Stewart R. Wallace — 1919–2009 - Society of Economic Geologists

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EXPLORATION REVIEWS 38 SEG NEWSLETTER No 78 JULY 2009 ... from 37 Exploration Reviews (Continued) Pebble project. Pacific North West Capital Corp. announced that it had exercised the option to acquire the Nixon Fork gold-copper mine from St. Andrew Goldfields Ltd. Linux Gold Corp. announced completion of a summary report on its Dime Creek prospect. EASTERN INTERIOR Kinross Gold announced year-end 2008 and first quarter 2009 production results from its Fort Knox mine. Teryl Re - sources and JV partner Kinross Gold announced year-end 2008 exploration results and 2009 plans at their Gil gold project. Freegold Ventures announced preliminary results from bulk sampling completed in 2008 at it Golden Summit project. Teck Resources and JV partner Sumitomo Metal Mining announced 4 th quarter and year-end 2008 results from the Pogo mine, and Teck Resources also announced plans to sell its 40% interest in the Pogo mine to 60% owner, Sumi - tomo. International Tower Hill Mines Ltd. announced drilling results from its winter 2009 program at its Livengood gold project. Alaska newcomer Fire River Gold announced plans for its Draken gold property. ALASKA RANGE Pure Nickel Inc. and ITOCHU Corpora - tion have approved an expanded $4.4M exploration budget for the MAN project. NORTHERN ALASKA Andover Ventures Inc. announced that it plans to complete a new resource calculation on the SUN polymetallic deposit. SOUTHEAST ALASKA Hecla Mining announced year-end 2008 and first quarter 2009 production from the Greens Creek mine. Ucore Uranium announced mineralogical studies of uranium and rare earth element mineralization at its Bokan Mountain project. CBR Gold Corp. announced a 457,000-t expansion to resources at its Niblack massive sulfide deposit. ASIA Regional Correspondent: Paul L. Zweng (SEG 2003F) Managing Member, Resource Venture Advisors P.O. Box 235901 Honolulu, HI 96823-3517 Tel. 808-536-3646 E-mail: pzweng@gmail.com Contribution from Andrew E. Nevin (SEG 1979) – India The SEG Asia Exploration Index, the equal-weighted index created to gauge the activity, excitement, and value creation being generated by non-government controlled companies working in Asia as measured by the financial markets, surged since it was first introduced in the last SEG Newsletter. The first quarter delivered a whopping 49% return, thrashing the major stock indices (e.g., –11.67% SP 500, –11.46% FSTE 100, –8.47% Nikkei 225, and –5.64% Hang Seng). By the end May the index had nearly doubled off the lows set in late 2008. So after this meteoric rise is anyone following the ol’ adage, “Sell in May and Go Away”? CAMBODIA Surface sampling by Oz Minerals at their Okvau project in NE Cambodia delivered up to 14.7 g/t Au from an area located 10 km SW of the main prospect. Geologists found visible gold in panned concentrates collected in 17 of 20 drainages that appear to be related to zones of quartz-arsenopyrite veins. CHINA Continental Minerals announced 653.7 Mt @ 0.31% Cu and 0.12 g/t Au (indicated & inferred; 0.2% Cu cutoff) of mineral resources for the Newtongmen deposit, the second discovery on its 100%-owned Xietongmen property (Tibet autonomous region). Eldorado Gold started a rotary airblast program consisting of 41 holes to test the area covered by alluvium between the QLT and JLG deposits at its Tanjianshan (Qinghai) oxide gold operation. SEG Asia Exploration Index The updated resource estimate for Minco Gold’s 51%-owned Changkeng project (Guangdong) highlighted just over 1 Moz Au contained in 7.962 Mt @ 3.95 g/t Au and 10.3 g/t Ag (indicated & inferred; 1.2 g/t Au equiv cutoff). A second, silver-rich deposit in the district holds 38.2 Moz Ag (and by-product Au, Pb, and Zn) contained in 6.685 Mt @ 178 g/t Ag (indicated & inferred; 35 g/t Ag cutoff). Minco Silver achieved an important milestone upon receiving approval of the mining area permit for its Fuwan Ag deposit (Guangdong). The average grade of samples collected by New Pacific Metals over 27.6 m of drift along the V9 vein (Guang - dong) yielded 294.8 g/t Au (yes—true high grade!), 123.8 g/t Ag, 1.33% Pb, and 1.93% Zn. The average width of the structure