SOUTHEAST ASIA SPECIAL — Minorca and Indonesian partner to explore holdings

A 70% interest in 6% of production from a gold project appears to be slim pickings, but not when the deal involves the multi-million-ounce Busang gold deposit in East Kalimantan, Indonesia.

Earlier this year, Minorca Resources (TSE) agreed to finance 60% of the 10% interest of PT Askatindo Karya Mineral (PT AKM) in the contract of work area held jointly with Bre-X Minerals (TSE). The area hosts the Southeast zone at Busang, held 90% by project operator Bre-X.

Minorca paid US$2 million and issued 3 million shares upon signing, and must pay US$2 million more once a definitive joint-venture agreement is signed, plus US$3.5 million 30 days later. Once a feasibility study determines that the deposit hosts at least 12 million oz. gold, Minorca must pay its Indonesian partner US$5 million, plus US$600,000 for every proven 1 million oz. gold beyond the 12-million-oz. level.

Minorca President Hermann Derbuch views the acquisition as significant for both partners. PT AKM will be able “to stay in the game” at Busang and have funds for its share of eventual production costs, plus hold an equity stake in Minorca that could increase in value as more ounces are defined. Minorca will benefit from cash flow from the mine while it advances other gold projects held in joint venture with PT AKM in Indonesia.

“These are good properties with real potential that were identified by our Indonesian partner before the current land rush,” Derbuch says.

A US$2.5-million exploration program is under way on the properties, which are held 85% by Minorca. PT AKM holds the remainder.

The land package includes the Kutai prospect 60 northeast of the Kelian gold mine, 10-40 km east of the Westralian Mining gold deposit and 82 km southwest of Busang.

Minorca describes the property as having geological and petrological features similar to volcanogenic deposits, including the adjacent Kelian.

Small-scale alluvial gold mining operations are found adjacent to this prospect, along parts of the Mahakam River. The gold carried by several of the river’s tributaries is believed to originate from a topographic high within the Kutai prospect.

Three targets have been identified on the property and will be explored by a geochemical, geophysical and geological program.

At the same time, a team of geologists will begin outlining targets at the Tanah Grogot gold prospect in the northern tip of the Meratus Mountain, also in East Kalimantan.

This area also contains alluvial mining operations. It was explored in the past by Inco and an Indonesian mining corporation, as the alluvium carried by the rivers is believed to be from the Lumut Mountains.

The third lode-gold project, Takengon, is within the main mineralized, magmatic arc of North Sumatra, a regional feature that contains abundant porphyry and skarn mineralization. This district is being actively explored by several companies, including Bre-X, Barrick Gold and Phelps Dodge. The alluvial plains west of the arc are known for their gold deposits, some of which have been exploited for decades.

Surveys show that the Takengon prospect has potential for hosting gold deposits. Geochemical work has outlined arsenic anomalies along its major drainage systems, and gold grains have been noted in pan concentrates of sediments from tributaries.

Gold-bearing, silicified rocks have been noted in the central portion of the prospect, and work is planned to determine if an adjacent hill (believed to be made up of the same rock) is a silicified, mineralized dome.

This property is accessible by paved roads. Trenching and sampling are planned for the mineralized siliceous rocks, and geophysical and geochemical surveys will attempt to outline additional targets.

Minorca also holds mineral properties in North America. The company is negotiating with a Canadian major interested in its Aiguebelle property on the Destor-Porcupine Break in eastern Canada.

Meanwhile, in Nevada, Minorca recently drilled three holes to test for deep, potentially high-grade gold mineralization at its Rodeo Creek property in the Carlin trend. Results are expected at the end of May.