EXPLORATION – Bargains to be found in Western Pacific — Teck, Madison among most active companies in region

The combination of depressed metal prices, devalued currencies and the lingering impact of the Bre-X debacle is turning the Western Pacific region into a storehouse of bargains for mining companies.

The discount on gold properties that sold at a premium as recently as early 1997 has not escaped the attention of diversified producer Teck (TEK-T), which has been quietly increasing its presence in the area through alliances with junior explorers.

In Indonesia, the senior that bills itself as the “partner of choice,” has teamed up with MM Gold, a subsidiary of Sydney-based Meekatharra Minerals, to explore several gold and copper properties in Java, Sumatra, Irian Jaya and Kalimantan. Combined, these properties total 11,000 sq. km.

Teck is financing the Indonesian projects through its purchase, last year, of a 9% stake in MM Gold for $3 million.

The junior has used the funds to outline gold-rich veins on the Tapaktuan and Aceh properties in northern Sumatra and, through stream-sediment and rock sampling, uncover a previously unknown belt of gold-copper mineralization on the Bird’s Head project in Irian Jaya. The 9-by-3-km belt, now known as the Kali Yom mineral district, contains at least 14 distinct geochemical anomalies with high gold and copper values.

Teck’s assets in the region are poised to grow through the creation of Pacific Mining, or PacMin, earlier this year. The new public company is the product of a consolidation of Teck’s Australian assets with those of Camelot Resources. PacMin’s goal is to “take advantage of current market conditions” and grow by exploration, project acquisition and mergers with other companies that have promising projects in the region.

Teck has a 75% interest in PacMin, which in turn owns the Tarmoola and Mt. Gibson mines in Australia. The two mines produced a total of 170,000 oz. gold last year. The junior also has a stake in an advanced gold project in northern Australia and holds several prospective tenements in Australia and Fiji.

Despite the difficulty of raising exploration financing on equity markets these days, some juniors are also managing to hang on to their projects in the region without the support of cash-rich senior producers.

In the central highlands of Papua New Guinea, for example, Madison Enterprises (MNP-V) continues its 2-year-old examination of the Mt. Kare property, next to Placer Dome‘s (PDG-T) rich Porgera gold mine. At presstime, the company was about to announce a resource calculation for the property, based on the results of more than 130 holes.

Madison has a 65% stake in Mt. Kare, where drilling to expand the gold resource continues with two rigs. The company raised $10 million for the program through a bought-deal private placement with Yorkton Securities in May.

Back in Indonesia, Spire Ventures (SVG-V) is expecting to have more cash available to continue exploration on its Cikatomas gold project in Java following a tentative deal with RJZ Mining (RJZ-A) of Calgary, Alta.

The two juniors have signed a letter-of-intent that requires RJZ to purchase 625,000 units of Spire at 20 cents each. A unit contains one share and one warrant to buy Spire at prices of 20-23 cents.

Spire says trenching and channel sampling at Cikatomas have returned “wide” sections grading more than 1 gram gold per tonne. A core drilling program is testing this mineralization at depth.

In return, Spire will have the option to earn a 25% interest in RJZ’s Caribou Dome gold property in Nova Scotia by spending an initial $25,000 and paying half of RJZ’s ongoing exploration costs.