gold exploration from the mining journal magazine

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Goldexploration

01Gold_exploration.indd 1 01/09/2010 14:29

September 2010Mining Journal special publication – Gold exploration

GOLD EXPLORATION

2

CONTENTS

Search for gold 2Deposits and methodology 3Exploration: Australasia 6

Europe 8North America 10South America 13Africa 16Asia 21

Focus: North-east Africa 25Russia 27

Published in September 2010 by:Aspermont UK Albert House, 1 Singer Street London EC2A 4BQTel: +44 (0)20 7216 6060Fax: +44 (0)20 7216 6050E-mail: [email protected] Website: www.mining-journal.comSupplement editors: Chris Hinde, Katherine WelchDesign and production: Tim Peters, Woody Phillips

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GLOBAL expenditure on the search for non-ferrous metals rose for six consecutive years to reach some US$13 billion in 2008, according to Metals Economics Group (MEG). The

financial crisis saw last year’s total expenditure retreat to under US$8 billion. However, the share of this amount spent on gold exploration increased to 48% in 2009 from a low of 40% in 2008 (having fallen from the proportional high of 50% in 2004); see graph.

As noted in the article opposite, the search for gold is global, with the deposits being more widely distributed through geological time, and present in more geological environments, than the economic concentrations of any other metal.

Yet spending on this search for gold represents a very real risk to investors, and the risk-reward balance varies from country to country (and from region to region within individual countries). As a result, the exploration picture is decidedly mixed – as we examine in articles on each of the six continents, starting on p6. (These articles summarise the most significant recent gold-exploration announcements.)

Apart from the variable prospectivity of the geology, politics play an important part in the destination of exploration dollars. There is also no doubt that the role of the State is increasing. As noted by David Humphreys in an article in this week’s Mining Journal, there is growing government participation in the revenues and running of the mining sector.

In some countries, such as India, Chile, South Africa, Zambia and Ghana, Dr Humphreys notes that this has manifested itself as increases in mining taxes or royalties. Elsewhere, as in the Democratic Republic of the Congo, Guinea, Sierra Leone and Madagascar, it has taken the form of a review by the state of previously-awarded mining licences.

In still other cases, for example, Bolivia, Venezuela, Ecuador, Zimbabwe and Mongolia, it has expressed itself through measures to have the state, or nationals, take a larger stake in mining companies operating within their borders.

Despite this trend, overall exploration activity (as measured by MEG in its Pipeline Activity Index; PAI), increased in May and June from a recent low in April. (PAI measures the level and direction of overall activity in the supply pipeline, incorporating significant drill results, initial resource announcements, project development milestones, and significant financings into a single comparable index.)

This heightened activity was led by a sharp rise in the number of gold financings and the announcement of significant gold drilling results. In contrast, weaker base-metals prices in recent months have kept

Name Country Status Type ControlOre

resource (Mt)(Mt)

Grade (g/t)

Contained gold (t)

1 Pebble East US Feasibility OPAnglo American, North DynastyNorth Dynasty

10,777 0.31 3,337

2 Target NorthSouth Africa

Prefeasibility UG Harmony 310 6.74 2,091

3 OribiSouth Africa

Conceptual UG Harmony 300 6.69 2,006

4 Sukhoy Log Russia Feasibility OP State of Russia 686 2.80 1,921

5 Sun SouthSouth Africa

Conceptual UG Harmony 250 6.73 1,683

6 KSM Canada Prefeasibility OP Seabridge 2,894 0.53 1,535

7 Rekodiq Pakistan Feasibility OPAntofagasta, Barrick, State

4,887 0.28 1,368

8 Donlin Creek US Feasibility OP Barrick, NovaGold 566 2.32 1,315

9 Mitchell Canada Prefeasibility OP Seabridge 2,279 0.56 1,286

10 Central RandSouth Africa

Conceptual CentralRandgold 127 8.29 1,054

11 Pebble West US ConceptualAnglo American, North DynastyNorth Dynasty

3,026 0.32 968

12 Cerro Casale Chile Prefeasibility OPBarrick,

Kinross Gold1,874 0.51 956

13 Snowfield Canada Conceptual OP Silver Standard 1,811 0.51 923

14 Salobo Brazil Feasibility OP Vale 1,713 0.52 891

15 Las Cristinas Venezuela Feasibility OP Crystallex 859 0.98 841

16 Hinoba-an Philippines Feasibility OPENRC plc, Metorex

326 2.50 814

17 Caspiche Chile Conceptual Exeter Resource 1,473 0.51 756

18 Detour Lake Canada Closed OP PDX Resources 597 1.17 698

19 Kibali DRC FeasibilityOP,UG

Anglogold, Randgold, StateRandgold, State

183 3.36 615

20 Metates Mexico Prefeasibility UG Chesapeake 1,071 0.57 611

21 Cadia East Australia FeasibilityOP,UG

Newcrest 830 0.67 569

The search for goldExploration for the precious-metal accounts for almost half of the total non-ferrous metals expenditure GOLD PROJECTS (sorted by contained gold in resource)

Profiles:Archipelago 22Continental Gold 30 Esperanza Gold 28Gammon Gold 18Kefi Minerals 28Kingsrose 28Kopylovskoye 26Minera IRL 28Miranda Gold 24Pelangio 30San Gold 30

Cover:Underworld Resources’ White Gold property in the Yukon Territory of northern Canada, with a selection of gold exploration images inset from other companies

Source: Raw Materials Group, Stockholm, 2010

02-05Gold_exploration.indd 2 01/09/2010 12:44

Mining Journal special publication – Gold explorationSeptember 2010 3

GOLD EXPLORATION

The graph shows the aggregate annual nonferrous exploration budget total by the companies covered in Metals Economics Group’s (MEG) annual Corporate Exploration Strategies study and the share allocated to gold in each year. The study includes the budgets of companies spending at least US$100,000 on exploration in a given year (generally about 1,600-2,000 companies annually), which MEG estimates covers about 95% of commercially-oriented nonferrous exploration spending each year. The budget figures exclude exploration for iron ore, coal, bauxite, uranium, oil/gas, and some industrial mineralsSource: Metals Economics Group

Non-ferrousexploration total

Wor

ldwide

non-

ferro

us ex

plora

tion t

otal

(US$

bn)

Gold

explo

ratio

n (%

of w

orldw

ide to

tal)

$15

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

70%

60%

50%

40%

30%

$10

$5

$0

Gold’s share of total exploration

base-metals activity relatively flat.MEG reports that the number of significant drilling

results (in total) reported in the May to June period was up 26% from the previous two months, and nearly double that of a year ago. Gold results continue to far outpace base-metals announcements, as has been the case so far in 2010.

MEG reports that the Americas (North and South) remain the dominant regions for overall drilling activity, while significant results from Africa increased noticeably during May and June.

MEG also notes that initial resource announce-ments (for both gold and base metals) continue to lag, still showing the effects of decreased drilling activity through early and mid-2009. The value of initial resources announced fell significantly as many of the deals were for smaller projects or new zones/satellite deposits at existing projects.

For the second consecutive bimonthly period, the total amount raised in significant financings by junior and intermediate companies increased, remaining evenly split between gold and base metals.

