, cyanidation and carbon-in-leach
processing plant at 600,000t/y initially, designed designed for expans o n to , t y. n t opa, yot otaa ne neras ras t repo report rtee t at an independent resource estimate for its Tulu Tulu Kapi gold deposit put the amount of gold contained at 1.38Moz, compared with 690,000oz for the previous calculation. Consultant Venmyn Venmyn Rand compiled the data from about 4,600m of reverse reverse-circulation -circulation drilling that targeted an extension to the known resource. Inferred Inferred resources were were estimated at 25.5Mt at 1.68g/t Au, at a cut-off grade of 0.5g/t Au. There has also been significant exploration to the sout so ut o t es esee co coun untr tr es es,, n an anza zann a. or ex exam ampp e, a feasibility study for Shanta Gold Ltd’ Ltd’ss Chunya project in Tanzania’s Lupa goldfield has confirmed the feasibility of a 360,000t/y metallurgical plant that is fed from a number of open-pit operations within 3km of Chunya. The operation would produce 28,400oz/y over an 11-year life. Elsewhere in the country, Canaco Resources Inc has received further results from drilling at the Magambazi property. Canaco, 35%-owned by Sinotex Mineral Exploration Co, can can earn a 100% interest in the property. n ay, nc an anno noun uncce t at rev ve r ng at its Ikungu property in Tanzania Tanzania had confirmed grade and continuity of mineralisation along a strike length of 2.5km.
September 2010
GOLD EXPLORATION
Far Eastern promise As a continent, Asia has punched below its weight in terms of gold exploration and production but that might be changing
A
SIA has hardly been the favourite destination for international mining investors inv estors uring t e past past ten yea years. rs. ew ou t, ow owev ever er,, t at t is va vast st region has significant undeveloped potential. For example, gold-rich porphyry and epithermal deposits are enticing targets in the Altaid belt of the Commonwealth of Independent States (CIS), Mongolia Mongolia and nort hern China. Asia also boasts arguably the world’s best-known mine development at the moment, namely the Oyu Tolgoi deposit in Mongolia of Ivanhoe Mines Ltd and Rio Tinto.
ADVANCES ADV ANCES IN I N KAZAKHST KAZAKHS TAN
Ivanhoe Mines Ltd, 50%-owner of the Kyzyl gold project, announced in July that a prefeasibility study had in icate t at t e project cou support a ten-year operation yie ing a to totta o . oz o go . Kyzyl comprises both the Bakyrchik and t he Bolshevik deposits, and consultant Scott Wilson Wilson has designed an underground mine at the former to produce 4,300t/d, exploiting three lenses of the deposit utilising drift-and-fill mining. Also in Kazakhstan, Central Asia Resources Ltd intersected further gold mineralisation during drilling in July at its Altyntas property. The programme was designed to test for depth extensions of known mineralisation. In June 2009, Orsu Metals Corp sold its only operating mine, Varvarinskoye in Kazakhstan, to Polyus Gold. he company said it would refocus its resources on the exploration and development of projects in Kyrgyzstan and Kazakhstan, including the Talas project, a joint venture with Gold Fields Ltd. The project has an estimated indicated resource of 141Mt at 0.66g/t Au, 0.17% Cu and 0.01% Mo, and inferred resource resource of t at . g t u , . u an . o.
Nowhere in Asia is the gap between mineral discovery of near near-surface, -surface, quartzite-hosted gold potential and investor interest wider than in mineralisation at its eponymous gold project. Russia (see also p27). Chaarat said that work is being conducted to Earlier this year some 200 delegates at a investigate early exploitation, by open-pit mining seminar in London on mining in Russian and the methods, of the new zone at Tulkubash. CIS heard 24 experts discuss the investment In the latest resource estimate, inferred outlook in the region. Despite the accepted resources at Tulkubash were estimated to difficulties, many of the speakers talked of the contain 2.5Mt at an average grade of 4.18g/t Au. opportunities for foreign investors, and that the Overall resources at Chaarat, including measured, situation situa tion was etter t an portra portraye ye over overseas seas.. in ic icat atee an in er erre re ca cate tego gori ries es,, we were re es esti tima mate te or exa examp mp e, iri iri en o, a sen senior ior anayst to contain 4Moz of gold. at the engineering consultancy NBL InterKentor Gold Ltd, meanwhile, is planning national Ltd, noted that gold production grew development of the Andash gold-copper project, 9% in 2009, lifting the country’s global ranking urther intersections from diamond-drilling at Manas Resources’ Shambesai and reported earlier this year that it is on track to fifth. He accepted, nevertheless, that this still gold property to commence development of its first mine this represents an underperformance compared year and be in production late in 2011. Andash with Russia’s share of global gold-ore reserves. around 5.5Moz. has a JORC reserve of 540,000oz of gold and 63,000t Mr Kirilenko commended the Russian gold-mining At the seminar, the chief executive officer of Ovoca of copper. Production is planned at a rate of sector to investors, saying saying that the investment climate Gold plc, Tim McCutcheon, described Ovoca as the 60,000oz/y of gold and 6,800t/y of copper in had improved during the past few years and that the only independent junior still operating in Russia concentrate for an initial 6.5-year mine life. coun co untr tryy a a re at ativ ivee y st staa e inan inanci ciaa syst system em.. n ee , mana ma nage geme ment nt ow owns ns 4 o t e co comp mpan anyy . voc ocaa ento en torr o s ot er in inte tere rest stss in t e yr yrgy gyzz he criticised those that found the region ‘scary’. acqu ac quir iree t re reee go pr prop oper erti ties es in t e ag agaa an re regi gion on epu ic inc u e t e sma , ig -gra e go project at As an example of delivering value in the region, it is in January this year (Rassoshinskaya, Nevsko-PestrinSavoyardy, where the company increased the resource hard to do better than Petropav Petropavlovsk lovsk plc (previously skoye and Stakhanovsky). estimate last year to 210,000t at 6.1g/t Au. Peter Hambro Mining). To encourage investors, the Elsewhere, OAO Polymetal announced last month Manas Resources Ltd owns nine projects, covering company has switched to JORC for reporting of its that it will develop the Birkachan gold project in a total of more than 4,400km2, in Kyrgyzstan. Kyrgyzst an. The mineral wealth. The company is busy converting the Russia as the first of a number of deposits in its company now has a resource base of 875,000oz of figures for its numerous projects but, in the meantime, Omolon project. The company has completed a gold at its Shambesai and Obdilla prospects, and is proven and probable reserves have doubled to feasibility study, audited by SRK, on Birkachan that targeting up to 2Moz by the end of 2010. 