Aussies scope Mt. Kare while Madison eyes Nevada

Vancouver — Developing mines in the remote Central Highlands of Papua New Guinea (PNG) is an expensive proposition, even for a major company, so it’s no surprise Madison Minerals (MMR-V) has found a partner to help bring the Mt. Kare gold-silver project into production.

The Vancouver-based junior signed a preliminary agreement allowing Equatorial Resources to acquire the company holding the Mt. Kare project in return for feasibility studies and staged cash payments. The principals of the Aussie firm have extensive experience in PNG and other parts of Australasia.

Madison had been exploring Mt. Kare as part of an undertaking with local landowners and the government of PNG to advance the project to production. The company says the deal with Equatorial allows it to continue to participate in the project but without the risk of further dilution to its share price. The junior has been trading at the 50 level, well below its 52-week high of $1.72.

The agreement is still subject to a due diligence review, but if all goes as planned, Equatorial will begin completing a preliminary feasibility study by early 2007.

Madison notes that the preliminary study will require considerable work, including at least 10,000 metres of drilling, as existing resources do not yet meet Australian reporting standards. An independent firm estimates that the deposit hosts indicated resources of 14.7 million tonnes grading 2.36 grams gold and 33.7 grams silver per tonne, plus inferred resources of 10.85 million tonnes grading 1.98 grams gold and 22.7 grams silver. This represents an in situ resource of 1.8 million oz. gold and 23.8 million oz. silver.

Mt. Kare contains numerous targets that have yet to be drilled. The property is 15 km southwest of the large Porgera mine operated by Placer Dome (PDG-T), with which it seems to share certain geological features.

Once feasibility work begins at Mt. Kare, Madison will focus its efforts on exploring the Lewis gold property in the Battle Mountain district of Nevada. The project is adjacent to the Phoenix-Fortitude property, where Newmont Mining (NEM-N) has reported minable reserves containing 6 million oz. gold (at US$300 per oz.), with additional resources not yet classified as reserves.