Despite weakening metals prices, interest in the equity markets continued to show signs of strength, according to MEG, as the proportion of debt financings more than halved compared with the previous two months, giving up share to equity placements and IPOs. The average amount raised per gold financing rose slightly over the previous two months.

The targets for much of this funding effort are highlighted in the table opposite from Stockholm-based Raw Materials Group.

Deposits and methodologyBY RICHARD SILLITOE AND JEFFREY HEDENQUIST

GOLD deposits are arguably more widely distributed through geological time, and present in more geological environments, than the economic concentrations of any other metal.

Hence, gold occurs in both a majority of countries worldwide and a spectrum of deposit types.

Nevertheless, current production is dominated by mines in just four countries: China, Australia, the US (mainly Nevada) and South Africa. Chinese production exceeded 300t for the first time in 2009, while production ranged from 210t to 227t in the other three countries, each down from the amounts produced in 2008.

Russia, Peru, Indonesia and Canada form the next tier of producers, with 95-185t in 2009; and Russian and Indonesian output levels have risen markedly.

TYPES AND DISTRIBUTIONGold deposit formation was maximised during two main periods of Earth history, namely the late Archaean (2,650-2,550 million years) and Mesozoic-Cainozoic (200 million years to present).

Archaean gold metallogeny is dominated by the palaeo-placer deposits of the Witwatersrand basin in South Africa, and mesothermal lodes, which are the products of deeply-derived metamorphic or magmatic fluids that flowed along major crustal structures.

In contrast, most of the Mesozoic and Cainozoic

deposits were generated at shallower crustal levels, in some cases through to the Earth’s surface, and were centred upon, and closely related to, volcanic and subvolcanic activity, typically in magmatic arcs.

In order of present-day global economic importance, the principal deposit types are orogenic, porphyry, palaeo-placer, sediment hosted (Carlin type), high-sulphidation (HS) epithermal, intermediate- and low-sulphidation (IS and LS) epithermal, a variety of other intrusion-related types (pluton related, skarn and iron oxide-copper-gold deposits) and volcano-genic massive sulphides (VMS) formed at former black-smoker sites on the seafloor.

Some porphyry copper deposits, the main source of the world’s copper, also contain large amounts of co- or by-product gold, and a few of them (in Chile, Colombia and Turkey for example) even constitute gold-only deposits.

Notwithstanding the broad geographical spread of gold deposits, there is a distinct tendency for them to

Barrick’s Pascua-Lama project in Chile-Argentina

Aerial view of

Barrick’s Pascua-

Lama on the

Andean ridge



GOLD EXPLORATION

4

be highly concentrated in relatively restricted regions, where the gold is commonly hosted by different deposit types formed during several restricted epochs.

Classic examples include the Archaean Superior and Eastern Goldfields provinces of Ontario-Quebec and Western Australia, and the Cainozoic Great Basin of Nevada and Andes of northern Colombia, northern Peru and northern Chile.

This preferential endowment suggests that the gold may be inherited from pre-existing, perhaps ancient, gold concentrations deep within the lithosphere.

Interestingly, some global plate reconstructions extend the gold-endowed Archaean lithosphere of the Superior province westwards beneath the Cainozoic Great Basin of Nevada.

DISCOVERY EXPENDITUREAccording to Metals Economics Group (MEG), the search for gold accounted for 48% of global non-ferrous exploration expenditure of US$7.7 billion in 2009, with the greatest amount being devoted to South America, largely in the Andean Cordillera.

There, as throughout the circum-Pacific region, Tethyan belt of Eurasia and Altaid belt of the CIS, southern Russia, Mongolia and northern China, gold-rich porphyry and epithermal deposits are the prime exploration targets, although the pluton-related deposits are also sought in the Altaids and elsewhere.

Sediment-hosted deposits remain the main focus in Nevada, but exploration for epithermal deposits is again increasing.

Until three or four years ago, the world’s gold companies tended to shy away from even the gold-rich porphyry deposits because copper production was considered likely to prejudice the gold premium enjoyed by their stocks.

However, today, most of the major and mid-tier gold companies, besides many juniors, are focusing on porphyry deposits because of the possibility of adding substantially to their inventories of the metal.

Pre-eminent examples of gold-rich porphyry deposits, discovered over the past decade, include Northern Dynasty Minerals Ltd and Anglo American plc’s Pebble project in Alaska (some 67Moz), Ivanhoe Mines Ltd and Rio Tinto’s Oyu Tolgoi in Mongolia (almost 27Moz), Exeter Resources Corp’s Caspiche in Chile (over 24Moz) and Antofagasta plc and Barrick Gold Corp’s Reko Diq in Pakistan (around 21Moz).

High-sulphidation epithermal deposits, in effect the shallow parts of porphyry copper-gold systems, are also targeted throughout the circum-Pacific region

and elsewhere because of the large size of several known examples, such as Newmont Mining Corp and Buenaventura’s Yanacocha in Peru (43Moz) and Barrick’s Pascua-Lama in Chile-Argentina (18Moz). Relatively recent epithermal discoveries include Barrick’s Alto Chicama (14Moz) and Gold Fields and Buenaventura’s Cañahuyre project (perhaps 6Moz) HS and IS systems in northern and southern Peru, respectively.

Meanwhile, the IS and LS epithermal deposits are favoured targets for the junior companies because they commonly occur as discrete vein sets with the potential to host bonanza-grade gold and silver values as well as being relatively inexpensive both to delineate and develop. Well-known examples include Sumitomo Metal Mining Ltd’s Hishikari in Japan (11Moz) and Newmont’s Waihi district in New Zealand (7Moz).

Coalescence of veins can lead to much larger, albeit still high-grade deposits, such as Comstock Lode in Nevada (8Moz; mined mainly in the 1800s) and Kinross Gold Corp’s Fruta del Norte (almost 14Moz), discovered in a little-explored region of Ecuador in 2006, both IS deposits.

Nonetheless, large-tonnage, low-grade, dissemi-nated LS deposits are also known, such as Kinross and

Barrick’s joint venture Round Mountain (over 12Moz) and the recently outlined Crowfoot-Lewis (8Moz) of Allied Nevada Gold Corp, both in Nevada. In the pluton-related category, International Tower Hill Mines Ltd’s Money Knob (Livengood) in Alaska (nearly 11Moz) is a just-announced, bulk-tonnage example.

Orogenic deposits are perhaps not as widely sought as they were in the early decades of the 20th century, although they are still the major producers and being actively explored for in the Archaean and younger Precambrian terranes of Canada, Western Australia, Ghana, Tanzania and elsewhere.

However, deposit types more typical of the Mesozoic and Cainozoic are being increasingly recognised in these regions, such as Osisko Mining Corp’s Canadian Malartic porphyry gold deposit (11Moz) in the Superior province.

Aggregate gold production from the Archean palaeo-placer deposits of the Witwatersrand goldfield is falling continuously as the mines become deeper, the grades lower and production costs higher.

South Africa, for decades the world’s main gold producer, currently lies in fourth place.

Paleo-placer deposits are uncommon worldwide, the only other major producer being the much young-er Tarkwa deposit in Ghana, and therefore do not merit much focused exploration attention.

APPROACHES AND TOOLSGold exploration, like that for most metals, is being conducted predominantly in brownfields settings, either near operating mines and defined deposits or by reappraisal of existing prospects.

