Anglo find propels Aussie explorers

Vancouver — With delineation drilling on the Boyongan prospect outlining what appears to be one of the highest-grade copper-gold porphyry discoveries in recent memory, Australian-listed Greenstone Resources and Perth-based Goldminco (GCP-V) have both joined the hunt for gold on the Philippine island of Mindanao.

Partners Anglo American (AAUK-Q) and Philex Gold (PGI-V) have four rigs turning at Boyongan, with three others performing scout drilling on surrounding ground. So far, the companies have outlined a 500-by-300-metre zone of mineralization grading greater than 1% copper-equivalent, with a broader 850-by-450-metre area averaging greater than 0.5% copper-equivalent.

A January research report tabled by BMO Nesbitt Burns indicates that the preliminary resource on Boyongan is 280 million tonnes averaging 0.93 gram gold and 0.57% copper. Total metal content amounts to 17.8 million oz. gold-equivalent. The core of the mineralization is exceptionally high grade, as indicated by the latest drill results.

Hole 44 was drilled 100 metres east of hole 35 (469 metres grading 0.67% copper and 1.09 grams gold per tonne) and returned 398 metres grading 0.52% copper and 1.61 grams gold at a down-hole depth of 95 metres. Included in this interval was a higher-grade section running 0.7% copper and 3.01 grams gold over 161 metres.

Moving 100 metres northwest of hole 38 (366 metres grading 1.66% copper and 4.49 grams gold), hole 41 cut 177 metres grading 0.4% copper and 0.14 gram gold at 155 metres down-hole.

Hole 42 was collared 100 metres north of hole 39 (547 metres averaging 0.46% copper and 0.51 gram gold) and returned 504 metres averaging 0.42% copper and 0.66 gram gold from 174 metres down-hole. Included in this section was a higher-grade portion running 0.67% copper and 1.32 grams gold over 63 metres.

Collared 100 metres north of hole 40 (332 metres grading 0.55% copper and 0.32 gram gold), hole 43 cut 272 metres grading 0.4% copper and 0.26 gram gold from 135 metres down-hole.

“We are delighted to see the assay results of hole 42, which shows improving ore grades at depth within the sulphide zone,” says Gerard Brimo, Philex’s chief executive officer. “This would indicate that the area northwest of the deposit remains highly prospective for sulphide mineralization at depth.”

Holes 45 and 46 have been completed, with assay results pending.

The drills are currently turning on holes 47-50. All in all, some 15,000 metres of delineation drilling are planned for this year.

Anglo American discovered the covered deposit in September 2000, when hole 6 returned a 365-metre intercept grading 0.7% copper and 1.9 grams gold per tonne. Subsequent drilling throughout 2001 continued to yield impressive numbers, including 393 metres grading 1.58% copper and 2.39 grams gold in hole 15 and 896 metres of 0.49% copper and 1.57 grams gold in hole 18.

Situated on the northeastern side of Mindanao Island in the historic Surigao gold district, the project covers part of a north-south-trending Pliocene volcano-magmatic arc, which hosts several known gold mines.

A porphyry deposit hosted by a composite diorite stock, Boyongan was locally affected by a later argillic event, which accounts for some high grades. The prospect hosts an unusually deep supergene oxidation (more than 400 metres locally) that was preserved by being capped by Quaternary sediments and lavas. Malachite, azurite, cuprite and native copper define the oxide zone. Chalcopyrite and bornite dominate the primary copper sulphides.

Initial metallurgical tests show that the oxide mineralization is amenable to preconcentration of gold and native copper by gravity and flotation, followed by acid leaching of the flotation tanks for copper recovery and an acid wash, followed by neutralization and cyanidation of the free concentrate for gold. The transitional oxide-to-sulphide mineralization is amenable to preconcentration by gravity followed by acid leaching of the tanks for copper recovery; the resultant gold-copper sulphide concentrates are sold to a smelter. The underlying sulphide zone appears to possess optimal metallurgical characteristics with high copper and gold recovery being achieved using direct flotation.

On the reconnaissance front, three rigs are turning immediately south and west of Boyongan. Holes 2 and 3 both encountered paleo-debris flows indicative of another mineralized porphyry system nearby.

Hole 4 is collared 450 metres south of the first reconnassiance hole and is still drilling. The hole intersected unaltered cover from collar to a depth of 183 metres, and weakly chloritized fine-grained diorite to the current depth of 207 metres.

Hole 5 is drilling some 250 metres west of hole 29 (49 metres grading 1.18% copper and 0.26 gram gold), and hole 6 is some 500 metres east of scout hole 1.

Late last year, Anglo American purchased an additional 10% equity stake in the project and surrounding ground from Philex for US$20 million. Additional payments of up to US$5 million will be required should the metal content of the deposit, or of any other discovery in the surrounding claims, contain more than 3.6 million tonnes copper-equivalent. Currently, Philex and Anglo American each hold a half-stake in the project. The major can then earn an additional 30% interest by completing a bankable feasibility study.

New Players

Goldminco entered the Philippines earlier this year by acquiring Australian company Templar Resources for 9 million shares. Templar’s main assets are the Masapelid gold property, some 8 km east of Boyongan, and an arrangement with Placer Dome Asia Pacific (PDAC), an arm of Canada’s second-largest gold producer, Placer Dome (PDG-T). The arrangement calls for the subsidiary to offer Goldminco any projects of which it divests itself. The junior also gets carried through to development and is reimbursed for all its exploration costs on any joint-venture deal it contributes. The deal covers southeast Asia, China, Australia and New Zealand.

