Sultan ties up more ground near Kena

Vancouver — With a 1,500-metre drill program ready to go on its Gold Mountain zone, Sultan Minerals (SUL-V) continues to consolidate ground around the Kena property near Ymir in southeastern British Columbia.

The junior inked a deal with privately-held Arbutus Resources over the Silver King property, which lies 1.5 km southwest of the Gold Mountain discovery zone. The property hosts the historic Silver King mine. In production from 1896 to 1910 the operation cranked out 247,100 tonnes averaging 3.29% copper and 665.2 grams gold per tonne. Some 54 holes drilled in the 1960s and 1970s outlined a proven reserve of 84,000 tonnes grading 2% copper, 0.9% lead and 294.8 grams silver. In 1998, Arbutus defined a strong geophysical anomaly associated with the favourable Silver King intrusive rocks that Sultan has been targeting on the adjoining property. Located 300 metres southwest of the old mine, the anomaly measured 1 km by 260 metres and has never been drill tested.

The price tag for the property is $130,000, plus 250,000 shares over a 3-year period, as well as the greater of $240,000 or 120% of the assessed value of the surface rights of the property payable in 2006. Sultan will issue a further 200,000 shares on commercial production or the completion of a positive feasibility study. Arbutus retains a 3% net smelter royalty, which Sultan can reduce to 1.5% by paying $1 million.

Late last year, Sultan inked a deal to pick up the Cariboo, Princess and Cleopatra properties located immediately north of the Kena property. The Cariboo claims host similar alteration to the Gold Mountain zone with grab samples returning up to 5.5 grams gold.

The company can earn 100% of the properties by paying $51,500 over four years and issuing 200,000 shares. The vendor retains a 3% and 1.5% net smelter royalty on any gold/silver and other metal production, respectively. The completion of a feasibility study gives the claim owner an additional 200,000 shares.

Positive results from the 2001 drill program over the Gold Mountain zone prompted the company to study the economic prospects of both underground and open pit mining scenarios. The Frank Lang-led junior hired Snowden Mining Industry Consultants to project a number of different scenarios based on different tonnage projections, varying gold grades and combination of underground and open pit mill feed. The study, expected to be complete in February, will include very preliminary production and operating costs, as well as a financial analysis of the projects economic potential.

Last year Sultan drilled 29 holes over a 1.4-km-by-500 metre coincidental geophysical and geochemical anomaly believed to be prospective for a large tonnage, open pittable gold resource. However, results received to date, show a high-grade gold-bearing structural zone confined to the east margin of the intrusive body within wide spread sub-economic gold mineralization

Four of the first five holes cut broad low-grade mineralization ranging up to 1.87 grams gold per tonne over 116 metres in hole 3. The style of mineralization suggested a gold-bearing porphyry, favourable for a large tonnage, open pit operation. Subsequent drilling hit sporadic intervals of low-grade mineralization with some holes yielding bonanza grade gold values over 2 metres width. The latest results are more indicative of a structural controlled style of mineralization, favourable for higher-grades but much lower tonnage.

Most of the high-grade intersections lie near the contact between the Silver King Porphyry and the Elise footwall volcanics with values occurring in either rock type. The highest gold grades came from hole 3 where a 1.23 metre returned 240 grams gold and hole 8, which yielded a 2 metre interval grading 172.1 grams gold. These holes were collared 125 metres apart covering a vertical depth of 40-to-190 metres.

The most recent geophysical survey over the project has defined three anomalies. The more easterly encompasses the Gold Mountain zone and measured 1.4-km in length. A second more westerly chargeability high measuring 1.2-km in length occurs where a previous drill hole cut 1 metre grading 50.8 grams gold. A third parallel anomaly is located where drilling in the 1980s cut broad zones of low-grade mineralization averaging 0.66 gram gold.

Preliminary petrographic and alteration studies on the drill core indicated that the mineralization is consistent with a porphyry gold depositional setting. Initial metallurgical test work on two composite core samples show that the ore is not refractory with recoveries hitting 92-to-97% using cyanide leaching.

Sultan currently has 12 holes spotted for the latest round of drilling over the Gold Mountain zone.