Greenfields exploration, particularly in frontier or emerging gold belts, is unpopular with the junior and major sectors alike because of the long lead times to discovery and eventual production, and the high real and perceived risks involved.

Furthermore, most juniors avoid greenfield activities because the discovery timeframe is incompatible with investor expectations.

Tommy McKeith and colleagues (Society of Economic Geologists Newsletter, 2010) analysed the discovery trends for gold deposits over the past 60 years and noted a clear decline in the number of discoveries over the past couple of decades despite an increase in exploration dollars spent.

The suggested causes are numerous, but include the major companies’ increased aversion to greenfield exploration and the need for quick results that is inherent in the business model of the juniors.

The current reduced levels of greenfield exploration documented by MEG will continue negatively to affect discovery rates because, historically, it was this activity that accounted for definition of new gold belts in the last century, such as the Carlin and associated trends of Nevada, and El Indio and Maricunga belts of northern Chile.

The few recent greenfield discoveries have further underscored the potential of several emerging gold belts, including the Andes of northern Colombia (AngloGold Ashanti Ltd’s La Colosa porphyry gold deposit; 13Moz) and southern Peru (Chucapaca), and the eastern margin of the Yilgarn craton, Western Australia (AngloGold Ashanti Ltd’s Tropicana; 5Moz).

Successful exploration today in all geological environments and for all deposit types is underpinned, as it has been for at least the past two decades, by a sound understanding of both the empirical and genetic models for the different gold deposit types

Core samples at Barrick’s Alto Chicama

Barrick drilling at Alto Chicama



GOLD EXPLORATION

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and the geology of the particular prospect under exploration.

Reconstruction of three-dimensional district, and deposit-scale, geological relationships, embodying rock-type distribution, structural framework, and alteration and mineralisation zoning, is a fundamental prerequisite.

Isotopic dating to determine whether the gold prospect under study was generated during a highly-fertile epoch, and therefore offering maximal potential, is being increasingly utilised.

Other tools, such as satellite imagery, geochemistry and various geophysical techniques, provide additional data to integrate into the geological picture, and help focus both regional-, and district-, scale exploration.

The characteristics of the shallow as well as distal parts of the different deposit types is becoming

particularly critical, given that many future gold discoveries will be made beneath either pre- or post-mineralisation cover.

Since gold is commonly invisible to the naked eye, even with a hand lens, geological study needs to be dovetailed with geochemistry; indeed, conventional drainage, soil and rock-chip methods are just as effective today as they were 20 years ago.

However, top-of-bedrock geochemical samples, collected by RAB or air-core drilling, are of increasing importance for gold exploration beneath post-miner-alisation cover.

Geophysical methods can assist with geological understanding at both regional and prospect scales, but cannot directly detect gold; although they may define gold-bearing rock volumes rich in pyrite (chargeable or conductive), magnetite (magnetic) or quartz (resistive), for example.

Despite the advances in geophysical techniques and their input to exploration over the past several

decades, Ken Witherley argues in a Society of Economic Geologists Newsletter this year that geophysical tools are approaching their ultimate limits, and explorers should not be waiting for the apocryphal silver bullet to appear.

Rather, much-improved integration of the available data from all sources, with better communication between workers in different disciplines, is more likely to provide the major advances in the coming years.

As with so many endeavours, gold exploration comes down to the people involved.

The exploration community may be subdivided into the energised learners, the doers and the inspirers, and each of these groups is essential to long-term discovery success. Discoverers are a tiny minority and, when recognised, they must be given the necessary support and freed from the bureaucracy that can so easily stifle innovation and calculated risk taking.

Concurrently, the exploration industry is faced with the dichotomy of needing the most experienced people in the field in times when temporary economic downturns lead to expedient budget and staff reductions that result in loss of this corporate ability and memory.

The essence of exploration programmes that maximise the chances of discovery remains detailed and imaginative, boots-on-the-ground geological fieldwork, preferably conducted by seasoned practitioners, who really are worth their weight in gold.

Richard Sillitoe is a past president (1999-2000) and Jeffrey Hedenquist is the current president of the Society of Economic Geologists. Detailed reviews of gold deposit types and their distribution can be found in Society of Economic Geologists publications (www.segweb.org)

Core logging by Tethyan Copper at Reko Diq in Pakistan

AngloGold Ashanti’s Tropicana project in Western Australia



GOLD EXPLORATION

6

AUSTRALASIA is a well-established gold-mining region, with Australia and Indonesia ranking in the top ten gold producers (second and eighth) and Papua New Guinea (PNG) falling just

outside, in eleventh place.Because of its renowned geologic potential,

exploration activity in the region is high, and continuing.

AUSTRALIAN DEVELOPMENTSThe Australian Bureau of Agricultural and Resource Economics (ABARE) forecast a significant increase in Australian gold production this year to 7.6Moz, followed by a further substantial increase in 2011 to 8.6Moz as new projects come onstream.

In the first half of 2010, numerous new mines commenced operation. Newmont’s Boddington mine came on stream in November 2009, and if its projected levels of production are reached (1Moz/y) the mine is set to become Australia’s largest gold producer.

Newcrest is also proceeding with development of its Cadia East mine in New South Wales, and the company has a potential total gold output from its Cadia Valley operations of up to 800,000oz/y. AngloGold Ashanti Ltd’s Tropicana project in Western Australia (being developed with partner Independence Group NL) will progress to a feasibility study this year with commissioning of the mine expected to begin in early 2013.

In early 2010, Tanami Gold NL purchased the Central Tanami gold project in the Northern Territory from Newmont to complement its existing operation on the Western Australian side of the Tanami. The package gives Tanami an extra 500,000oz of resources, the Groundrush plant and some 2,000km2 of exploration ground on which drilling has already commenced.

Other gold operations coming on stream included Saracen Mineral Holdings Ltd’s Carosue Dam, where production of up to 30,000oz is expected in the June quarter, A1 Mineral Ltd’s BrightStar project (30,000oz/y), Navigator Resources Ltd’s Bronzewing

(100,000oz/y), Exco Resources Ltd’s White Dam (16,000oz in 2010), Catalpa Resources Ltd’s Edna May project (100,000oz/y) and Range River Gold Ltd’s reopened Mt Morgans project (40,000oz/y).

Earlier stage projects include Vista Gold Corp’s Mt Todd project in the Northern Territory, where a prefeasibility study was recently completed.

Gold production at the former mine (which operated between 1993 and 1997) was forecast at 187,500oz/y at cash operating costs of US$476/oz. The study concluded that previous processing was poorly designed to handle the hardness of the ore, and that previous metallurgical problems were related mainly to the copper content of the ore.

The new study suggests conventional open-pit

mining techniques should be used to produce 18,500t/d of ore, at an overall mining rate of 22.9Mt/y, over a mine life of just under nine years.

Meanwhile, a feasibility study of Integra Mining Ltd’s Randalls gold project near Kalgoorlie in Western Australia has outlined the potential for a 75,000oz/y mining operation.

Phase one development of the project, outline in the study, would involved processing ore through a conventional carbon-in-pulp processing plant at a rate of 800,000t/y for four years. Ore from the Salt Creek deposit would be delivered directly to a run-of-mine pad adjacent to the processing plant and Maxwells deposit ore would be trucked 17km on existing haulage roads, for blending.

