Menora Resources buys advanced gold project in Yemen

In south-central Yemen, Menora Resources (ME) has acquired a gold exploration licence that hosts an advanced gold deposit and 35 other gold occurrences.

The 340-sq.-km licence includes the Wadi Medden deposit, which was the focus of an exploration program by a Soviet geological team in the 1980s.

The deposit consists of nine sub-parallel, gold-bearing shear zones that range in length from 200 metres to more than 1.5 km. The high-grade, steeply dipping veins vary in width from up to 2 metres but average 0.7 metre.

Previous work by the Soviet team included surface trenching, drilling, underground development and channel sampling.

More than 1,000 trenches spaced at 10-metre intervals were dug along the main shear zones. In addition, 18 surface drill holes totalling more than 6,000 metres were completed. Underground work included 4.5 km of adit development on two levels, channel sampling of the shear zones at 2-5-metre intervals and 50 underground drill holes totalling more than 8,000 metres. The deposit remains open at depth.

More than 13,700 samples were analyzed, and the Soviets conducted geotechnical and metallurgical tests. Bulk samples taken for the metallurgical testing indicate 92% of the gold is recoverable by cyanidation, with 40% being free milling.

Following the exploration program, the Soviets estimated the deposit had a resource potential of 739,000 oz. at a gold grade of 0.34 oz. per ton. Almost half of this resource (or 322,057 oz.) was considered by the team to be a commercial reserve at a grade of 0.43 oz. per ton. More than two-thirds of the commercial reserve (or 255,118 oz.) is accessible above the 900 level adit and, therefore, does not require a shaft in order to be mined.

In 1993, Watts, Griffis & McOuat estimated the Wadi Medden had probable reserves of 150,078 tons averaging 0.44 oz. gold, and additional possible reserves of 385,700 tons grading 0.43 oz. Menora concludes that, since mining costs have not been calculated, the deposit’s reserves should be re-stated as a measured resource of 650,000 tons grading 0.43 oz.

Menora plans to complete a prefeasibility study at Wadi Medden to determine the actual reserves and mining characteristics of the deposit, and then move quickly to a production decision.

The exploration licence is valid for a 2-year period and renewable thereafter.

As consideration for the licence, Menora will pay the government of Yemen US$15,000 and annual rent of US$20 per sq. km, as well as issue it a 3% net smelter royalty on all production.

In addition, Menora will pay, at its option, either a delayed cash payment or an equity interest equal to the appraised value of work completed to date. The appraised value of work is expected to be between US$5 million and US$10 million.

The company will also pay a finder’s fee of US$100,000 and 200,000 shares on a staged basis, as well as issue a 3% net smelter return to its Yemeni partner.