6.7Moz, with with a further 8.2Moz of measured and designed a combined open-pit and underground mine In Tajikistan, an independent resource estimate has indicated resources, and 3.66Moz of inferred exploiting resources estimated to contain 2Moz of defined nearly 3Moz of gold contained within Kr yso . go at an av aver erag agee gr graa e o .4 .4gg t u. in iner eraa is isat atio ionn at esou es ourc rces es p cs a ru rutt go pr proj ojec ect. t. e ate atest st Peter Hambro, the chairman of Petropavlovsk, said ir ac an com ompr priise sess go go -s -sii ver en enrric e vei eins ns an ca cu at atio ionn incu e at ataa ge gene nera rate te y ri in ingg at t e at the seminar that his team is “building a regional disseminated stockworks, hosted by a volcanosediproject during the second half of last year, and will be champion”, and expects gold production to reach mentary sequence. used in the preparation of the ongoing feasibility 1.15Moz/y in 2015. Polymetal had previously announced that it will study. Another gold-mining company active in Russia is also develop its Mayskoye gold deposit in Russia’s In Azerbaijan, Anglo Asian Mining plc announced in Highland Gold Mining Ltd. The company’s chief Far East Chukotka region as one of a planned series July an increase increase of over 50% in the contained contained gold and operating officer, Brent Horochuk, talked at the of mines producing concentrate for the Amursk copper at its 54,000oz/y Gedabek operation (which hydrometallurgical hydrometal lurgical plant in Khabarovsk. has been in operation for over a year). A reserve Mining Journal seminar of the improving operating conditions but described a lack of qualified personnel statement, following following further drilling, is expected by as “a challenge”. the first quarter of 2011. OTHER CIS e company now operates two mines an n yrgyzs yrgyzstan, tan, anas esour esources ces t rece recent nt y rece receive ive rmenia rme nia is ein eingg tar target getee y y ian nte nterna rnatio tiona na Novo) and has two development projects (Belaya (Belaya further intersections from diamond-drilling at its Ltd, whose flagship Amulsar Amulsar gold property has an Gora and Taseevskoye) plus four exploration Shambesai gold property, with the latest holes testing inferred resource of 1.4Moz. This followed a 14,000m properties. Gold production this year is expected to areas outside the resource model. drilling programme last year, centred on the exceed 200,000oz from corporate resources put at In May, Chaarat Gold Holdings Ltd announced the Artavasdes,Arshak and Erato deposits.
eptember 2010
Mining Journal special publication – Gold exploration
21
COMPANY PROFILE
rchipelago esour esources: ces: quality gold project with near-term output Archipelago is developing developi ng its it s flagship fla gship Toka Tindung gold project p roject in i n Sulawesi, Indonesia and exploring the Pac Lang gold project in Vietnam Archipelago was formed in 2002 and is Archipelago focused on gold and silver exploration and development developme nt in South East Asia. The company is listed on AIM but is managed from Perth Western Australia. Toka Tindung was acquired from Aurora Gold in February 2002 and lies about 200m above sea level at the northern tip of the island of Sulawesi. It is 85%-owned by the company company,, but 100% of proceeds are rece v a e unt a e t owe to rc pe a go go y t e m nor ty o ers s repa . o a n ung as a near surface resource of 1.7Moz gold equivalent, of which 1.1Moz will be mined via open pits. Gold production is due to start by the end of 2010 with a first year’s production of 140,000oz of gold equivalent and an initial six-year mine life with an average production rate of 160,000oz/y of gold equivalent. It is a decade since substantive exploration was undertaken at Toka Toka Tindung and the company will rest staart exp orat on n t e seco conn a o wt a view to finding replacement ounces necessary to maintain the mine life during production. In terms of infrastructure, there is an established base camp, along with an administration office, laboratory and workshop/warehouse.The processing plant is under cons truction and 60% built. Power Power will be provided by an onsite leased 15MW power station producing 8MW of base load power output for the fully operational mine. Toka Tindung will have an average cash production cost o 4 oz. s ng ng a go pr pr ce ce o , oz, the company determines a pre-tax NPV of US$376 million and an EBITDA averaging US$90 million per annum.The company’s broker targets a share price of 67p (Ambrian, January 10). This valuation ignores the excellent exploration potential inherent in the Toka Toka Tindung project as well as its other projects.
Gold projects are one of the few assets currently in g eman , an w t . oz o go go toget er w t a relatively low cash production cost, Archipelago Archipelago offers an attractive gold investment. Archipelago’s Vietnamese asset is the Pac Lang gold
project, located130km north of Hanoi together with appp ca ap catt on onss co cove verr ng t e am uy – a uo uocc o Project, 105km south-west of Hanoi. The 65%-owned Pac Lang area has never been evaluated by modern exploration methods so Archipelago’s work, which includes drilling, surface surface and underground surveys and sampling, aims to determine the extent of the large historic gold mineralised system. Cam Thuy – Ba Thuoc lies on a fault structure parallel to the Red River suture and is the centre of a lot of alluvial gold workings. Archipelago’ Archipelago’s focus is to discover extensions or repetitions of this known m ne nera ra sa satt on on..
Administration Office 17 Strome Road, Applecross Perth, Western Australia 6153 AR. 33p 493 million £163 million 21.25p – 33.00p $28 million AIM Colin Loosemore, Managing Director E-mail:
[email protected] Tel: +61 (0)8 9364 8301 EPIC Share price Issued shares Market cap 12-month range Net Cash Market Contact
www.archipelagoresources.co.uk
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Mining Journal special publication – Gold exploration
September 2010
GOLD EXPLORATION
In April, Mongolia suspended the issuance and transfer of mining permits as the government plans to introduce new laws to protect the industry from corruption and bribery. President President Elbegdorj Tsakhia said the suspension will remain in place until a new law is passed. He noted that the order “addresses, and aims to resolve”, critical issues that have been “causing “causing a great deal of conc co ncer ernn . The Oyu Tolgoi copper-gold project in Mongolia is capable of supporting an average annual output of 544,000t of copper and 650,000oz of gold during the first ten years, according to an independent study completed in May by a group of leading consultants led by AMEC AMEC Minproc. Ivanhoe Mines released a new resource estimate for yu o go n pr to nc ncor orpo pora rate te t e ug ugo o ort extens exte ns on an erug erugaa epos ts. e tota res resourc ources es cont ntaa ne w t n t ese tw two o epo poss ts was est mate at 17Mt in the indicated category, at an average grade of 1.8% Cu and 0.61g/t Au, and 910Mt in inferred resources at an average grade of 0.48% Cu, 0.49g/t Au and 141ppm Mo (using a 0.6% copper-equivalent cut-off grade). Robert Friedland, executive executive c a rm rman an o -ow owne nerr van oe nes t , sa t e pro ect as the potential to become one of the world’s top three copper-gold producers. Elsewhere in the country, Voyager Resources Ltd completed an initial drilling programme in uly to investigate the geometry and nature of gold mineralisation below trenching results at its a t n vo vorr pr prope operty rty..