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September 2010 7

GOLD EXPLORATION

Mining Journal special publication – Gold exploration

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Junior companies including GGG Resources plc, Avoca Resources Ltd, La Mancha Resources Inc, Southern Gold Ltd and Crescent Gold Ltd have also been conducting exploration drilling on their projects in Australia.

INDONESIA: EXPLORATION SLOWSLike Australia, Indonesia has an established gold mining industry, being home, for example, to the world-class Grasberg and Batu Hijau gold mines.

Grass-roots exploration has fallen in Indonesia in recent years, however, possibly as many companies wait for new legislation (which has been slow to develop).

Over the past ten years, grass roots exploration expenditure has averaged only US$20 million annually. By contrast, it is estimated that Indonesia needs up to an annual US$1 billion in exploration spending to find the new reserves that are needed to replace existing, depleting, reserves.

But until the regulatory environment clears, and Indonesia’s policies are brought into line with international best practice, exploration activity will remain sluggish.

Some companies are taking the plunge, however, with a small number of junior companies currently active in the country.

Earlier this year, Intrepid Mines Ltd extended the known mineralisation at its Tujuh Bukit project, intersecting a zone of copper, gold and molybdenum mineralisation in a new porphyry zone. Last year, the company increased the inferred resource estimate at the project to 21.5Mt at an average grade of 0.74g/t Au and 16g/t Ag.

Last month, Sumatra Copper and Gold plccompleted a deal with Newcrest, whereby Newcrest took a share in Sumatra and a 70% stake in the Tandai project. Newcrest also has the option to take a 25% interest in the Tembang project for a consideration of US$500,000.

Other junior companies currently active in Indonesia include Robust Resources Ltd, Southern Arc Minerals Inc, East Asia Minerals Corp, Kalimantan Gold Corp and Crossland Resources Ltd.

PNG EXTENSIONThe Ok Tedi mine, owned by PNG Sustainable Development Program Ltd (52%), the PNG government (30%) and Inmet Mining Corp (18%), is PNG’s largest producing mine. The operation is nearing the end of its current mine-life, however, with activity expected to scale down or close after 2013.

A feasibility study is currently underway to extend the mine-life to 2020 through a combination of open pit and underground mining, and in November 2009 the PNG government approved a transaction for Inmet to exchange its 18% interest to a 5% net smelter royalty, enabling the remaining partners to conduct this feasibility study.

According to the operating company, Ok Tedi Mining Ltd, the extended mine will be significantly smaller in size that the existing operation, but is anticipated to produce 90Mt of ore containing close to 700,000t of copper and 2.3Moz of gold over the seven-year period.

Early stage exploration is also continuing in PNG, with a number of companies currently working on exploration and drilling programmes.

A new resource estimate for the Wafi-Golpu project, part of Harmony’s 50:50 joint venture with Newcrest (which also includes Hidden Valley), was released in July putting contained gold in Golpu at 8.8Moz (from 3Moz), 4.8Mt of copper (from 1.8Mt) and molybdenum at 55,000t (from 22,000t). Harmony is testing a target of 500-800Mt at 0.7-1.0% Cu and 0.5-0.7g/t Au.

Other early stage projects include the Woodlark gold project, wholly owned by Woodlark Mining Ltd, a subsidiary of Kula Gold Ltd and Pacific Road Capital Management.

The project is being advanced towards a prefeasibil-ity study and has an indicated resource of 4.6Mt at an average grade of 1.7g/t Au for contained 1.02Moz of gold.

FORGOTTEN ISLANDSMining has been a neglected sector in New Zealand, but the election of a new government in 2008 has promoted a shift towards production and exports. As a result, exploration interests have begun to stir in this forgotten sector.

While the country does have some existing gold mines, exploration activity is focussed on the Waihi region of the North Island and the west coast and Otago regions of the South Island.

Newmont has been intensively exploring in the Waihi district in the vicinity of its existing Martha mine, which has a remaining life of about four years.

To the west of Waihi, Heritage Gold NZ Ltd is evaluating the former Karangahake (Talisman) mine (the region’s second largest gold producer) where the company has established a 205,000oz gold resource at an average grade of 6.9g/t Au.

Meanwhile, Glass Earth Gold Ltd has carried out an extensive programme of airborne geophysical surveys and follow-up exploration over the region south of Waihi and in the active Taupo Volcanic Zone of the central North Island.

Its recent activities have been focussed in the Otago region of the South Island where it carried out a regional airborne magnetic and electromag-netic geophysical survey in 2007 with funding from the Otago Regional Council. It is now developing two placer gold-mining operations in Otago to help finance ongoing exploration.

TAX REVISIONAustralia’s gold exploration community received some favourable news earlier this year when the country’s proposed Resource Super Profits Tax (RSPT) was replaced with a Mineral Resource Rent Tax (MRRT).

The new MRRT is to be applicable at a rate of 30% only to iron ore and coal production, unlike the RSPT which was at a rate of 40% and applicable to all on-shore minerals.

The country’s junior mining community said however, that it was not fully involved in negotiations over the new tax.

Australia’s Association of Mining and Exploration Companies (AMEC) said it was disappointed with the negotiation process.

“Because of its renowned

geologic potential, geologic potential, geologic

exploration potential,

exploration potential,

activity in the exploration

activity in the exploration

region is high, and region is high, and region is

continuing”



GOLD EXPLORATION

8

EUROPE has witnessed a resurgence in exploration activity in recent years.

This activity has focused on three main regions; the western extent of the Tethyan Belt (extending across central and

eastern Europe, Greece, Turkey and into the Arabian peninsular), the Iberian Pyrite Belt (covering Spain and Portugal) and Scandinavia.

However, western Europe, including the UK, is also seeing an increase in exploration activity.

Euromines, the European Association of Mining Industries, estimates that total gold exploration in Europe amounted to €30 million (US$38 million) in 2009, with strong growth potential for 2010.

The bulk of these funds are spent in the Nordic countries (Sweden, Finland, Greenland and Norway), which account for some 60% of total European expenditures.

A lot of this is generated by local companies raising money on local stock exchanges and privately however.

The Balkans also receive a large proportion of exploration spending (around 35%) while the rest of Europe (the Iberian peninsular and other countries) accounts for just 5% of gold exploration spending.

SCANDINAVIAN SCENEGold exploration has not been the main focus in Scandinavia, where base metals and iron-ore dominate, but some companies are active in the region.

Dragon Mining Ltd currently operates four mines (one in Sweden and three in Finland) and is developing a number of exploration projects in the region.

The company is progressing with a feasibility study on the underground development at the Svartliden mine in Sweden, and a development decision is expect-ed in September.

An internal feasibility study has also been completed to determine the viability of developing an underground operation at the Jokisivu mine in Finland, and a development that would encompass both the Kujankallio and Arpola deposits should commence this year.

Golden Rim Resources Ltd is developing the Falun

project in Sweden, a former copper mine, as a joint venture with Drake Resources Ltd.

The companies have been conducting drilling at the project with the aim of determining a gold and copper resource estimate.

Nordic Mines AB completed a feasibility study at its Laiva project in Finland in March, and aims to begin gold production in the March quarter next year.

The planned open pit operation is anticipated to produce 115,000oz/y of gold at cash costs of US$415/oz.

In December last year Belvedere Resources Ltd announced a maiden resource estimate at its Hirsikangas gold project in Finland, comprising 3Mt at 1.23g/t in the indicated category and 2.6Mt at 1.27g/t in the inferred category.

