Mongolia Gold adds ground

Mongolia Gold Resources (mgr-v) has added to its holdings in Mongolia by acquiring an 80% interest in two exploration licences.

The properties, which, combined, cover 5,000 sq. km of ground in the central part of the country, are underlain by mid-Paleozoic sedimentary rocks. The company believes the geological terrain is prospective for Carlin-type gold mineralization.

Government geologists have reportedly defined broad gold geochemical anomalies with associated mercury, antimony and arsenic enrichments. Mongolia Gold has used remote-sensing studies to identify alteration zones that coincide with some of those anomalies.

The company has also announced plans to raise $1.1 million in a private placement of up to 1 million units priced at $1.10 each. Each unit comprises one share and one non-transferable warrant. Two warrants will permit the purchase of an additional share at a price of $1.10 during the first year and $1.27 during the second.

Mongolia Gold will use the proceeds to finance its partner’s share of the first- and second-quarter cash calls on the Bumbat gold mine project in the Zaamar region of north-central Mongolia. Mongolia Gold owns a 49% interest in the project, while Mongol Alt, a private company, holds the remainder.

The Bumbat project is scheduled for startup in May. Initial production will come from open-pit, narrow-vein mining and will be processed in a 300-tonne-per-day gravity and flotation concentrator on-site. Production for the year is forecast at 25,000 oz. at an estimated cash cost of US$121 per oz.

Veins 118 and 56 have an estimated, drill-indicated reserve of 492,312 tonnes grading 11.64 grams gold per tonne, equivalent to 184,259 oz.