After a t wo-year hiatus, Continental Continental Minerals Corp announced earlier this year that it was resurrecting its Xietongmen copper-gold project in China’s Tibet Autonomous Region, 200km west of Lhasa. he company has applied for a mining licence, and is hopeful of a decision later this year. Continental is affiliated to the Hunter Dickinson group, with Taseko Mines Ltd owning 5.1% of ont nen nenta ta , an man manage agemen mentt a further 9.6%. In Laos, PanAust Ltd has discovered discover ed high-grade skarn gold mineralisation at the Tharkhek gold property, near its Tharkhek copper-gold deposit. The first four discovery holes have intersected mineralisation over an area 100 x 100m, with an estimated true thickness of 15-20m. Tharkhek is in the north of the property that hosts PanAust’s PanAust’s Phu Kham an u a pr pro o ec ects ts.. In Thailand, Thailand, Kingsgate Consolidated Ltd has intersected a new zone of gold mineralisation near proposed open-pit mining areas in the northern
“In In onesia, t e Acee Pr Ac Proovi vinc nce, e, in nort no rt er ernn Suma Sumatr tra, a, is considered to e par arti ticu cu ar y prospective”
portion of its Chatree gold mine. The company regards the Q East zone as having potential for underground mining. In Indonesia, the Aceh Province, in northern Sumatra, is considered considered to be particularly prospective, especially for shallow porphyry and epithermal gold-copper mineralisation. The area comprises a volcanic arc, a long-lived zone of subduction, rapid uplift, and a moderately fractured igneous suite of volcanics and intrusives. e re regg ons pr pros ospe pect ct v ty s us ustr trat atee y as astt s a Minerals’ Miwah epithermal gold discovery. discovery. Earlier this year the company sampled 4.11g/t over 200m in the eastern zone and 4.35g/t over 27m in the west. Another company operating in the area is Centurion Minerals Ltd. The Vancouver-based firm already has an interest in four properties near the Miwah discovery, of which three received the country’s new type of exploration licence before the end-April deadline (representing a significant competitive advantage as newcomers to the region w ac acee ar arrr er erss to en entr tryy . Archipelago Resources plc was formed in 2002 to develop mines in south-east Asia. Managed from Perth, the company’s principal project is at Toka Tindung in north Sulawes Sulawesi.i. Toka Tindung has a resource of 1.8Moz, of which 1.1Moz will be mineable from five open pits (with processing through a central CIL plant). Construction is well advanced with an average production target of 160,000oz/y (gold equivalent) over ov er t e rs rstt s x ye year arss o pr pro o uc uctt on on.. Kingsrose Mining Ltd acquired an 85% stake in t he Way Way Linggo high-grade, underground, gold-silver project in January 2009. The project, located in Lampung Province, southern Sumatra, is described by Kingsrose as being at “an advanced development stage”. Various other highly prospective targets have been identified in the region, and will form the basis of an extensive explorat on programme programme..
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eptember 2010
Mining Journal special publication – Gold exploration
23
COMPANY PROFILE
iranda old: exploration and discovery in world-class jurisdictions Miranda Gold Corp aims to create shareholder wealth by discovering world-class gold deposits Miranda Gold Corp is focusing on Nevada, the fourth-largest gold-producing region in the world, and Colombia, one of only five regions to produce a 10Moz-plus gold discovery since 2000. Five of Miranda Gold’s 12 properties lie in the orte or tezz ren ren porton porton o t e at attt e ou ount ntaa n- ur uree a Gold Belt, which, along with the Carlin Trend, accounts for over 80% of Nevada’s total gold production.The management team has been involved in over 20Moz of gold discovered in this area. The recent addition of Colombia as a regional focus was a strategic decision to balance the mature nature of Nevada’s mining histor y with a more underexplored area that exhibits similar world-class potential. As an emerging mineral exploration company company,, known for its expertise as a project generator, nvestor nve storss av avee t e opp opportu ortunn ty to part c pat patee n a diverse number of projects and, in turn, numerous possibilities to take part in a major gold discovery. With a strategic property portfolio and par tnerships with various mining companies, Miranda Gold’s goal is to mitigate the risk of exploration through a uniquely executed joint-venture model, thereby thereby increasing opportunities for discovery and preserving the treasury.
KEY PROJECTS e e an anyyon pr pro o ec ectt s a se men entt- os oste te go project in Eureka County, Nevada. The property adjoins US Gold’s Tonkin Springs property on the west and covers an erosional ‘window’ that exposes altered, brecciated and silicified lower plate carbonate rocks that are age-equivalent to the host rocks at t he Cortez Hills discovery (+12Moz). In June 2008, an exploration funding agreement was signed with Montezuma Mines Inc. Drilling has confirmed that Carlin-style alteration exists on the project.Three core holes were drilled in 2009 to understand the stru st ructu cture ress ca caus us ng t s m ne nera ra sa satt on on.. ssa ssays ys rom hole MR09-05C confirmed previous results intersecting 119ft of 0.152oz Au/t (36.3m of 5.25g Au/t). The 2010 exploration programme will include
IGHLIGHTS ■
trongg ma tron mana nage geme ment nt te team am w t ex exte tensve nsve wo worr w e m n ng ex expe pert rt se an a oa oarr o re rect ctor orss w t decades of experience in financing and public mining company management; ■ Focused in Nevada and Colombia with emphasis on finding multi-million-ounce gold deposits; ■ Share project risk by joint-venturing properties, thus providing shareholders exposure to numerous gold exploration projects while preserving capital; Piedmont Mining ■ Ongoing partnerships with Ramelius Resources Ltd, NuLegacy Gold Corporation, Piedmont Company Inc, Montezuma Mines Inc, Red Eagle Mining Corporation and SIN Holdings Ltd; ■ Attractive capital structure with 51 million shares issued and outstanding; ■ Fully cashed up treasury with C$ 10.5 million and a C$2.5 million annual burn rate.
