Mongolia Gold establishes Bumbat JV

A Mongolian state-controlled corporation is joining forces with Mongolian Gold Resources (VSE) to form the Bumbat joint venture. Its objective will be to explore for and develop gold projects.

Mongolia Gold, which is based in Vancouver, holds a 49% interest in the Bumbat Gold Fields property in the Zamaar region of north-central Mongolia, 210 km northwest of the capital city Ulaanbaatar. Mongol Alt, the state-owned corporation, holds the other 51%.

Mongolia Gold will act as operator and director-general of the joint-venture for a minimum of three years. The Bumbat JV itself will manage the exploration and development of the property which is reported to host more than 200 quartz veins.

Seven of these are known to be gold-bearing, with economic potential. Previous work on the 118 vein indicates a probable geologic reserve of between 173,000 and 261,400 tonnes grading 13.96 to 17.96 grams gold per tonne. A probable geologic resource elsewhere on the property is estimated at 920,000 tonnes grading 11.7 to 21.4 grams. The average width of the veins is 1.6 metres.

Last summer, the company completed a 12-hole drill program on three veins: 118, 115 and 56. Four holes tested the southern extension of the 118 vein but failed to return significant gold values. Similar results were encountered by two holes drilled along the southern extension of the 115 vein, although chip sampling along a length of 200 metres at surface returned values of up to 101.34 grams over 1 metre.

Of six holes drilled on the southern end of vein 56, four returned the following values: 1.2 metres of 8.35 grams for hole 18; 2.6 metres of 15.4 grams for hole 19; 2.3 metres of 5.08 grams for hole 20; and 0.9 metres of 7.36 grams, as well as 2.6 metres of 17.5 grams, for hole 21. Samples with visible gold were re-assayed for metallic content, and the original fire assays (32.91 grams over 0.76 metres for hole 19 and 39.09 grams over 1.07 metres for hole 20) increased significantly (to 340.42 grams and 271.03 grams, respectively).

A feasibility study by Cominco Engineering Services recommends an initial phase of open-pit mining for veins 56, 115 and 118; the mineral resource will be confirmed by a minimum-200-tonne-per-day bulk-sampling plant. The capital cost of such a project is estimated at US$5.9 million.

Mongolian Gold President Edward Kennedy says the company’s objective is to place the Bumbat Gold Fields into production and pursue other exploration interests in Mongolia, a country whose resources are seen as relatively untapped.

Mongolia Gold is negotiating for financing to undertake the feasibility study’s recommendation, and an extensive $700,000 exploration program to firm up reserves is to begin in May.