THE GLOBAL SEARCH FOR GOLD SPECIAL — Sutton goes underground at Bulyanhulu project

While gold exploration companies in Indonesia and West Africa have been making headlines regularly, Sutton Resources (STT-V) has steadily advanced its Bulyanhulu project in Tanzania to the underground development stage.

The company acquired an 85% interest in the gold project in 1994, with the Tanzanian government retaining a 15% carried equity interest. Previous operators Outokumpu and, more recently, Placer Dome had identified a resource of 3.1 million tonnes grading 10.6 grams gold per tonne from Reef 1.

Exploration has focused on three of the six quartz-vein systems or reefs on the 55-sq.-km concession. A preliminary engineering study on Reef 1 and 0 suggests that a 1,500-tonne-per-day operation could produce 200,000 oz. gold annually during the first four years of operation, dropping to 180,000 oz.

thereafter. The study estimates a cash cost of US$125 per oz., with a capital cost of US$135 million. The most recent estimate of reserves is 6.5 million tonnes grading 15.4 grams gold per tonne.

Bulyanhulu is interpreted as a stratabound gold deposit hosted by a sequence of siltstones, mudstones and chert averaging 4.5 metres in thickness. The sedimentary sequence lies at the top of a felsic cycle and is overlain by a mafic volcanic sequence. Sedimentary structures indicate the deposit is slightly overturned.

“The Reef 1 deposit is open in all directions,” says Sutton Chairman Roman Shklanka, adding that “the potential for the discovery of a lot more gold at Bulyanhulu is superb.”

Sutton plans to begin a US$14-million exploration and underground development program in October and expects to begin underground development by January of next year. The company will drive an underground decline to carry out underground bulk-sampling and exploration on the Reef 1 zone. This work will provide the engineering basis for a feasibility study, to be completed by the end of 1997.

The junior also plans to test shallow, near-surface targets on the deposit, where the presence of illegal miners has hampered exploration in the past.

The Tanzanian government has ordered all illegal miners at Bulyanhulu to vacate the property by the end of August. Initial reports from the property indicate that many of the miners are responding in advance of the deadline.

Elsewhere, Sutton is looking for joint-venture partners for its properties in Tanzania and Guyana. The Kabanga-South Kagera project in Tanzania is a nickel-copper-cobalt project, which has identified a resource of 21 million tonnes grading 1.66% nickel, 0.23% copper and 0.14% cobalt. The Marudi gold project in Guyana has identified two gold zones at Mazoa Hill and Marudi Mountain, which appear to be amenable to open-pit mining.

Meanwhile, Pangea Goldfields (PGD-T) and partner Ashanti Goldfields (AHD-T) are exploring ground immediately south of Bulyanhulu. The joint venture is conducting ground geophysical and geochemical surveys, as well as a pitting program at selected sites. The companies plan to spend $2.3 million by next April on this property, as well as on the Rubondo property, 80 km to the west.

Southeast of Bulyanhulu, Pangea and partner Randgold of South Africa have almost completed a prefeasibility study on the Golden Ridge gold deposit.

Pangea Goldfields reports a resource of 1.5 million oz. gold from banded-iron formation over a strike length of about 7 km. Randgold, as operator, is midway through a 13,000-metre-drill program on the property, which it began in April.

Randgold can earn a 65% interest in the Golden Ridge project by funding all exploration costs and completing a feasibility study.