14,000ft (4,270m) of both reverse-circulation and core drilling. Angel Wing Wing is a low-sulphidation vein and disseminated gold system in Elko County, Nevada. High-grade surface samples up t o 2.7oz Au/t (92.5g u t occur occur n st stee eepp y ppng qu quar artz tz-c -caa c te te-a -a u ara ‘bonanza’ veins within Triassic Triassic limestone. These high-grade veins remain untested. Miranda Gold geologists have identified several well-defined drill targets on the property. Ramelius Resources Ltd is funding exploration at Angel Wing.A 4,000ft (1,220m) reverse-circulation reverse-circula tion drill programme is expected in 2010. Pavo Real is the first project acquisition in Colombia.The property lies within the department of Tolima 12.5 miles (20km) south of the city of Ibague an m es 4 m sout east o ng o o s ant s La Colosa project (+12Moz Au). Recent channel sampling of outcrops and old workings at Pavo Real has returned very encouraging results. Of the 82
samples collected, 32 samples, or 39%, assayed in excess o . oz u t 1. g u t w t t e g est sample assaying 0.46oz Au/t (15.9g Au/t). Red Eagle Mining Corporation recently signed a definitive agreement for exploration whereby Red Eagle may earn a joint-venture interest in the Pavo Real Concession. Drilling, following mapping and geochemical surveys, is expected in 2010. Other Miranda Gold properties include: Big Blue, Coal Canyon, HOG, Iron Point, PPM, Redlich, Redlich , Red Hill, and TAZ. TAZ.
ares ar es ss ssue ue : 51,279,452 Fully diluted: 61,632,944 Listed on: TSX-V: MAD; OTCBB:MRDDF; FSE: MRG 2-week high/low: TSX-V: 0.84 / 0.32 OTCBB: 0.80 / 0.29 FSE: 0.57 / 0.21 Cash position: C$10.5 million Annual burn rate: C$2.5 million Number of properti properties: es: 12 o a o n ven ures: Suite 1500 - 701 West Georgia St. Vancouver, BC, Canada V7Y 1C6 Tel: +1 604 689 4580 Fax: +1 604 801 5911 Toll Free: +1 877 689 4580 Contact: Fiona Grant, Manager, Investor Relations E-mail:
[email protected] Website: www.mirandagold.com
24
Mining Journal special publication – Gold exploration
September 2010
GOLD EXPLORATION
The new west Africa The Nubian-Arabian shield has excellent geological potential, but past political instability has caused north-east nor th-east Africa to be overlooked overlooked by exploration companies
T
HE Nubian side of the Nubian-Arabian Shield, comprising Egypt, Sudan, Eritrea an t opa, s a ge geo o ogca opp oppor ortu tu-nity so large it is “literally “literally off the map” according to Simon Gardner Gardner-Bond, -Bond, mining analyst at Ocean Equities. The shield comprises late Proterozoic volcanosedimentary units, and high levels of magmatic activity have created significant potential for mineral deposits. The region has a current gold endowment of more than 20Moz, Mr Gardner-Bond says, and is also highly prospective for base metals. For example, La Mancha Resources Incs Hassaï land o ng n u an s compara e to t e s z e o t e entire Iberian Pyrite Belt, historically historically one of the most prosp pr ospect ect ve e ts ev ever er ev evee ope . ut, unt recent recent y, the region has been overlooked by juniors and majors alike. A lot of the reason for this lack of investment has been political, Mr Gardner-Bond says. In the 1990s, when many companies were beginning to explore the prospective gold projects of west Africa, north-east north-east Africa was still in t he midst of civil war. ven to ay, a an ancc a s t e soe m n ng co comp mpan anyy active in Sudan, where where the stigma of war and the refugee camp at Darfur continue to dissuade many nvestors. Yet the geological potential can not be denied. For example. La Mancha has been mining at Hassaï since 1992, producing producing more than 2Moz of gold with no disruptions. The company is currently producing 60,00070,000oz/y from the gold oxide cap at the operation, and although this is fast becoming exhausted, the com ompa panny st as t e vo can anog ogeen c ma masss ve sup e (VMS) to exploit (with more than 50Mt of reserves already delineated from just two targets) and is working on studies for the development of a plant to process the VMS material. GROWING INTEREST
While political tensions in Sudan continue to make many potential investors nervous, Eritrea and Ethiopia are faring better. Eritrea is increasingly gaining attention from the expp or ex oraton aton com commu munn ty w t a num num er o co comp mpanes anes now active in the country, led by the success of Nevsun Resources Ltd. Nevsun’s Bisha project, set for production in the March quarter next year, has become a ‘poster child’ for the region, Mr Gardner-Bond says. “With Nevsun coming on stream, people will see what can be made of a good VMS deposit in this region,” he comments. Bisha is set to produce an average of 450,000oz/y of gold in the first two years of production from an openp t ope operat rat on, p ac ng evs evsun un as one o t e top top-tw -twent entyy go -pro uc n g compan es n t e wor . The operation will go on to produce approximately 80,000t/y of copper in years three to five, with 98,000t/y of zinc and 18,000t/y of copper in the
eptember 2010
remaining five years of the mine-life. Nevsun’s success in Eritrea has resulted in a surge in investment with at least a dozen companies now exploring in the countr y. These include Sunridge Gold Corp, which which plans to proceed on a pre-feasibili pre-feasibility ty study having defined four deposits at its Asmara project. To date the three VMS deposits and one gold deposit have estimated indicated resources containing . oz o go , , t o copper, . t o z nc nc an 31.8Moz of silver. Other companies active in Eritrea include Chalice Gold Mines Ltd Gippsland Ltd and Thani Eritrea Ltd (a subsidiary of AngloGold Ashanti Ltd). Eritrea’ss government is supportive of mining Eritrea’ development, Mr Gardner-Bond says, and the mining law, developed in 1995 is fairly standard, with a 5% royalty on precious metals, 3.5% on other metals, a 30% tax and up to a 30% equity interest for the state. The country remains one of the poorest in the wor , ow oweever er,, an w t no o weat to ra raw w on on,, m n ng nve nvest stme ment nt w e cr cruc uc a to ts ev evee op opme ment nt..
Ethiopia meanwhile, is the most attractive investment destination of these three countries, Mr Gardner-Bond Gardner-Bond says. The country is politically stable, has a strong mining code (developed in 1996) and high levels of support for mining development from the government. It also has good infrastructure. t opa as an a un anc ncee o wate waterr an s se sett to ecome eco me a net net energy energy exp exporte orterr n t e next next t ree to five years, and although the road network still requires some development, the Chinese government has become involved in a road-building programme. Mining investment to date has been quite limited, however, with agriculture dominating exports and employment, and and only one privately-owned operating gold mine, Legadembi, which has been producing 100,000oz/y since 2000. With the government keen to diversify the economy econo my,, exp orat on nterest n t e country s eg nn ng to grow grow.. “There’s starting to be a lot of activity [in Ethiopia]; it’s becoming very interesting to a lot of people”, Terry Tucker, chief operating officer at Nyota Minerals Ltd says.
