Tirex races to reveal new VMS district in uncharted Albania

SITE VISIT

TIRANA, ALBANIA — You could call it a silver lining.

Albanians endured almost 50 years of repressive dictatorship under Enver Hoxha and his Communist Albanian Party of Labour. Albanians were not allowed to own property, drive vehicles, travel abroad, practise religion, communicate with the outside world, or speak freely, among a litany of other restrictions. Punishments for disloyalty to the party, and Hoxha, were fierce.

Hoxha’s regime ended in 1992, several years after his death, but left Albania the poorest country in Europe, completely isolated and economically stagnant. A few years of rampant capitalism and shaky democracy culminated in the collapse of a pyramid investment scheme in 1997. Three-quarters of the population lost all their savings.

The silver lining is the opportunity that this Mediterranean country nowoffers. Since the riots of 1997, the country has developed into a stable parliamentary democracy with a free market economy. Its people are racing to catch up with the world from which they were excluded for so long — everyone is looking for whatever gems Albania might have to offer.

It turns out one of those gems is a Canadian company called Tirex Resources (TXX-V, TIRXF-O). Tirex has grabbed hold of an immense land package in Albania called the Mirdita district that it thinks holds the potential to become one of the world’s great volcanogenic massive sulphide (VMS) districts, like Noranda, Flin Flon, or Kuroko.

“I hate sounding like a promoter but if any one of the targets in our camp were in Flin Flon it might be a company-making project on its own,” says Bryan Slusarchuk, one of the founders of Tirex and its CEO. “And we have over one hundred targets.

“We’re not shooting for development of a single project but a whole district of deposits.”

Albania’s mining history

The Mirdita district is in north-central Albania, placing the 344-sq.-km project between the southern tips of Montenegro and Kosovo. Macedonia borders Albania on the rest of its eastern flank and Greece sits to the south.

Mining is fairly new to Albania — prior to 1950, geologists knew of few metallic mineral prospects in the country. That all changed with the dictatorship of Enver Hoxha, who declared the need for an Albanian copper mining industry. But the isolation he imposed on his country made his demand difficult to fulfill.

During Hoxha’s reign, geologists in other parts of the world were gaining immense knowledge about VMS deposits and developing new exploration techniques to find them. In particular, they learned that VMS deposits, which comprise lenses of metal-rich massive sul- phide mineralization with halos of disseminated sulphide minerals, can usually be detected via electromagnetic, induced-polarization (IP) chargeability, or magnetic explorations methods. Since the 1960s, such surveys have been the go-to tool for finding these rich deposits.

But Albanians were left completely out of the loop and so were forced to rely on antiquated exploration methods. Even so, Albanian geologists found a wealth of minerals in their backyard, much of it in the Mirdita district. Between 1976 and 1990, the government copper mining company found 17 VMS deposits on what is now the Tirex property in the Mirdita district and brought nine of them into production. The Albanian Geological Society estimates that 20 million tonnes of copper ore was mined in Albania during those years; half of that came from the 1% of Albania that is Mirdita.

Mirdita deposits are VMS deposits, so zinc was usually present –and it was a problem. Hoxha was not interested in zinc production and did not allow zinc recovery. As such, orecarrying lowgrades of zinc was processed for copper and the zinc left in tailing piles; when a mine hit high-grade zinc, the ore was left in waste dumps because the processing facilities could not handle it. Gold was also reportedly mined at Mirdita but gold values were kept a state secret — only a select few in government had access to this data, or wealth.

As Hoxha’s reign weakened, so did Albania’s mining industry. The last mine operating in the country was called Gurthi; it shut down in 2000. At closure, miners were still pulling ore from one adit but had run into that problematic high-grade zinc. To get around it they had drifted in a second adit, which was almost complete when the country’s political and economic demise — not a lack of metal in the ground — spelled the end of mining for some time.

Perparim Alikaj is now the head of the geophysics section of the department of Earth Sciences at the Polytechnic University of Tirana, Albania’s capital city. As a geophysicist under Hoxha, Alikaj explored the Mirdita district to the best of his abilities for over 30 years.

Alikaj left Albania in 1992, when the Communist regime ended, and became a Canadian citizen. He continued his geophysical work and is credited with inventing Real Section IP and Voltage Domain IP technologies. But his thoughts were never far from Mirdita.

With Albania stabilized and worldwide metals markets stronger, Alikaj’s relentless belief in the potential of Mirdita finally brought together a group of Canadians willing to gamble on Albania for the chance to explore this hidden gem. So was born Tirex, founded by Slusarchuk, geologist George Gorzynski and the well-known R. Stuart (Tookie) Angus, who was a founding director of First Quantum Minerals (FM-T, FQM-L), a director of Canico until its takeover by Vale (RIO-N), and a director of Bema Gold until its takeover by Kinross Gold (K-T, KGC-N). Angus is now chairman of Tirex.

