New Guinea Gold launches drilling at Kabang prospect

New Guinea Gold (NGG-V) has begun diamond drilling on the Kabang prospect, part of the Feni project in Papua New Guinea.

The Feni project comprises about 81 sq. km on the islands of Ambitle and Babase. The islands lie in the South Pacific ocean archipelago, which extends from the Asian mainland to New Zealand.

The circum-pacific volcanic belt is host to large porphyry copper-gold deposits, as well as epithermal gold deposits. Ambitle and Babase are about 150 km southwest of the island of Lihir. The Lihir mine, owned by Papua New Guinean-based Lihir Gold, produced 262,000 oz. gold at a cash cost of US$191 per oz. in the first half of 1998.

New Guinea Gold has earned a 25% equity interest in the Feni project from Australian-based Macmin, which holds a 23% interest in New Guinea Gold. Toronto-based Goldcorp (GB-T) holds a 42% interest, and New Guinea management holds an additional 3.2%.

New Guinea Gold is required to spend $4 million to acquire a half-interest in the Feni project.

The Kabang prospect, which is on Ambitle island, has been previously explored and drilled. A report prepared in 1993 by Bateman Kinhill, consulting geologists, calculated an open-ended inferred resource of 4 million tonnes grading 1.4 grams gold per tonne. About 25 reverse-circulation and diamond drill holes have been drilled at Kabang by previous owners. Many of the holes intersected wide intervals of mineralization that assayed between 1 and 2 grams gold.

Highlights of previous drilling are as follows:

* Hole 2 intersected 113.9 metres grading 0.19% copper and 1.12 grams gold starting from the surface. At a down-hole depth of 125.7 metres, the drill cut 50.4 metres grading 0.25% copper and 0.5 gram gold. Farther down-hole, at a depth of 207.2 metres, a 42.8 metre intercept averaged 0.24% copper and 0.51 gram gold.

* Hole 4 cut 4.4 metres of 0.04% copper and 1.1 grams gold starting at a down-hole depth of 68.4 metres. This intercept was followed by a 32.4-metre interval that averaged 0.26% copper and 0.52 gram gold, starting 98.3 metres down-hole. The last intercept, an 8.5-metre interval grading 0.15% copper and 1.32 grams gold, was hit at 191.3 metres down-hole.

* Hole 5 intersected 6 metres grading 0.04% copper and 2.22 grams gold starting at a depth of 89.2 metres down-hole. This was followed by a 26.5-metre interval grading 0.11% copper and 1.02 grams gold starting at a depth of 95.2 metres down-hole. A final 6.5-metre intercept, starting at a depth of 143.8 metres down-hole, averaged 0.06% copper and 1.2 grams gold.

New Guinea Gold believes the mineralization is mainly epithermal and that it overprints a porphyry copper-gold system.

The company has been focusing its efforts on a 10-sq.-km area that surrounds the previously drilled mineralization. Numerous gold, mercury and arsenic geochemical anomalies have been identified in the region, and radar surveys have identified structures that may be significant. One such structure extends both northeast and southwest of the Kabang prospect.

An induced-polarization (IP) survey is under way, and several chargeability anomalies are interpreted to represent undefined sulphide zones that increase the overall extent of the Kabang system.

Recently, New Guinea Gold began a program of core drilling. The initial hole has been collared 400 metres northeast of previously drilled hole 2. The hole has a planned depth of 250 metres and is designed to test a strong IP anomaly. The company has planned about 1,800 metres of drilling with the intention of testing the southeastern extension of the Kabang system, other IP and geochemical anomalies, and an area where gold is being deposited in hot springs.

New Guinea Gold has $700,000 in working capital.