“Even ten years ago it was very different from today,” he adds, “I don’t think many realised the [Nubian-Arabian] Shield was as prospective as it is”. Nyota has been enjoying a first mover advantage in Ethiopia where it has been developing the Tulu Tulu Kapi gold project. The project currently has an estimated inferred resource of 25.4Mt at 1.68g/t Au for 0.38Moz of contained gold (at a 0.5g/t Au cut-off), and Mr Tucker says sa ys t e compa companys nys nvestment nvestment as een we come from the local community through to the ministry of m ne nes. s. “We’ve “W e’ve had nothing but a good response in Ethiopia,” he says, “the people have been generally welcoming to the investment opportunity.” The company also received a boost earlier this year when the IFC took a 10% interest. Mr Tucker says this is a positive development for both the company and Ethiopia, showing the IFC is confident about the future of mining development in t e coun country try.. ese pos t ve ev evee opm opment entss av avee e to new interest in Ethiopia Mr Tucker says. Juniors and majors alike alike are beginning to take take an avid interest, with companies including Newmont Mining Corp AngloGold and African Barrick Gold plc now setting up exploration offices. IMPROVING POLIT ICAL SITUATION SITUATION
The political situation in nor th-east Africa Africa has been difficult but is improving, Mr Gardneron conc u es, an t e ge geo og ca potent a rema ns uge. “Where west Africa is ‘elephant country’ nor th-east Africa is more like ‘big game fishing’” he says. “The targets are smaller but there are lots of them.” Furthermore, if the handful of near-term projects continue to show value, the region could see the same investment witnessed by west Africa a decade ago. Ocean Equities is hosting its inaugural African African Gold oneren oner encce n on on on epte eptem m er 4- , w t ten compa compann es pres present ent ng to nst tut ona nve nvestors stors.. Nyota Minerals, Nevsun Resources, Sunridge Gold and La Mancha Resources will all be par ticipating.
Mining Journal special publication – Gold exploration
25
COMPANY PROFILE
Kopylovskoye goes from strength to strength The company’s recent listing is the latest step in its vision of becoming a world-class gold exploration and production company Kopylovskoye AB is now listed at Nasdaq OMX First North. The company owns six exploration projects, with total Russian GKZ C1-P2 classification of 1.8Moz of tota rorc an rr, in a world-class gold prospective area. Its short-term target is to prove JORC resources while long-term, it aims to start production in 2013 at the Kopylovsky deposit. The company’s listing is the next logical step towards its vision of becoming a world-class gold exploration and production company. It will also strengthen its financial foundation and ensure continued growth. HOw THe COMPANy sTARTed
Kopylovskoye Kopylovskoye AB was c reated three years ago as a subsidiary of Central Asia Gold AB, another Swedish exploration and production gold company. In 2008 the shareholders of Central Asia Gold AB took a decision to dividend out shares of Kopylovskoye AB. Since then, the company is fully independent. It has been a rapid rise to where the firm is today. On splitting with CAG AB, the company reviewed and questioned all its exploration projects: are are they worth spending more funds and developing into the next stage? Is the exploration technique optimal – cost-effective and to the best industry standards? Does the company have in-house competence to develop the projects? Which knowledge does the company miss? What What should be its strategy for the next five years? The company contracted SRK Consulting to help it review its projects along with us and has been advising since. With their expertise, Kopylovskoye Kopylovskoye has revised its exploration approach and developed a clear strategy. This gave the correct background for the board of directors to authorise exploration and other development activities in 2009-10. In short: question–analyse–take decisions. BRIGHT PROsPeCTs
In five years, Kopylovskoye AB aims to produce 0.2Moz/y of gold with resources of 5Moz of gold to support gold output. The region announced in 2009 plans to increase gold production from 15t to 80t in
five years. This gives a good indication of the potential of the region. Kopylovskoy Kopylovskoyee expects to start production at the namesake deposit in 2013, with total capacity 70,000-90,000oz. This will be followed by production start at Kavkaz and Prodolny in 2014 and by Krasny in 2015. In all this will give potentially more than 0.2Moz. Before production, Kopylovskoye’s schedule is to develop and upgrade reserves and resources at all its exploration properties. It has resource and reserves of about 1.8Moz and the immediate target is to make it JORC-classified. By the end of 2010 it plans to prove resources for the total area of Kopylovskoye Kopylovskoye property to BFS JORC stage, prove JORC-classified resources for part of Kavkaz and small part of Prodolny area, potentially for Krasny area. The Prodolny property alone is expected to host several Kopylovskoye Kopylovskoye size deposits (it has identified 11 gold mineralisations). Development Development of the existing and new properties under consideration for acquisition will lead it towards 5Moz. Kopylovskoye Kopylovskoye has found opport unities to acquire licences in the area within the financial recession. It is obviously more difficult to raise funds for exploration projects now compared to 2007. Appetite for risk is low. The company’s recipe is simple: keep going. ItIt reduced administration costs last year and limited exploration work scope. Kopylovskoye Kopylovskoye was able to negotiate costs of various exploration activities down or reschedule them. It used momentum to make a few acquisitions in March. It left the crisis slim, structured and hungry for development. 2010 has been a success, with two rights issue of 100% + 87%, a US$5.5 million subscription and latest the listing according to that. Further acquisition has also been done and all prospects have developed.
district in the area with long history of alluvial gold production and good mining infrastructure. The most advanced is Kopylovskoye prospect, which gave the company its name. It has historic 0.2Moz of C1&C2 Russian reserve classification. The company forecast total resources of Kopylovskoye Kopylovskoye of above 1Moz. This year the company plans a 5,000m RC-drilling programme to prove JORC resources. The second advanced project is Kavkaz. It has 0.03Moz of C1& C2 Russian reserve classification. The company expects the resources of above 0.6Moz for Milliony area which makes up 30% of the Kavkaz property. Scheduled exploration activities (RC drilling, trenching and sampling) aim to validate t his forecast. The Prodolny prospect borders the Kavkaz property. It has 11 identified historic gold mineralisations. In 2009 the company prospected one of them: the Uspensky site. Detailed exploration follows at Uspensky with a target to prove JORC resources and start prospecting at the Zolotoy site (all within Prodolny). Krasny has 0.6Moz historic Russian P1 resources. The team is reviewing and digitalising all historic exploration data for Krasny and performing a limited exploration programme to validate historic data. If Kopylovskoye Kopylovskoye is successful, classification will be done and potentially extend the historic resources under JORC. For the second and third new properties, Pravovesenny and Vostochnaya, the focus is on reviewing and digitising historic exploration data.
