Barrick ups investment in Papua New Guinea (April 07, 2008)

Just weeks after Allied Gold (AGLD-L ALD-A) poured the first gold from its Simberi project on Simberi Island off the northern coast of Papua New Guinea, the Australian miner has signed a deal with Canadian heavyweight Barrick Gold (ABX-T, ABX-N) to explore its licences on nearby Big Tabar and Tatau Islands.

The coral-reef fringed group of Tabar Islands, made up of Simberi, Tatau, Mapua and Tabar, cover an area of about 270 sq. km and lie at the northwestern end of a belt of islands about 300 km in length.

Allied Gold’s 100%-owned Simberi oxide gold project is on the northernmost island in the Tabar Islands group– about 60 km northwest of the Lihir gold project, which hosts a 40-million-oz. gold resource.

To date, the Perth, Australiabased company has produced 13,140 oz. gold and poured 6,160 oz. gold at Simberi. About 120,000 dry tonnes of ore have been processed at an average head grade of 3.93 grams gold per tonne.

The Simberi deposit contains measured, indicated and inferred resources of about 2.4 million oz. gold and proven and probable ore reserves of 674,000 oz. gold.

“As there is so much value to be unlocked at Simberi, we recognized we required assistance over the next three to five years to provide adequate means to systematically assess the vast potential of Big Tabar and Tatau,” Allied Gold said in a statement, explaining its deal with Barrick.

“Simberi needs to be our primary focus — it is a new, 84,000-ounce-per- annum operation to manage. We have some 1.75 million ounces ofmineral resources on Simberi currently outside of ore reserve status, and numerous ore-grade intercepts and drill targets to follow up on.”

Enter Barrick Gold. Under the deal, Barrick will help the Aussie gold miner drill gold targets identified on Tatua and Big Tabar Islands and will invest as much as A$35 million (US$32 million) for up to a 70% stake in the project.

Barrick will need to invest A$8 million (US$7.3 million) in exploration spending within four years to earn the first 51% interest, and another A$12 million (US$11 million) within the following four-year period to earn 70% in the exploration licence.

Modern exploration on the islands began in 1981 by Nord Pacific and other joint-venture partners, from which Allied acquired the property, and has continued since then, apart from a period when gold prices dipped between 1999 and 2002.

Geologically, the group of islands are made up largely of alkaline and under-saturated volcanics, lavas and intrusives.

The main prospects on all of the islands are associated with potassium anomalies. These are due to sericite-adularia-clay alteration associated with gold mineralization.

On Simberi, strong potassium anomalies are associated with areas of flat magnetic patterns or magnetic lows, suggesting hydrothermal alteration has been magnetite destructive, the company says.

The potassium anomalies on Simberi indicate there is potential for further extensions to the known deposits, and on Tatau they indicate sizable hydrothermal systems were developed. Several anomalies are present on the islands that are not associated with known mineralized prospects.