here is 0.37 m. These grades are dramatically higher than those reported from the 3 drill holes that cut the V9 vein—stay tuned to see which tells the real story. Four holes by OZ Minerals at the Xiaosongshan project (Inner Mongolia) cut narrow intervals of low-grade Ni and Cu sulfides at the targeted ultramafic intrusion basal contact. Sino Gold announced committing to the US$65M development of what will be its third gold operation, the Eastern Dragon gold mine (Heilongjiang Province). Commercial gold production is scheduled for early 2011, averaging 90,000 oz/yr during the first 5 years at a cash cost of US$125/oz. INDIA Rio Tinto announced an indicated re - source of 37 Mt @ 0.7 carats/t at its 17hectare Atri lamproite pipe at Bunder, Madhya Pradesh. Diamond value was estimated from 410 cts, but not reported. Seven smaller pipes are known within the same prospecting license area. The find is in the same Proterozoic Vindhyan formation scarp as National Mineral Development’s Panna (Majhgawan) mine (0.1 carat/t) and its Hinota diamond prospect. Panna is now reopening after two years of litigation over its location within a tiger reserve. India Resources has farmed out a staged 51% interest in its Rajasthan Periods are month end Jun-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Index Value 388.95 120.00 132.25 151.53 178.75 201.72 234.66 % Change (Mo-Mo) xxx xxx 10.2% 14.6% 18.0% 17.9% 11.4% % Change (YTD) xxx –69.1% 10.2% 26.3% 49.0% 75.6% 95.6%
JULY 2009 No 78 SEG NEWSLETTER 39 reconnaissance permit and prospecting license applications to RBG Mineral Industries, a company majority owned by Binani Zinc, with Rajasthan and Gujarat government-owned companies holding minority interests. The prospects surround Vedanta’s Rajpura Dariba and Sindesar Khurd zinc-lead mines. Historic resource estimates on the India- RBG prospects are 95 to 135 Mt @ 2.2 to 4.5% Zn and 0.7 to 1.8% Pb. Environmental clearance for production: Geomysore has applied for a 400,000 tpy mine and concentrator mine on its Jonnagiri gold prospect in Andhra Pradesh, and Ramgad, a subsidiary of iron ore miner MSPL, for a 300,000 tpy mine and mill on its Sangli gold deposit in Karnataka. Neither company has released resource estimates. Pebble Creek obtained environmental clearance for production at its Askot VMS deposit in Uttarakhand. In order to have the best of both worlds, here is our ongoing catalog of Western services firms that have offices in India or business associations with Indian firms. These include exploration, drilling, geochemical analysis and assaying, engineering, metallurgy, feasibility studies and mine and mill construction: Alcock McPhar, AMC, Atlas Copco, Ausenco/Sandwell, CRU, Elliott Geophysics, Environmental Quality Management Systems (EQMS), Golder, Hatch, Met-Chem, Mitchell Drilling, Moonlake, Pinnacle Drilling, Salva, SGS, Shiva Analyticals, SRK, Tech know, Transnational Drilling and Mining Associates (TDMA), Wardrop and Versadril. Please send any omissions or corrections to us at nevin@pebcreek.com. The Geological Survey of India’s mandate has been far broader of late than most geological surveys and it has been overtaken by changing times. The Ministry of Mines’ “High Powered Committee” (yes, that’s its name!) released its comprehensive report on the GSI, noting its glorious 158-year history, continuing with some current dysfunctions, and concluding with astute recommendations. See http://mines.nic.in, Geological Survey of India tab, then the tab GSI Portal. By now the new Congress Party-led government is old news. We hope it exercises its strong mandate for reform as initiated and promoted by Prime Minister Dr. Manmohan Singh throughout his long career in public service. LAOS Amanta Resources granted Japan Oil, Gas, and Metals National Corp (“JOG- MEC”) an option to earn a 51% interest in the Luang Namtha Cu project in northern Laos by investing US$3M prior to end Mar 2012. Exploration drilling by Oz Minerals at Thengkham South (Sepon Copper) cut new copper skarn to the north of previously identified mineralization. Better results include 30 m at 1.3% Cu and 0.4 g/t Au (155 m downhole) and 20 m at 2.7% Cu and 0.3 g/t Au (38 m downhole). A small drilling program at Sepon Gold was completed