Low gold prices and preliminary results of a feasibility study have forced Lone Star Explorations (LSE-V) to put off construction of its Awak Mas gold project in Indonesia.
The Australian company says the current resource base at Awak Mas does not constitute an economically viable project at current prices.
“In view of the prevailing and medium-Term outlook for the gold price, together with the preliminary results from studies commissioned by the company, the board of directors has determined that the company must refocus its efforts on exploration, particularly in areas within the current contract of work adjacent to the Awak Mas project,” the company said.
The company has applied for a 2-year extension to its current contract of work (CoW), which stipulates that production must commence by October 1998.
To increase tonnage and grade, exploration will be carried out along strike and at adjacent prospects within the CoW.
Previous work by Battle Mountain Gold (BMG-N), between 1987 and 1993, yielded soil anomalies similar to those found more recently at Awak Mas.
Exploration during the second quarter of 1997 will focus on the Ulusalu prospect, 5 km southeast of Awak Mas. Four diamond drill rigs are operating on site.
The resource at Awak Mas is estimated at 71,039 tonnes grading 1.4 grams gold, based on a cutoff grade of 0.5 gram gold. The reserve estimate is 22,301 tonnes grading 1.5 grams gold. An updated resource estimate will be released in the second quarter.
Lone Star has a 1997 exploration budget of A$10 million.
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