KOPylOvsKOye KOPylOvsKOye AB AB
Engelbrektsgatan 9 11432 Stoc kholm, Sweden Contact:
[email protected] www.kopylovskoye.com www.nasdaqomxnordic.com/firstnorth
RussIAN GOldFIelds
shar:
KOPY
Kopylovskoye’ Kopylovskoye’s projects focus on 215 square km in Lena Goldfields, Russia. The company is developing six bedrock gold exploration projects there. All properties lie near each other within the Artemovsky
26
Mining Journal special publication – Gold exploration
September 2010
GOLD EXPLORATION
Gold exploration potential of Siberia and Russian Far East Globally,, explorers face increasing challenges, Globally challenge s, forcing them to look deeper and smaller BY ALEX MIKHAILOV
T
HE rate of success in discovering new deposits is dropping, leading to a decline in the resource base. The situation could be characterised as a depletion of the residual exploration search ‘space’. The possibility of discovering new large, outcropping, or even close to surface, deposits n no nown wn go -p -pro ro ucng ar area eass s ap appr proa oacc ng zero. ut t ere are areas n t e wor w t egen ary high alluvial gold production and pristine exploration search space for primary gold deposits.They are Siberia and the Russian Far East. Historically, Russia has been one of the world’s leading gold producers (for many years it was reliably in second place, after South Africa). However, unlike most other countries, about 80% of Russian gold was mined from alluvial deposits. e gr gra e an an resources o t ese a uv a go deposits were so high that it detracted attention from primary gold exploration. But even the limited amount of exploration that targeted primary gold deposits had led to the discovery of a number of world-class deposits. Russia has lost its position of one of the leading gold producers in recent years. This is largely because the country’s alluvial gold resources are significantly depleted, and also because of a lack of investment investmentss in hard-rock gold exploration. But Russia has potential to rega n t e ea ng pos t on.
Most of gold had been mined in Siberia and the Far East of Russia, as demonstrated in the graph above, which shows accumulated gold production by the leading mining regions of Russia. Most remarkably, gold mining in the leading region (Magadan) only started in the 1930s. Also, gold production in the Irkutsk region comes only from a very compact province ena, w c s ocate next to o a o . Perhaa s the names of the re ions,‘Sibe Perh ‘Siberia’ ria’ and ‘Far
ast , co ast cont ntrr ut utee to t e wro wrong ng pr pres esum umpton pton t at regon s no nott eve op opee an a mo mosst un unrrea eacc a e. Instead, decades of intensive alluvial mining have led to significant infrastructure development. The roads are not highways, of course, but are well maintained, all season, roads that can take you to almost all of the gold districts. GOLD GENESIS
here several theories of the genesis of alluvial gold deposits and its correlation with the primary m ne nera ra sa satt on on.. o ma matt tter er w at t es esee t eo eorr es sa sayy, t e existence of alluvial gold is a direct indicator of prmaryy m ne prmar nera ra sa satt on on.. Even more importantly, alluvial mining is the best stream sediment sampling programme. One of the good examples of the spatial correlation of unique primary deposits and alluvial mines is that of the Natalka gold deposit (which contains more then 0Moz).
2500 2000 1500 1000 500 0
n a d a g a M
a i t u k a Y
k s t u k r I
k s r a y o n s a r K
a t i h C
a k t o k u h C
r u m A
k s v o l d r e v S
k s v o r a b a h K
k s n i b a i l e h C
istorical gold production in Russia (t) Another example of this spatial correlation etween a uv a mn ng an a ar -roc epos t s Sukhoi Log (in the Lena gold province), which is the largest undeveloped gold deposit in the country. The mineral potential of Siberia and the Russian Far East exceeds 6,000Moz. And this potential is waiting for active, enthusiastic and ambitious junior exploration companies.
Alex Mikha Mikhailov ilov isis an associa associate te principal principal explor exploration ation geolo geologist, gist, based in Cardiff Cardiff (UK) with with SRK SRK Explora Exploration tion Services
“Sukhoi Log (in t e Lena go province) is t e argest un eve ope go eposit in t e country
Russian Federation
Magadan Moscow Irkutsk
s r u on o go go m ne nera sa on n uss a
eptember 2010
Mining Journal special publication – Gold exploration
27
COMPANY PROFILES
Esperanza Resources is an emerging precious-metals producer committed to developing its two late-stage projects. Since start-up in 2002, its geologists have discovered these two exceptional except ional gold projects: San Luis, a joint venture in Peru; and the 100%-owned Cerro Jumil in Mexico – o a vanc ng o pro uc on. Cerro Jumil is a heap-leach gold project. The deposit contains 642,000oz (gold equivalent) classified as measured and indicated plus 442,000oz (gold equivalent) classified as inferred. In late 2009, the company announced the results of a Preliminary Economic
Assessment. At a gold price of US$1,000/oz, the project has a value of US$109 million and IRR of 38% The project has now moved into the feasibility level of study. San Luis (shown right) is a high-grade gold and silver epithermal vein system. Current resources contain 485,000oz (gold equivalent). A ‘bankable’ feasibility feasibility study has been completed and t e nv ron onme ment ntaa mpact mpact tat tatem emeent w e e n t e third quarter of 2010. San Luis is a joint venture with Silver Standard Resources, which owns 55% and can earn up to an 80% interest by funding the property to production.The large land position has high potential for new discovery.
KEFI MINERALS
28
er s nc ncor orpo pora ra on n e n a e , nera s p c es a s e se as n innovative gold and copper exploration ompany and quickly expanded its exploration portfolio in Turkey. The company aims to create shareholder value through strategic exploration to discover gold, copper and other base-metal deposits equivalent to 1Moz of gold. Its strategy is to explore the highly prospective regions of Turkey and surrounding countries. KEFI Minerals owns exploration licences in Turkey Turkey as well as an extensive ataa as at asee co cont ntaa n ng n or orma matt on a ou outt nu nume mero rous us prospe pro spect ct ve s tes n t e regon. neraa s rec ner recenty enty
expan e ts act vt es w en t orme a mne mnerra exploration joint venture in Saudi Arabia with ARTAR, ARTAR, a leading Saudi construction and investment group. KEFI Minerals is the operating partner with a 40% interest and its aim is to discover and develop a +1Moz gold deposit in the underexplored Arabian Arabian Shield in Saudi Arabia. The company is awaiting the granting of applications for strategically selected prospective prospective tenements through its joint venture in Saudi Arabia. KEFI Minerals’ expatriate and local management team has extensive Australian and European mining experience. Its reputat repu tat on as een u t on trea treatt ng sa ety ety,, env ronm ronment ent an co comm mmunty unty re re atons as a pr pr or ty at a t me mes. s.