Hirsikangas is one of three advanced gold properties Belvedere is currently developing in Finland. The company is also developing the Rantasalmi and Kiimala projects.

TETHYAN FOCUSThe European extension of the Tethyan belt has received significantly less attention that the eastern extent, which hosts numerous established mining operations, including Freeport McMoRan Copper and Gold Inc’s Grasberg mine, Inmet Mining Corp’s Ok Tedi and Newmont Mining Corp’s Batu Hijau.

The European extension, which includes Romania, Bulgaria, Greece and Turkey, does however host significant potential as a gold-mining region.

Exploration in Hungary and Bulgaria is still in the early stages, but a few international companies have initiated projects in the region.

In Bulgaria, Dundee Precious Metals Inc’s Krumovgrad project is at the feasibility stage and has the potential to produce up to 800,000oz of gold over the life of the mine.

Euromax Resources Ltd and Cambridge Mineral Resources plc are also developing the Breznik and Trun and Tashlaka Hill projects, respectively.

Romania’s current gold production is only in the region of 12,000oz/y, but a number of foreign companies are investing in exploration projects in the country, which, if developed, could make Romania Europe’s largest gold producer.

Gabriel Resources Ltd’s Rosia Montana project could become Romania’s largest gold operation, producing an average 500,000oz/y over the life of the mine (and 626,000oz/y in the first five years of production).

Development of the project has been stalled since 2007, however, when the Environmental Impact Assessment (EIA) was suspended as a result of a decision taken by the former Minister of Environment and Forestry.

Meanwhile, in May this year, European Goldfields Ltd received the last remaining approval for the Zonal Urbanisation Plan at its Certej gold-silver project. The company is completing the final EIA for the project, which it says will be submitted to the authorities shortly.

Also in Romania, Carpathian Gold is developing the Rovina Valley gold-copper project following the completion of a preliminary economic assessment earlier this year. While, Valhalla Resources Ltd has entered into a joint venture with Barrick Gold Corpon the Bratosin Hill property.

NEAR-TERM POTENTIALGreece has the potential to become a near-term gold producer with a number of exploration companies active in the country.

European Goldfields is developing a project including mining and processing at the Skouries gold-copper project, and the initiation of mining at the Olympias polymetallic project. The company has completed a feasibility study at Skouries outlining potential annual production of 200,000oz of gold and 40,000t of copper.

Eldorado Gold Corp is developing the Perama Hill gold project through its wholly-owned subsidiary Thracean Gold Mining SA.

In March, Eldorado submitted a technical report on the project to the relevant authorities and the company anticipates starting construction at the property in 2011, at a capital cost of US$159 million. Once operational, Perama Hill is anticipated to produce 110,000oz/y of gold at a cash operating cost of US$278/oz.

Australian-based Cape Lambert Resources Ltd, meanwhile, is developing the Sappes gold project in north-eastern Greece.

LEADING THE PACKTurkey has the most established gold-mining industry within the western Tethyan region, and the country’s gold production is expected to grow from last year’s 469,400oz to 650,000oz this year.

For example, Eldorado is expanding production at its Kisladag mine to a steady rate of 300,000oz/y, commencing in 2011.

Anatolia Minerals Development Ltd mined the first gold ore from the Manganese Mine Zone of its Çöpler project in December 2009. The 1.3Moz project expects to produce 175,000oz/y by 2011 at a cash cost of US$260/oz.

Among the junior explorers and developers, Ariana Resources plc and Stratex International plc stand out. Each has advanced projects in the country which they are seeking to develop in partnership with local companies.

IBERIAN PYRITE BELTAfter several years of decline, the Iberian peninsular has also witnessed a revival of exploration in the past ten years, mainly by Canadian and Australian companies.

The Iberian Pyrite Belt (IPB) remains an unquestioned target for exploration activity due to its historical importance (both quantitatively and qualitatively) and because of recent mine developments.

For example, Cadillac Ventures Inc is conducting exploration on several properties in the IPB, and Orvana Minerals Corp acquired the El Valle-Boinás/Carlés gold-copper project in northern Spain in September last year.

Europe: precious metals exploration is on the rise

Scotgold’s Cononish project is bringing a new focus to Scotland


September 2010

Yusufeli Gold Property – North Eastern Turkey12km mineralized trend – 100% owned by MediterraneanFour project areas with over 100 square kms under license

•Tac & Corak – Advanced Stage Projects

Over 2.5Moz Au Eq. resource – 1.8Moz capped goldPreliminary economic assessment to be completed October 2010

• Celtik & Cevreli – Exploration Stage Projects

Celtik discovery – 18.5m of 6.51g/t Au & 0.9% CuDrilling campaign at Celtik partially completed

• Less than 15% of the Yusufeli property explored to date

Tac & Corak deposits – open for expansionCeltik & Cevreli projects – strong discovery potential

•

Contacts

MNR- TSX MHM1-Frankfurtwww.medresources.ca

Peter Guest, D.Eng.

President/CEO +1 604-669-3397

John Walter,Communications Manager

Investor Relations+1-647-430-0197

9

GOLD EXPLORATION

Aldridge Minerals Inc and Mediterranean Resources Ltd also both have advanced projects in Turkey which they have so far pursued on their own.

Mediterranean Resources announced in June, however, that it is in negotiations with a major Turkish mining company regarding a joint venture to progress the Tac and Corak projects towards development.

Mediterranean is currently working on a preliminary economic assessment at the projects, which is expected to be completed shortly.

Other foreign-owned companies, such as Chesser Resources Ltd, Eurasian Minerals Inc and Kefi Minerals plc, are working up exploration projects either and Kefi Minerals plc, are working up exploration projects either and Kefi Minerals plc,on their own, or through joint-ventures with Centerra Gold. These projects are all at drilling, or initial resource, stages. European Goldfields has also entered a joint venture with Ariana Resources on the Ardala project in the north-east of the country.

Domestic company Koza Gold Operations Inc became the first national company to reach gold production in 2005. The firm has three operating mines, as well as the Kaymaz project, where exploratory drilling has already been conducted.

OTHER EUROPEAN TARGETSThe increasing price of gold has also contributed to a revival of interest in gold exploration in the UK over the past five years, with a particular focus on Scotland and Northern Ireland.

In Scotland, the Cononish deposit near Tyndrum in Perthshire, 90km northwest of Glasgow, is being re-evaluated by Scotgold Resources Ltd. The company anticipates an operation producing around 20,000oz/y of gold starting in 2011.

Meanwhile, since its release in 2007, high-resolution geophysical and geochemical data from the Tellus project for Northern Ireland, funded by the Northern Ireland Department for Enterprise, Trade and Investment, has underpinned a marked increase in mineral exploration in the province.

Galantas Gold Corp has been reviewing the resource at its Omagh mine, while Dalradian Gold Ltd continues its exploration at the Curraghinalt deposit 15km north-east of Omagh in County Tyrone.

Conroy Diamonds and Gold plc, meanwhile, is exploring the Longford-Down Conroy Diamonds and Gold plc, meanwhile, is exploring the Longford-Down Conroy Diamonds and Gold plc,Massif in Northern Ireland and the Republic of Ireland.