at Nalou South, returning only low-grade values (up to 6 m at 0.7 g/t Au). China Minmetals Non-Ferrous Metals Co., Ltd. (“Minmetals”) offered US$1,206M to financially troubled miner OZ Minerals for its miningexploration assets, including Sepon Copper and Sepon Gold—see above. Excluded from the sale are the Prominent Hill Cu-Au mine (S Australia), the Martabe Au project (Indonesia) (to be sold to another Chinese group), certain exploration assets in Cambodia and Thailand, and equity holdings in listed companies. PanAust announced an updated reserve/resource for its flagship Phu Kham Cu-Au operation. Proven and probable resources sum to 146 Mt @ 0.66% Cu, 0.26 g/t Au, and 2.1 g/t Ag whereas measured, indicated, and inferred resources amount to 194 Mt @ 0.65% Cu, 0.25 g/t Au, and 2.0 g/t Ag (0.3% Cu cutoff). Taken together, Phu Kham contains 4.89 B lbs Cu, 2.76 Moz Au, and 22.2 Moz Ag. The appetite for resource companies by the Chinese wasn’t sated by OZ Minerals and Rio Tinto—wholly stateowned Guangdong Rising Assets Management will invest A$180M (~US$141M) to acquire a 19.9% interest in PanAust. Guangdong operates a number of Pb-Zn-Ag, Fe ore, W, V-Ti, and REE mines in Guangdong and Guangxi provinces, S China. MONGOLIA Unionized employees of Centerra Gold’s Boroo mine initiated a work stoppage over wage demands. As a result, mining and milling at Boroo have been temporarily suspended. Ivanhoe Mines and Rio Tinto continue to await the approval for the Oyu Tolgoi Cu-Au investment agreement. Some analysts believe that the May 25 th election victory of President Ts. Elbegdorj, a member of the opposition Democratic party, may complicate matters for the miners because of his populist, antiforeign inclinations. Khan Resources released the feasibility study results for its Dornod U project showing an IRR (after tax) of 29.1% and NPV (10% discount) of US$276M. Study employed a long-term U price of US$65/lb U3O8 and throughput of 3,500 mtpd over a 15-yr mine life, generating 3.0 M lb U3O8/yr at a cash cost of US$23.22/lb U3O8. Peabody Energy completed the ac - quisition of a 50% interest in Peabody- Polo Resources B.V., a joint venture that holds Polo Resources’ Mongolian coal interests. Peabody has committed to an investment of US$23M. The prefeasibility study for Red Hill Energy’s 100%-owned Ulaan Ovoo thermal coal project calculated an aftertax NPV (10% discount) of US$250M and a DCF-IRR of 19% based on an assumed coal price of US$76/Mt (fob, Port of Nadhodka). Initial capex costs are estimated to be US$337M to build a 5.9 Mtpa saleable coal operation. SouthGobi Resources retracted the resource estimate announced last July for the West Field portion of its Ovoot Tolgoi coalfield after learning of errors made by The Americas Group (Lakewood, CO) which led to an overestimation of the resource. The current mining plan and operations will not be impacted as they are based on an earlier resource estimate. Western Prospector Group and CNNC International Ltd (“CNNC Intl”) announced a definitive agreement whereby CNNC Intl will offer to acquire all of the common shares of Western for C$0.56 per share in cash, valuing Western’s equity at ~C$31 M. As luck would have it, soon after the Mineral Resources Authority of Mongolia suspended Western’s exploration licenses for its Gurvanbulag U deposit, citing violations. Later CNNC Intl extended the offer beyond the initial closing date to June 29 th. PHILIPPINES Indophil Resources signed a MOU with Anvil Mining to assume Anvil’s position in an exploration and development agreement with Itogon Suyoc Resources regarding the Itogon Au project in the Baguio district in northern Luzon. Intex reported a substantial 64% increase in size of its Lower Kisluyan portion of the Mindoro Ni laterite deposit. The new measured & indicated laterite resources contain 92,359,000 DMT (dry metric tonnes) grading 0.92% Ni (0.7% Ni cutoff) in addition to 3,834,000 DMT of inferred resources. Two of the first three holes drilled by Medusa Mining at the Lingig Copper to page Discovery yielded 40 ... EXPLORATION REVIEWS
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Stewart R. Wallace — 1919–2009 - Society of Economic Geologists

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