The Masapelid project, on an island just off the east coast of Surigao, hosts several northeast-striking veins which individually extend for more than 1 km. The veins cut the Mabuhay clastics, andesites and dacite porphyries. Historical workings, which date to before the Second World War, extend to depths of 90 metres below surface. Mineralization typically comprises chalcopyrite, bornite, galena, sphalerite and tetrahedrite.

Balabag

Goldminco’s other asset, and initial target, is the high-grade Balabag gold property on the eastern side of Mindanao Island in the province of Zamboanga. The property was first worked by Rio Tinto (RTP-N) in the late 1990s. Some 300 channel and chip samples collected over a portion of a major ridge returned a weighted average of 10.97 grams gold and 258.69 grams silver. Small-scale mining is scattered throughout and on both sides of the impressive ridge. The highest-grade sample collected to date came from the face of the old Tinago workings, returning 273 grams gold and 109 grams silver.

Armed with a newly completed $500,000 financing, Goldminco has a rig on site and expects to begin drilling before the end of the month.

Another player to jump on the Boyongan bandwagon is Australian junior Greenstone Resources. The company inked a deal to acquire an 80% interest in the nearby Siana gold project by completing a bankable feasibility study within five years.

The project’s indicated resource is pegged at 5.3 million tonnes grading 4.2 grams gold per tonne, or 710,000 contained ounces, based on a cutoff grade of 2 grams gold. At a cutoff grade of 1 gram, the resource climbs to 7.7 million tonnes running 3.3 grams gold. The resources are immediately below the open pit, at a depth of about 150 metres.

Lying only 6 km southeast of Boyongan, Siana has a long history of gold mining. Production began in 1938 as an underground operation treating the upper levels of the oxide ore. A 1,000-tonne-per-day open-pit operation was launched in 1981, on
ly to be suspended in 1990 after a typhoon caused the pit to flood and a pit-wall to collapse. In total, some 4.9 million tonnes grading 6.3 grams gold have been treated.

Gold mineralization is hosted in limestone breccia, both as massive sulphide bodies and as disseminations in the mud matrix. The sulphide bodies represented about 20% of past production, with grades averaging 30 grams per tonne. Within the mud matrix, gold occurs as fine free grains of electrum with grades coming in at 3.5-4 grams per tonne.

Large pit

Greenstone envisages the project as a large pit with potential for underground mining. The company has begun preliminary engineering studies, with a drill program slated to begin shortly. The holes will aim to verify previous results and test several other targets.

Having completed an initial public offering on the Australian Stock Exchange in April, Tony Robbins-led Indophil Resources has set its sights on another gold-rich porphyry system in Mindanao. Situated in the central portion of the island near General Santos city, the Tampakan copper-gold prospect was discovered by Australian-based WMC (WMC-N) in the mid-1990s. In February 1999, after pouring more than US$30 million into the property, the major walked away as a result of “social and political challenges.”

WMC outlined 990 million tonnes grading 0.75% copper and 0.27 gram gold on the project before throwing in the towel, following trouble with the local indigenous people and pending legal challenges against both its mining application and the validity of the new Mining Act. At its 1999 annual general meeting, WMC stated that the project would be abandoned despite “insufficient work having been completed to enable a sound estimate of its extent or commercial viability.”

Indophil quickly capitalized on WMC’s departure by inking a deal with the original claim-owners. However, Manila-based Lepanto Consolidated Mining launched a legal challenge to the deal, claiming it had the first rights of refusal over the project. Indophil won the initial court ruling, and in early June the Philippine Court of Appeals rejected Lepanto’s appeal and ordered the case dismissed. The only legal recourse left to Lepanto is to appeal to the Supreme Court of the Philippines.

Mindoro Res.

Meanwhile, Placer’s US$1.1-billion takeover offer for Australian miner Aurion Gold could affect long-time Philippine explorer Mindoro Resources (MIO-V). Last year, Mindoro, in partnership with Aurion, sank 11 drill holes into the Pan de Azucar property on the island of Panay. The holes yielded some promising copper-gold grades from the Valderama target. The best results included 37.1 metres grading 0.8% copper and 1.87 grams gold per tonne in hole 3, and 41.5 metres averaging 0.12 % copper and 1.2 grams gold in hole 6.

Mineralization at the Valderama zone is described as a “high-sulphidation style” pyritic sulphide overprinted by low-sulphidation events. The zone is exposed at surface at Valderama Hill, where it is 20 metres thick. The extent of the mineralized zone has not been determined, but based on geophysics, the mineralization covers an 800-by-200-metre area.

Aurion funded the drill program as part of its option to earn a 65% interest in the project. The Pan de Azucar deal calls for Australian company to spend A$4.5 million on exploration over four years to earn 45%. The junior can earn an additional 10% by completing a bankable feasibility study within the following three years, and another 10% by paying half of the gross value of the reserves outlined to a minor Philippine partner. If all goes as planned, Mindoro will be left with a 25% participating stake, which can be converted to a 2% net smelter return royalty.

Placer, which held a 40% stake in Manila-based Marcopper Mining’s Marinduque copper-gold operation, where a much-publicized 1996 tailings spill occurred. The major spent some US$71 million fulfilling its commitment to clean up the spill before pulling out of the country late last year under a cloud of government and private-sector probes.