CYANIDE USE TO CONTINUEEarlier this year the European Commission rejected a proposed Europe-wide ban on cyanide use in mining after deciding that the ban was not justified from an environmental or health perspective.

In a statement on behalf of the commission to the European Parliament, Janez Poto�nik, European Commissioner for the Environment, said: “The commission considers that a general ban of cyanide in mining is not justified from environ-mental and health point of views”.

Mr Poto�nik added that a general ban on cyanide use would result in the closure of existing mines operating in safe conditions, and would have a detrimental effect on employment.

The commission further added that “existing legislation, notably on the management of extractive waste (Directive 2006/21/EC), includes precise and strict requirements ensuring an appropriate safety level of the mining waste facilities”.



GOLD EXPLORATION

10

THE mining jurisdictions of North America fare well in the rankings of investment targets by the Vancouver-based Fraser Institute, which conducts an annual survey of mining company executives.

No fewer than seven North American jurisdictions appeared in the top ten places of the Fraser Institute’s last full survey (for 2009/10); Quebec, New Brunswick, Alberta, Nevada, Saskatchewan, Newfoundland and Manitoba; with the Yukon jumping into fourth place in a recently-released interim (smaller) survey.

The dominance is split (in the 2009/10 ranking) only by Finland, Chile and South Australia (and the latter has suffered recently from concern over the country’s mooted new resource tax).

CANADIAN OPPORTUNITIESCanada boasts more precious-metals exploration companies than any other country, and they are not short of prospective targets within their own borders. These targets have focussed on the Archaean Superior province of Ontario-Quebec and the country’s younger Precambrian terranes.

As noted above, the Fraser Institute recently ranked Alberta (with its extensive oil and coal resources), Quebec, the Yukon and Saskatchewan within its top five places in the latest survey of mining executives

(Finland was second in the investment ranking).

Gold-exploration activity in Quebec has recently included work by Aurizon Mines Ltd, which updated the contained gold resource on its Hosco deposit in June by 35% to 1.73Moz.

The deposit is part of the Joanna property, located 20km east of Rouyn-Noranda. The company revealed a measured and indicated resource of 40.6Mt at 1.33g/t Au (using a cut-off grade of 0.5g/t). The increase came from outside the pit outlined in the pre-feasibility study, and from lateral extensions to a depth of 100m. Inferred resources have also been increased, by 11% or 91,000oz.

Also in Quebec, Northern Star Mining Corp received assay results in April from drilling pro-grammes at its Malartic-Midway and McKenzie Break projects. The results come from underground holes at Malartic-Midway and surface drilling at McKenzie Break.

In April, Tawsho Mining Inc released the first NI 43-101 compliant resource for its Chevrier deposit located near Chibougamau, Quebec. Met-Chem Canada estimated the Chevrier deposit, one of two deposits on the Chevrier property, to contain an inferred resource of 4.6Mt at an average grade of 1.99g/t Au, for a total of 295,000oz (cut-off of 1g/t, and is to a depth of 250m).

The company also said that while the 19 holes on the Cheverier South deposit do not carry sufficient information, a 3D model by Met-Chem did allow for an estimate of 8.5-9Mt of mineralised material at 1.8-2.2g/t Au.

At about the same time, Alto Ventures Ltd and Pacific North West Capital Corp released the results of the final three holes of the Phase 2 drilling

North American dreamThe US, Canada and Mexico remain attractive gold-exploration targets

According to Metals Economics Group, exploration expenditure in the US fell 42% to US$510 million in 2009. The two most prominent states remain Nevada (the fourth-largest gold-producing region in the world) and Alaska, but both of these states saw exploration expenditure fall as companies struggled to access financing.

As a result, exploration activity last year was primarily focused on sites with previously-defined resources, or at polymetallic sites, which received a greater share of exploration funding.

In Nevada, Barrick Gold Corp has been developing the Cortez Hill project, which is in the final stages of commissioning (the project received a setback in December when a US appeals court told Barrick that further work should be done on the project’s environmental impact assessment).

Newmont is conducting exploration work in Nevada at the Greater Leeville-Turf, including a surface exploration programme extending well beyond known mineralisation. Early results from both surface and underground exploration programmes suggest significant potential for resource expansion. Newmont said it expects to spend over US$75 million this year in Nevada on advanced project development and near-mine exploration.

Rye Patch Gold Corp announced in June that its reverse-circulation drilling programme at the Wilco gold-silver property in Nevada had demonstrated an expansion of a high-grade zone.

Also in Nevada, US Gold Corp released a scoping study in April for its Gold Bar project, indicating US$38.2 million of capital expenditure and annual production of 57,000oz.

The mine would have an initial life of six years, although the company plans to continue explora-tion on the project this year, to increase the life to eight years. At the end of March, US Gold incorporated over 100 new holes drilled in 2009, increasing the measured and indicated resources at Gold Bar to 975,000oz.

Five of Miranda Gold Corp’s twelve exploration properties lie in the Cortez Trend of the Battle Mountain-Eureka Gold Belt. These properties include the Red Canyon project, which is a sediment-hosted gold deposit in Eureka County.

In Alaska, two projects (Pebble and Donlin Creek) have accounted for over half of exploration expenditure recently.

NovaGold Resources Inc co-owns the Donlin Creek gold project with Barrick. The deposit contains some 33.6Moz of gold, contained in 468Mt at an average grade of 2.23g/t Au.

Northern Dynasty Minerals Ltd’s Pebble copper-gold-molybdenum project is possibly the largest, and most controversial, project currently under development in the US. Northern Dynasty is developing the project in partnership with Anglo American plc, which is required to spend up to US$1.5 billion on the project’s development towards permitting and operation to retain its 50% interest.

Pebble is estimated to contain up to 25Mt of copper, 67Moz of gold and 1.5Mt of molybdenum. However, the project has received strong opposition, particularly from environmental and fishing groups that are concerned about potential impacts on nearby salmon fishing grounds.

Also in Alaska, Vancouver-based International Tower Hill Mines Ltd (ITH) recently reported results from the latest 22 holes at its Livengood project near Fairbanks. The results included assays from holes at the new Olive prospect near the Core zone. ITH is operating five drilling rigs at Livengood, three using reverse-circulation methods and two diamond drills. The company claims that the project will be able to support production of 500,000oz/y.

ITH had announced a mineral resource update at Livengood in June. The independent study, by Reserva International LLC, incorporated the results from the winter drilling programme of 420 diamond and reverse-circulation drill holes (a total of 121,212m) received up to May 25.

In Montana, an independent scoping study was announced in June for development of Atna Resources Ltd’s Columbia gold project. The study outlined the potential to produce 70,000oz/y of gold from an open-pit operation feeding a 5,000t/d processing plant.

In South Carolina, step-out drilling in April at Romarco Minerals Inc’s Haile gold mine intersected further mineralisation north and west of the South pit, and at the newly-discovered Horseshoe zone.

US EXPLORATION SCENE

Core inspection at Northern Dynasty’s

Pebble project



GOLD EXPLORATION

programme on their Destiny gold project in Quebec. The results were incorporated into a database for the next stage of work.

The Yukon was placed fourth in the Fraser Institute ranking. Activity in the province has included exploration by Capstone Mining Corp, which reported in June that it had found a new copper-gold zone near its Minto mine. The Wildfire zone was intersected by three holes.

