EXPLORATION 1997 — Asia Minerals acquires prospecting concessions in China

Without fuss or fanfare, Asia Minerals (AMP-A) has acquired the right to explore one of the world’s least explored regions with potential for massive gold discoveries.

The Vancouver-based junior, which is held about 41% by gold producer Royal Oak Mines (RYO-T), signed a co-operation agreement late last year with the Xinjiang Bureau of Geology and Minerals to explore jointly for gold in the West Kunlun Shan and Altay Shan mountain ranges.

Asia Minerals is no stranger to China, where it has been active for more than three years at several projects in Gansu and Shandong provinces. It also owns 50% of the Yingezhuang mine in Shandong province, where reserves are reported to contain 1.8 million oz. gold.

The latest agreement provides Asia Minerals with an exclusive right to select properties for joint exploration in two concessions of northern China. The region is attracting attention because of its potential for hosting large gold deposits similar in size to those in neighboring Kyrgyzstan, Uzbekistan and Kazakstan.

“That’s certainly the theory and the geological model we will be pursuing,” says Michael Cunningham, vice-president of exploration for Asia Minerals.

“But it is still early days, and the proof will be in the pudding.” Cunningham says other North American mining companies have secured, or are looking to secure, ground in the region. “We’re not exactly bumping into people, but we hear that the geological bureaus have been approached by other Canadians.”

Cunningham explains that government cutbacks are forcing China’s geological bureaus to become self-sufficient and generate revenue by taking on commercial mining projects. “They were not allowed to do this in the past, when their role was more along the lines of our government [Geological Survey of Canada] geologists. It’s a major adjustment for them.”

Asia Minerals intends to work with the Xinjiang Bureau of Geology and Mineral Resources to review existing data in greater detail and outline exploration targets. While the government geologists are familiar with the geology of the areas for which they are responsible, they are generally not used to exploring for commercial deposits in the field.

Asia Minerals intends to make use of as much North American exploration technology as possible. “It would be nice to bring airborne geophysics to bear, but the lack of airstrips and problems with logistics make that too difficult,” explains Cunningham. “For example, it’s not possible to find a commercial helicopter company.”

Instead, the company will make use of satellite imagery, ground geophysics and geochemical methods, as well as prospecting and other surface work.

Cunningham expects exploration will begin in earnest later this spring. In the meantime, the company will work to complete the joint-venture agreement and set up a legal entity that will hold title to the land package.

“We would look for control [of the joint venture] and more than a 50% interest,” Cunningham adds. “In our discussions, we made it clear that a 50-50 deal is not on the table.”

The process of forming a joint-venture and going through the regulatory hurdles of setting up a legal entity is the most challenging aspect of working in China, Cunningham says, adding that “extreme patience” is required.

Concessions

The West Kunlun Shan concession comprises 15,000 sq. km in southwestern Xinjiang and lies southeast of a concession held by Barrick Gold. Asia Minerals notes that its concession is part of a copper-gold metallogenic belt that extends from Uzbekistan into the Kunlun Shan and the Tien Shan mountains. This belt consists of Paleozoic sediments, volcanics and granite intrusions and Mesozoic volcanics overlying Proterozoic basement rocks. The company says the concession has potential for hosting huge gold deposits of the type found in Silurian sedimentary strata along the extension of the Kunlun Shan and Tian Shan belts in Kyrgyzstan and Uzbekistan. There, spectacular deposits such as Murantau and Kalmakyr have indicated resources of 140 million oz. and 25 million oz., respectively.

The company’s Chinese partner has already identified four large, regional-scale gold and gold-copper targets in the concession area. At least two of these appear to be in Silurian sedimentary strata.

Project selection and initial exploration are planned for this spring and summer.

The Altay Shan concession covers 3,000 sq. km in northeastern Xinjuan, which is adjacent to Mongolia. Most of the rivers that flow through the concession are said to carry placer gold. A stream-sediment geochemical survey identified gold anomalies in six areas and trends, and gold- and copper-bearing veins were discovered in the areas of known placers. The anomalies appear to correlate to a major, northwest-trending fault structure and a series of granitic intrusives into Proterozoic, Paleozoic and Mesozoic sedimentary and volcanic strata.

On the Philippine island of Luzon, in the Sierra Madre mountains, Asia Minerals recently launched a program aimed at exploring gold and copper-gold targets. The company plans to open an exploration office in Manila, which will be used as a base from which to examine and acquire other projects in the country.