The first step was to do what no one had been able to do before in Albania — fly an airborne geophysical survey. The survey of Mirdita revealed more than 100 prospective anomalies, some coincident with the few known deposits but many representing potential for new discoveries. And since the Mirdita district does not host graphite, the anomalies from the survey likely all represent sulphide mineralization or structure of some sort.

Tirex’s property is 45 km long, north to south, and 5 to 10 km wide. It’s a huge area for one company to explore, which means the Tirex team has been forced to prioritize its list of targets.

The airborne survey outlined one clear trend that was not surprising — it was the Gurthi trend, home to the Gurthi mine near the south end and the Lak Roshi and Qaf Bari mines some 16 km north. The Tirex team decided to start by drilling known deposits on this trend, and hoped the effort would delineate the known mineralization while also giving the company time to figure out the next exploration target.

And drills have hit mineralization. Tirex started at Koshaj, a deposit that the Albanian State Mining Company discovered but did not mine because of its high zinc content. And zinc-rich it is: the first hole in Koshaj returned 65 metres grading 9% zinc, 0.6% copper, 0.3% lead, 2.7 grams gold per tonne and 48.4 grams silver, starting 38 metres down-hole and including several short, high-grade intervals, such as 3.1 metres of 34.8% zinc, 2.3% copper, 2.4% lead, 14.6 grams gold and 376.1 grams silver.

Hole 2 hit a very similar intercept: 60.4 metres averaging 6.7% zinc, 1.1% copper, 0.1% lead, 1.6 grams gold and 17.7 grams silver from 74 metres depth. The mineralized intercept in hole 3 carried similar grades but the drill hit a fault, cutting the length down to 13 metres.

Tirex completed nine holes at Koshaj in the first pass. Seven returned intercepts carrying grades like those in the first three holes. The final two holes were collared 50 metres north and returned only low base metal grades.

The company then moved the drill 2.5 km south to Gurthi South, where it punched four holes into the ground for which assays are pending. The team has high hopes for Gurthi South because a previous drill program there returned some whopper intercepts, including 11 metres gr
ading 8.8% copper.

That drill has now moved to Gurthi Central, where the Gurthi mine operated until 2000. Selected rock samples from the old ore pile have returned incredible grades: up to 18% copper, 43% zinc, 27 grams gold and 267 grams silver. The goal is to first test the downdip extension of the area mined via the first adit, then move on to test the area near the second, nearly complete adit.

Slusarchuk says his team believes Gurthi Central has the potential to be a company-maker on its own.

The drilling program started with only one drill but Tirex now has three drills turning at Mirdita. “Our geologists want more — they want ten drills,” Slusarchuk says. “If only we could.”

Beyond the known mineralization

While the drills turned, the task of figuring out Tirex’s next step was given to Allan Miller. As Tirex’s chief geologist, Miller spent two months climbing around the Gurthi trend’s rugged terrain, turning over stones, climbing into creek beds, and “talking to the rocks.”

“It’s like real estate, but instead of location, location, location, it’s structure, structure, structure,” he says. “We’re looking for Norandatype deposits in the lower sequence of mafic volcanics, along the corridor and along the parallel second-and third-order faults.

“It’s exciting because you can really see that there’s been significant hydrothermal activity along this entire corridor and there definitely remains considerable potential for new discoveries.”

One aspect of the area that caught Miller’s attention was the limestone cap that covered an area 11 km long by 4 km wide east of the Gurthi corridor. Part of a second major corridor, the Munelle trend, emerged like a tease from under the cap beside the southern half of the Gurthi trend but nothing was known about what lay under the cap, since regular geophysics cannot penetrate non-conducting limestone.

Tirex commissioned a deep-penetrating geophysical survey and Miller’s team started on geochemistry and mapping. The result is the first real hint at Mirdita’s blue-sky potential.

The work doubled the length of the Munelle VMS trend to 6 km and revealed two new VMS trends totalling some 8 km that had been completely hidden under the limestone cap. By mapping creek beds that cut through the limestone and locally exposed bedrock-hosting copper mineralization, Miller’s work confirmed that the new trends — called the South Arm and East Slope trends — are indeed VMS corridors. Stream-sediment samples from creeks that drain the trends also support the presence of VMS mineralization.

The work more than doubles the prospective VMS area in the northern half of Mirdita.