Also in the Yukon, Atac Resources Ltd completed the first phase of diamond-drilling in August at the East zone within its Rau gold property. A new stratabound gold occurrence, called the Upper Tiger zone, was intersected in five of the holes.

The first two holes drilled at Kaminak Gold Corp’s Coffee property in the Yukon during May intersected “intense alteration and mineralisation over wide inter-vals”, according to president and chief executive Rob Carpenter.

In April, Northern Tiger Resources Inc raised C$2.5 million from the private placement of shares and share-purchase warrants to finance exploration on the company’s gold and copper projects in the Yukon.

In Saskatchewan, St Eugene Mining Corp received assay results in June from a drilling programme being conducted by Claude Resources Inc at the joint-venture Amisk gold property. St Eugene holds a 35% interest in the joint venture.

In Ontario, the first holes drilled on Bayfield Ventures Corp’s Rainy River property intersected gold mineralisation recently. The property lies adjacent to, and along strike from, gold deposits held by Rainy River Resources Ltd. The latter company reported in May that infill drilling at its 5Moz Rainy River gold deposit had identified mineralisation up, and down, plunge of the resource at Beaver Pond.

Lake Shore Gold Corp reported recently that drilling at the Vogel prospect, 3km from its Bell Creek mine and mill facilities, has intersected gold mineralisa-tion with potential for open-pit mining.

In July, VG Gold Corp received additional results (described as “the most significant to-date”) from drilling aimed at defining an open-pit resource at its Paymaster West gold property in Timmins, Ontario. Also, an independent scoping study for Treasury Metals Inc’s Goliath gold project in Ontario found the deposit could be economic. ACA Howe recommended the continuation of work towards completion of a prefeasibility study with a view to exploiting the Thunder Lake deposit.

Also in Ontario, Creso Exploration Inc intersected

high-grade gold mineralisation during drilling at its Minto property during June. The two-hole diamond-drilling programme yielded best results from the second hole, which returned almost 66m at 18.2g/t from 49m down-hole.

An independent feasibility study in May concluded that Detour Gold Corp’s Detour Lake project in Ontario could support average annual gold production of 649,000oz, peaking at more than 800,000oz. The proposed 55,000-61,000t/d open-pit operation was estimated to cost US$992 million to build, with an additional US$580 million in sustaining capital estimated to be needed over the 16-year life of the mine.

In May, Moneta Porcupine Mines Inc intersected narrow, high-grade gold mineralisation at the 55 Zone prospect, part of its Golden Highway property in Ontario. The holes tested a structural interpretation as part of a 30,000m programme.

In April, assay results were announced for the Hardrock gold property in Ontario owned 70% by Premier Gold Ltd and 30% by Goldstone Resources Inc. The drilling targeted open pit and underground-style mineralisation.

A prefeasibility study for Tyhee Development Corp has reduced the gold-production forecast for a 3,000t/d open-pit and underground operation at the Yellowknife project in Canada’s Northwest Territories.

A scoping study two years ago suggested an operation could support average annual gold output of 163,500oz over seven years, but the prefeasibility study found that at the same 3,000t/d throughput, the output would be only 108,000oz/y on average.

At the end of July, Spanish Mountain Gold Ltd confirmed a near-surface higher-grade gold zone at its eponymous project in British Columbia, and North Country Gold Corp announced the discovery of a zone of gold mineralisation at the Antler prospect, part of its Three Bluffs property in Nunavut. Indicated resources at Three Bluffs are estimated to contain 508,000oz (based on almost 6g/t Au) and inferred resources containing 244,000oz.

Results in July from initial diamond-drilling at Silver Standard Resources Inc’s Brucejack gold project in BC confirmed continuity of high-grade gold-silver mineralisation.

Brucejack is adjacent to Silver Standard’s Snowfield project. In June, the company reported that the capital cost of the polymetallic project had been estimated at US$3.4 billion by an independent scoping study. The mining inventory captured by the open-pit design was estimated at 966Mt at forecast mill-feed grades of 0.64g/t Au, 1.67g/t Ag, 0.105% Cu and 0.009% Mo, for

20Moz of gold, 51.9Moz of silver, 1Mt of copper and 892,000t of molybdenum.

Also in BC, drilling at the former gold operation at Dunwell intersected further gold mineralisation in July, according to Mountain Boy Minerals Ltd. The latest holes in the second phase of drilling tested an area 40m from the discovery holes.

In May, Imperial Metals Corp increased the resource estimate for its Red Chris copper-gold deposit in BC after including data from recent drilling into its calculations. The company said the latest resource contained 31% more tonnes in the combined measured and indicated resource categories, and 89% more in the inferred category.

Metals contained within the measured and indicated categories at Red Chris were estimated to have increased by about 586,000t of copper and 2.73Moz of gold. Inferred resources were estimated to contain 622,000t of additional copper and 2.54Moz more gold. The majority of the increase came from the drilling completed at the East zone, which established mineralisation at about 1km, double the depth previously intersected.

Abacus Mining and Exploration Corp agreed in May to form a joint venture with KGHM Polska Miedz SA to progress the former’s Afton-Ajax copper-gold project in BC. KGHM will spend US$37 million to fund a feasibility study, receiving a 51% interest in return.

NovaGold Resources Inc launched a pre-feasibility study in April at its 50%-owned Galore Creek copper-gold-silver project in northern BC (Teck Resources Ltd owns the remaining equity). The project is managed by Galore Creek Mining Corp, which has been reviewing a number of optimisation scenarios.

In April, the results of a prefeasibility study for development of Seabridge Gold Inc’s KSM gold project in BC defined “the largest gold reserve in Canada”, according to the company’s president and chief executive, Rudi Fronk. The independent study, by consultant Wardrop, was based on exploiting reserves at three separate open-pits at the Mitchell, Kerr and Sulphurets deposits.

In Nova Scotia, a definitive feasibility study has been completed on stage one of Atlantic Gold NL’s Touquoy-Cochrane Hill project. The company said the study, which covers the Touquoy deposit, would provide the basis for “further advance discussions” with potential financiers.

Proven and probable ore reserves of 9.6Mt at 1.48g/t Au will be extracted, producing 422,000oz over the five-year mine life.

In Manitoba, Alexis Minerals Corp intersected gold mineralisation in the Main and No3 zones in June at its Snow Lake project. The programme was designed in support of the ongoing feasibility study.

Also in Manitoba, San Gold Corp operates the Rice Lake and recently developed Hinge gold mines, 230km north-east of Winnipeg, adjacent to the town of Bissett. The former has produced 1.4Moz since 1932. San Gold is conducting exploration of the area to improve its understanding of the regional geology.

In Nunavut, additional drilling at Llama Lake, part of Sabina Gold & Silver Corp’s Back River project, returned more intersections of gold mineralisation in June at the company’s new discovery.

Last month, Commander Resources Ltd reported the intersection of further mineralisation on the Malrok gold zone at its Baffin Island gold property in Nunavut Territory. AngloGold Ashanti Ltd is earning a 51% interest in the project. Capstone’s Minto copper mine

NovaGold Resources Inc launched a pre-feasibility study in April at its 50%-owned Galore Creek copper-gold-silver

project in northern BC



GOLD EXPLORATION

12

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MEXICO BOOMINGEven after some 500 years of mining in Mexico, exploration is booming and Canadian companies are leading the search (they make up 75% of all explorers, according to the Mexican Chamber of Mines).

