GLOBAL SEARCH FOR GOLD — European Gold tests the luck ‘o the Irish

Toronto-based junior European Gold Resources (EGRI-C), through its wholly owned subsidiary, Omagh Minerals, intends not only to open Ireland’s first modern-day gold mine, but also to market its production. The gold will be used in jewelry and medallions that will bear the stamp of having been produced on the Emerald Isle.

The planned open-pit mine will be near the district of Omagh in Tyrone Cty. in the west-central portion of Northern Ireland.

The deposit, known as Cavanacaw (or Lack), was discovered during the late 1980s and then drilled by Rio Tinto Finance & Exploration (RioFinEx). The company, a subsidiary of Rio Tinto (RTP-N), sold its interest in the property, as well as its proprietary information, to Omagh Minerals in 1990.

Gold mineralization at Cavanacaw is hosted by steeply dipping quartz veins and shear zones in Dalradian metasediments. The gold infills microfractures and forms discrete grains with lead, copper and iron sulphides.

The first production from Cavanacaw, tentatively scheduled for late 1998, will come from the Kearney structure, where a 1994 reserve estimate tallied 181,480 tonnes grading 7.36 grams gold per tonne in the proven category and 185,830 tonnes at 7.68 grams gold in the probable category. The mineralized structure at Kearney is up to 20 metres wide, at least 900 metres long and extends to a depth of at least 300 metres.

An overall resource of 2 million tonnes grading 6.9 grams gold has been delineated.

Kilborn of Toronto and Knight, Piesold & Partners of the United Kingdom have designed an initial production facility capable of processing some 17,000 oz. gold and 40,000 oz. silver in the first year. The mine life is estimated at a minimum of eight years.

Cash costs are estimated at US$181 per oz. gold, whereas the capital costs of realizing production are pegged at 5 million (inclusive of working capital and funds for further exploration).

Jack Gunter, president of European Gold, says the firm may build its own refinery so that the Irish origin of the gold can be certified. The company is also considering doping the gold with certain isotopes so as to earmark the product as distinctly Irish.

“The gold will have a cachet to it”, says Gunter. “It’s Ireland’s first gold, and we simply want to add value to its marketability. We’ve been in advanced discussions with luxury goods producers, including the Irish firm Waterford-Wedgwood [one of the largest producers of fine, hand-crafted crystal and pottery in the world]. They’re looking for another luxury item — most likely jewelry — to introduce to their range of products.” The company is also considering striking a medallion to commemorate Ireland’s first gold pour.

Another area the company may venture into is wedding rings. “There’s a very large market for wedding rings both in North America and in Ireland, and it’s relatively price-inelastic,” Gunter says. “It’s also simple; anyone can make rings.”

He adds: “Creating a vertically integrated business is especially attractive in the Irish context. That’s always been our strategy, and we think it will add a significant premium to our gold — maybe, across the board, a 20% premium. It adds an interesting twist to our business.”

Permitting for the mine has been completed. “If I ever go down in history, it will be for permitting, practically single-handedly, Ireland’s first gold mine. The public enquiry lasted 24 days in total, and everyone had a go at me, including a man from the Sierra Defense Fund in California who flew over for the enquiry. Actually he was quite reasonable — at the end he shook my hand and wished me luck.”

Though Ireland is best known for its zinc-lead deposits, such as Navan (80 million tonnes), Galmoy (6.2 million tonnes) and Mt. Lisheen (17.7 million tonnes), gold does have a long history on the island, with prehistoric gold ornaments having been found throughout the land. Most belong to the Bronze Age (2,000-400 B.C.), though others date from the late Iron Age and early Christian periods.

Ancient history

Whether the gold used in these ornaments was native or imported is still open to debate. Small amounts of alluvial gold do occur in several localities in Ireland, according to Annals of the Four Masters, a historical document written in 1632, which refers to the discovery of Irish gold around 1600 B.C. and which further mentions that gold was smelted in the forests south of present-day Dublin.

The last significant occurrence of gold mining in Ireland, between 1795 and the mid-19th century, exploited alluvial gold from the Gold Mine River in Wicklow Cty. The total amount mined is said to have been less than 10,000 oz.

European Gold’s other key asset is its gold deposit on the 130-sq.-km Montemor concession (also relinquished in the early 1990s by RioFinEx), situated near the town of Montemor-o-Novo, some 95 km southeast of Lisbon in central Portugal.

There, European Gold and equal joint-venture partner Auspex Minerals (APJ-V) have boosted the total indicated and inferred resource to 4.4 million tonnes grading 2.81 grams gold, equivalent to 402,991 contained ounces. The resource is contained in a total of 17 near-surface deposits, which occur within a 12-km-long stretch of steeply dipping, sheared Precambrian metavolcanic and metasedimentary rocks.

Definition drilling and trenching are under way at the property in an attempt to upgrade the classification of the inferred resources.

European Gold was formerly known as Montemor Resources.