Kingsrose Mining Ltd’s (‘Kingsrose’ ASX:KRM) near-term strategy is to produce ver 45,000oz/y of gold and 50,000oz/y of silver at a cash cost of US$147/oz of gold. The company achieved a major milestone in its o ec ectt ve o ec ecomng omng a ow-c ow-cos ostt go pr pro o uc uceer w en it successfully commissioned, in August 2010, its 140,000t/y ore-processing ore-processing plant and high-grade underground gold mine at its Way Linggo project (pictured) in southern Sumatra, Indonesia. Kingsrose holds 10,540ha of highly prospective ground centred on the Way Linggo mine. This lies over a zone of complexity where pull-apart basins, fault splays
and dilational jog settings give f avourab avourable le settings for epithermal precious-metal mineralisation. These features are related to the Trans Sumatra Fault Zone. All significant gold deposits on Sumatra are related to this structure. An aggressive exploration programme now un er way w ocu cuss on entt e ta en targ rget etss to un erpn uture mine/project expansion. Kingsrose is also carrying out a pre-feasibility study on its potentially massive zinc-lead tailings retreatment operation on the island of Sardinia, Italy. Early research has delineated targets totalling over 90Mt grading over % zinc plus lead with significant tonnages reaching over % combined metal.
The 75,000k 75,000km m Desea Deseado do Massif in Argentina’s southern Patagonia region continues to emerge as a world-class gold and silver district host to precious metals mines, new projects under development, recent new discoveries and active exploration. Exploration and mining in the Deseado Massif is strongly supported by the Santa Cruz provincial government. ne r a t s a er eru- ase go go pro uct o n, n, development and exploration group. With 256,000ha, the company holds the third-largest tenement package in the Deseado Massif. Minera IRL has a two-pronged
strategy to fast-track the Don Nicolas Project into production while exploring for major new gold deposits. A feasibility study, due for completion in 2011, is being conducted on the Don Nicolas Project.The study includes infill and extension drilling, metallurgical metallurgical testwork, hydrology and environmental studies. The aim is to develop a new mine in 2012. Exploration is assessing many prospects, including Escondido, a bulk tonnage target, and Pan de Azucar, a g -g -gra ra e ept er erma ma ve n tar arge get. t. e or orne ne ma magn gneet c geophysical survey has been carried out over four areas and drilling on the above two projects is imminent. Minera IRL adds value for its shareholders.
Mining Journal special publication – Gold exploration
September 2010
Excellence in Discovery
Discover – Develop – Deliver
EXPLORING FOR GOLD AND COPPER IN TURKEY AND SAUDI ARABIA
KEFI Minerals is a dynamic exploration company focussed on exploring for world class mineral deposits in the wellendowed and under-explored Tethyan Tethyan Mineral Belt of Turkey Turk ey and Arabian-Nubian Shield of S audi Arabia. Contact: William Pincus +1 303 830 0988
[email protected]
The company’s company’s experienced management manag ement and board have highly demonstrable track records in Australia and Europe. Our reputation has been built on treating safety, environment and community relations as a priority at all times. KEFI Minerals plans to grow through rapid exploration of existing properties and acquisition of prospective new projects in Turkey and, with with its strategic partner par tner the ARTAR Group, in Saudi Arabia.
• An emerging precious-metals producer • San Luis, Peru – development stage • Cerro Jumil, Mexico – feasibility stage
KEFI Minerals Plc www.kefi-minerals.com info@kefi-minerals.com Tel: +90 232 381 9431 Fax: +90 232 381 9071 Listed on AIM (Code: KEFI)
• Ongoing exploration on 11 prospects
TSX-V:EPZ
www.epzresources.com
[email protected] / www.minera-irl.com
AIM-BVL: AIM-BV L: MIRL MIRL / TSX TSX : IRL
Way Linggo Gold Project a highly prospective geological setting
Way Linggo Gold Project Sumatra, Indonesia 85%
Feasibility study completed and all Government approvals, including Forestry permit, obtained. Mineral rights held under 4th Generation Contract of Work. Construction of 140,000 tonnes p.a. underground gold mine and processing facility. Commissioning July/August 2010. Projected steady state annual production of 45,000 oz Au and 750,000 oz Ag at an operating cash cost of US$147/oz gold (after silver credits). 25,000 tonne high grade stockpile ready for processing. Experienced Indonesian miners. Highly prospective setting with 22 near-mine targets already identified. US$5m to be spent on exploration during next 12 months. Kingsrose Mining Limited (ASX: KRM)
Operates the Corihuarmi Gold Mine in Peru, and has 2 new gold mine development projects underway in Latin America eptember 2010
Suite 9, Level 2, 12-14 Thelma Street, West Perth WA 6005 T: +61 8 9486 1149 F: +61 8 9486 1151 www.kingsrosemining.com.au
Mining Journal special publication – Gold exploration
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COMPANY PROFILES
San Gold’s game-changing exploration model emerged in 2007 after lead geologist Bill Ferreira noticed deposits where they were not expected to be – outside the historic mining unit. After rethinking the regional geology, a grid pattern was developed across the claims area where every nter nt erse secton cton n ca cate te a po pote tenta nta ne new w ep epost. ost. e co comp mpan anyy st start artee r ng co core re at t es esee ocat ocat on onss an wa wass en enccou oura rage ge y t e g -qu quaa ty sam ampp es. In the past two years, the new model has resulted in two new high-grade, near-surface producing regions. The Hinge mine has been producing since Q3 2009
while the 007 zone has just begun bulk sampling. Three additional high-grade, near-surface zones are also on deck, at Emperor, Cohiba, and L-13. The original Rice Lake mine has been mined for more than 75 years and has produced 1.4Moz of gold. As well as providing ore for San Gold’s 1,250t/d mill, the Rice Lake mine’s workings have helped determine w et er t ese zones exten to ept . Once just a small mine north-east of Winnipeg, Canada, San Gold now has a $1 billion market capitalisation and $90 million in liquid assets. San Gold is traded in Canada on the TSX Venture (SGR) and in the US on the OTCQX (SGRCF).