“We’re excited but you know who’s really excited are the geologists who see these maps and call in to the office,” Slusarchuk says. “They can hardly believe it.”

One ofthe moreprospectivespots within the new area happens to be directly beside Tirex’s camp, on the side of Old Man Mountain. Whatever is hidden in Old Man Mountain caused coincident AeroTEM, UTEM, and IP anomalies. Tirex moved a drill to the location as soon as possible; the first hole is now under way.

The country question

So the project is moving along apace, but what about the country? It’s a question Tirex’s team is used to hearing. For many, Albania conjures up images of boatloads of poverty-stricken peasant families fleeing their country in 1992, when the borders finally opened, and then again in 1997 after the pyramid scheme collapse.

The repressed Albanians who flooded into Europe seemed archaic, uneducated and needy. The country they left appeared a shambles, and for a time it was. But much has changed since those heady days.

The country is best described as the archetype of a rapidly developing country. Driving through the capital city, Tirana, is like driving through one massive construction project. A city block home to half a dozen major construction projects is the norm. A rutted, pothole-filled lane rounds a corner and becomes a brand new four-lane highway. And on that highway, new E-Class Mercedes speed past old men on wooden donkey carts.

Albania is racing forward full tilt, not always sure of its goal but generally moving in the right direction. That being said, the country is littered with abandoned building projects. In fact, the only sight more common in Albania than a half-built building is a bunker.

Hoxha was convinced the country was in danger of imminent attack and had his people build a million bunkers to be ready to protect their land. Most of the mushroom-shaped structures, made of concrete with enough steel reinforcement to supposedly withstand a tank attack, are just a few metres across, sized for two people. And they are everywhere: driving through the farmlands that run from Albania’s coastline towards the mountains to the east, it is not fences that separate farmers’ fields but lines of bunkers.

Closer to the coast the bunkers are large enough to house 88-mm cannons, which were in Hoxha’s time primed to fire halfway to Italy across the Adriatic Sea. And so many underground munitions caches were built that many have been forgotten.

Today, the bunkers are a tourist curiosity and a teenager hangout. It took only a few years for Albanians to rid their country of most reminders of Enver Hoxha; now even his million bunkers are slowly breaking apart, the concrete crumbling and the rebar stolen for new projects.

It is thanks to this rapid transformation from an isolated communist dictatorship to an actively democratic, capitalist country that Albania is moving quickly towards admittance into the European Union. In 2007, Albania signed a bilateral agreement with the EU that, among other steps, eased visa requirements for Albanian citizens. The EU is helping Albania meet economic development targets and membership is expected in the not-so-distant future.

And in April of this year, the country accepted an invitation to join NATO. The country will formally enter the 26-nation pact in early 2009, on NATO’s 60th birthday. Albania is also a member of the United Nations and the World Trade Organization, among other international relationships.

Infrastructure development is a key focus for the country’s government — a ban on driving during Hoxha’s reign meant roads were simply not built or maintained to any acceptable degree. But the Albanian government is pouring serious energy and money into infrastructure, and highways are a major part of that.

For now, access to the Mirdita project is along narrow, winding roads. It turns out the highway being built from Durres, the major sea port 85 km south of Tirana, north through the country to the Kosovo border will pass through the eastern side of Tirex’s property.

“When we started working here and had done the drive a few times we started saying, ‘Wouldn’t it be nice if someone came and built us a better road?'” Gorzynski says. “And not longer after, our wish came true!”

The government is also invested heavily in upgrades to the port at Durres and to the country’s power system. Most of Albania’s power is hydropower; shortages of late prompted the government to develop the country’s first-ever natural gas power station. Transmission lines are also being inspected and repaired across the country.

In another plus for mining in Albania, the country adopted mining legislation in 1994 that was geared towards international investment and has remained unchanged. Key aspects of the law include the right for up to 100% foreign ownership, a corporate tax rate of only 10%, and a 2% net smelter return royalty from which holidays may be negotiated for new mines.

Slusarchuk certainlyfeels at home in Albania. He makes the 30-hour trip from Vancouver every few months and every time he arrives it seems the country has taken one more step forward. The rapid pace of development in Albania is, really, a perfect match for this little Canadian company.

“I feel like we’re running against the clock,” Slusarchuk says. “We need to generate as much drilling
data for the district as quickly as possible before somebody big takes a run at us. So far, we’ve advanced the project quietly, but it won’t stay like that for long.

“If we keep putting up big assay numbers like we have to date and we start to prove that multiple economic deposits exist, it won’t be long before the majors start to realize that they simply can’t afford not to own a piece of this district. There just aren’t many, if any, places like this left in the world.”