PELANGIO EXPLORATION e ang o xp ora on s a we - un e un or go exp ora on company ocuse on acquiring and exploring camp-sized land packages on world-class gold belts. The team that re-envisioned the Detour Lake deposit in northern Ontario (at which Detour Gold has proven 11.4Moz in reserves) is now focused on a 290km 2 land package in Ghana beside AngloGold Ashanti’s high-grade Obuasi mine (production of 30Moz since 1897). Pelangio has confirmed that the structures hosting gold at Obuasi traverse at least 15km of its property and initial drilling on t es esee st stru ructu cture ress wa wass en enco cour urag ag ng ng.. urt er r ng s planned for autumn 2010.
e an angg o s aso ac actt vey exp exp or ng ts atest atest acquisition in Ghana, the 100km Manfo property. property. On the Sefwi greenstone belt, the the Manfo property lies on the same fault as the Ahafo and Chirano mines, operated by Newmont and Red Back, respectively. Five major geochemical anomalies have been identified at Maufo and Pelangio is confirming further positive historical exploration work. An initial 13-hole, 1,800m drilling programme is near completion, with drill results expected in September 2010. Pelangio has a track record of success and the expert se to atta atta n even even greater returns rom ts worr -c as wo asss ex expp or orat at on pr prop opertes. ertes.
Continental Gold (TSX:CNL) is an advanced stage exploration company focused on rowth of its gold projects in Colombia. Continental Gold is following an aggressive development me nt p an or ts ag agss p pr pro o ec ect, t, urt ca ca,, s ra rapp y a va vancng ncng ts er n ex expp or oraton aton pr pro o ec ectt an s ac actt ve y evaluating several additional projects within its portfolio of 100%-owned gold properties in Colombia. Buritica is a high-grade porphyry-related carbonate gold/base-metal vein system where gold is hosted in steeply dipping veins with drill intercepts including: 14.3m at 446g/t Au and 166g/t Ag including 3.0m at ,106.1g/t Au and 738.7g/t Ag. Nearly Nearly all holes drilled
have encountered multiple high-grade veins varying in true width from less than 0.5-1.5m and to as much as 5-10m which have been traced over a strike length of more than 1km and vertically over 500m. ont ne n enta comp et e te , m o amon r ng in 2008/09 and has mapped and sampled about 800m of underground development. The company is advancing its understanding of these vein systems through a 50,000m surface and underground drill programme. Continental has begun engineering, metallurgical metallurgical and geotechnical studies and baseline environmental work to be followed by initiation of a resource estimate.
tora rect re ctor or Chris Hinde PhD, CEng c r s . n de de m n n gg- o ur urn a .c .c om om
e pu pu ty ty e t or or Dominic Mercer MSc, DIC, FGS
[email protected]
eature eatu ress e to torr Katherine Welch Welch MSc
torr a enqu to enqu r es es:: Tel: +44 (0)20 7216 6060 Fax +44 (0)20 7216 6050 E-mail: editorial@mining-jou
[email protected] rnal.com
Website: www.mining-journal.com ver semen , su scr p ons an c r cu cu a on rec or rec
gare ga rett .t .tre redw dway ay mn ng ng-ourn -ourna.co a.com m
Gareth Hector +44 (0)20 7216 6057 vert sement manager manager Richard Dolan +44 (0)20 7216 6086 sp ay sa sa es exec execut ut ves Matthew Couch +44 (0)20 7216 6082 Gabriella Kiss +44 (0)20 7216 6090
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upp eme ement nt sa es manager manager Richard Verth Verth +44 (0)20 7216 6068 E-mail: adsales@mining-jo
[email protected] urnal.com Advertising production Sharon Evans
[email protected]
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u s cr cr p t o n e nq nq u r e s: s: O Box 1045, Bournehall House, Bournehall Road, Bushey WD23 3YG, UK el: +44 (0)20 8955 7050 Fax: +44 (0)20 8421 8155 E-mail: subscriptions@minin
[email protected] g-journal.com Annual subscription: US$650 UK an d Euro pe: £360/€580) ISSN 0026-5225 Mining Journal , published weekly, is available only as art of a subscription with Mining Magazine, Mining nvironmental Management nd online access. ublished by Aspermont UK Albert House, 1 Singer St, EC2A 4BQ rinted by Stephens & George, Merthyr Tydfil Registered as a newspaper at the Post Office
e exe cu cut ve o ce r David Nizol a rm rman an Andrew Kent © Aspermont UK 2010 Member of the Periodical ublishers Association
s c a me r: spermon sper montt , pu s er and own owner er o n ng ourna ourna ( t e pu pu s er and eac o ts d rec rectors tors,, o cers cers,, empoye empoyees, es, advsers and agen agents ts and reated entt es do not ma e any any war warrant rantyy w atso atsoeve everr as as to to t e accu accuracy racy or re a ty o any n orm ormaton, aton, estmates estmates,, opn ons ons,, con concus cus ons or recommendations contained in this publication and, to the maximum extent permitted by law, the publisher disclaims all liability and responsibility for any direct or indirect loss or damage which may be suffered by any person or entity through relying on anything contained in, or omitted from, this publication whether as a result of negligence on the part of the publisher or not. Reliance should not be placed on the contents of this magazine in making a commercial or other decision and all persons are advised to seek independent professional advice in this regard.
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Mining Journal special publication – Gold exploration
September 2010
Find out more at www.sangold.ca
Discover ONE OF CANADA’S MOST EXCITING NEW GOLD PRODUCERS
Development
Results
Potential
•Two new mines in two years •Operating mill on site
•Consistent Consistent growth in revenue and roduction since 2005
• Game changing exploration model • Three Three new new ones on deck deck
:SGR
OTCQX:SGRCF
TSXV:SGR
OTCQX:SGRCF
TSXV:SGR
OTCQX:SGRCF
TSXV:SGR
OTCQX:SGRCF
TSXV:SGR
OTCQX:
Camp-sized land packages on world-class gold belts in Ghana Obuasi – 290km2 beside the 30Moz Obuasi Mine Manfo – 100km2 between Ahafo and Chirano
Pelangio Exploration Inc 440 Harrop Drive, 2nd Floor Milton, Ontario Canada L9T 3H2
E-mail: info@pelangio
[email protected] .com Tel: 905-875-3828 Fax: 905-875-3829 Toll Free: Free: 1-877-746-1632
TSX:CNL TSX: CNL
Phone Email
eptember 2010
Mining Journal special publication – Gold exploration
31