This activity is not focused entirely on silver. Last year, for example, Yamana Gold Inc gave the go-ahead to develop the Mercedes gold-silver project in Sonora, with an anticipated start up in late 2012. The project is anticipated to produce 120,000oz of gold equivalent over an initial six-year mine life.

First Majestic Silver Corp recently acquired the famous Real de Catorce mine with the aim of restarting production, and Vista Gold Corp is developing the Paredones Amarillos gold project in Baja California Sur. Once in production, output is expected to average 143,000oz/y of gold during the first five years, and an estimated 1.2Moz of gold over the proposed nine-year mine life.

Argonaut Gold Inc is a new Canadian gold producer with a mine and advanced exploration projects in the state of Durango, as well as grass roots projects in the State of Sonora.

In Durango, Argonaut owns 100% of El Castillo, an open-pit, heap-leach gold mine which hosts some 0.8Moz of proven and probable gold reserves and 1.2Moz of measured and indicated resources. The company’s main exploration property, La Fortuna, is also located in Durango. Numerous high-grade intersects have already been reported, and additional drilling is planned for later this year.

Gammon Gold Inc has been active in the country

since 1999, with a focus on the Ocampo land package. The company transformed the grass-roots exploration property to one of the country’s largest gold-silver mines, and is using the cash flow to implement a strategic re-investment programme.

Current work includes a scoping study at the Guadalupe y Calvo project in southern Chihuahua State. In April, Gammon signed an option agreement to acquire the 4,491ha Venus property just 2km north of Ocampo, and has initiated geochemical analysis.

Minefinders Corp’s flagship Dolores mine in Mexico commenced production of gold and silver in November 2008, and is expected to produce more than 1.7Moz of gold and 64Moz of silver from heap-leach operations over a 16-year mine life.

The company’s precious-metals exploration projects include La Bolsa in Sonora State, where a prefeasibility study has concluded that 228,000oz of gold, plus silver, could be recovered over a six-year period.

Other gold exploration in Mexico includes work by Pediment Gold Corp, which last month announced that it had received an independent preliminary assessment (scoping study) for development of its San Antonio project in Baja California Sur.

The study found that resources within an open-pit outline (generated using a gold price of US$900/oz) could support a heap-leach operation capable of recovering about 673,000oz over a mine life of about nine years.

In June, Kimber Resources Ltd reported that an independent scoping study had designed a combined

underground and open-pit mining operation to exploit its Monterde gold-silver project in Sierra Madre. Under the mine plan, the operation would extract mineralisation from the Carmen and Veta Minitas deposits at an initial rate of 2,500t/d using both underground and open-pit methods.

In May, Corex Gold Corp reported that it had discovered copper-gold-silver mineralisation at the Benjamin zone of its Santana property in Sonora State. The mineralisation is adjacent to oxide and sulphide gold-bearing zones.

Also in May, Levon Resources Ltd intersected further polymetallic mineralisation at the 51%-owned joint-venture Cordero property. The holes tested the Pozo de Plata diatreme target, returning evidence of new limestone replacement mineralisation. The remaining 49% interest in the property is held by Valley High Ventures Ltd.

Grayd Resource Corp reported in May that successful drilling at its La India gold deposit has allowed calculation of an independent resource estimate. At a 0.4g/t Au cut-off, the resource contains 760,000oz of gold in measured and indicated categories.

Results from a preliminary economic assessment in April for the Metates gold-silver-zinc project provided sufficient encouragement to Chesapeake Gold Corp for it to plan a US$3 million prefeasibility study. The independent assessment found that measured, indicated and inferred resources totalling 852Mt within an open-pit (designed using US$900/oz gold price) could support a 27-year operation.



GOLD EXPLORATION

THERE is no doubting the potential for discovering precious metals in South America. The Andes of northern Colombia, northern Peru and northern Chile, in particular, offer attractive

geology. Indeed the continent still accounts for the greatest share of the global search for gold (itself almost half of the total exploration budget for non-ferrous metals).

This search is despite a marked shift to the left in the politics of the region. The sentiment of investors is reflected in the Fraser Institute’s annual survey of mining executives, with the continent contributing five countries in the bottom ten of last year’s ranking by the Fraser Institute; Venezuela was bottom (of the 72 jurisdictions evaluated), Ecuador 71st, Bolivia 66th, Honduras 65th and Guatemala 64th.

However, Chile continues to rate highly in the Fraser Institute ranking (7th last year), and Brazil, Colombia and Peru have much to offer exploration companies.

EXPLORATION IN BRAZILLess than one-third of Brazil’s territory has been studied thoroughly but the country’s mineral potential is extraordinary.

AngloGold Ashanti Ltd already operates two gold mines in Brazil; one through subsidiary Brasil Mineração, and the second a joint venture, Serra Grande, with Kinross Gold Corp. AngloGold describes Brazil as “the cornerstone” of its regional growth plan, which is designed to take production in the Americas from around 800,000oz/y to more than 1.1Moz/y over the next four years.

Key to AngloGold’s growth strategy is the São Bento property, which was acquired in 2008 from Eldorado Gold Corp. Purchase of the existing plant at São Bento could speed development of the neighbour-ing Córrego de Sítio project, where production of 140,000oz/y is anticipated from 2013. The company expects to have made significant progress toward reporting a reserve by the end of this year.

Yamana Gold Inc, which currently operates three gold mines in Brazil, announced earlier this year that it plans to go ahead with development of its Ernesto/

Pau-a-Pique project. Reserves are currently over 0.7Moz, with indicated resources of almost 0.9Moz, with production expected to start in late 2012.

The flagship project of Colossus Minerals Inc is the gold-platinum-palladium Serra Pelada deposit, which is at the resource-delineation stage. The project is being advanced toward production in a joint venture with Coomigasp. In March, Colossus acquired 774ha of additional ground contiguous to Serra Pelada (ownership of the total land package remains 75% to Colossus and 25% to Coomigasp).

Other companies expanding their gold-exploration projects in Brazil include Beadell Resources Ltd, whose drilling programme at the Tucano gold property last month returned further intersections from metallurgical and resource-definition holes.

Elsewhere, Carpathian Gold Inc reported in July a sharply increased gold content for its Riacho dos Machados project. Overall resources contained within both open-pit and underground mine plans were estimated to contain just over 1.5Moz. Also in July, Rio Novo Gold Inc reported that the drilling programme at its Almas property in Tocantins continued to intersect gold mineralisation.

Eldorado Gold Corp liked the Tocantinzinho gold project so much it bought the holding company, Brazauro Resources Corp, and has prepared an updated resource estimate outlining more than 2Moz of gold in measured and indicated resources. Also included in the agreement are two further exploration projects (Ague Branca and Piranhas) that are located nearby.

In May, Jaguar Mining Inc announced that a pre-feasibility study for its Gurupi project had outlined a US$225 million mine producing 154,000oz/y. The open-pit operation would exploit probable reserves estimated at 63.4Mt at an average grade of 1.14g/t Au. Indicated resources were estimated at 63.4Mt at an average grade of 1.14g/t Au (cut-off grade of 0.3g/t Au).

Brazauro Resources Corp received a scoping study in February for the Tocantinzinho deposit, raising the forecasted gold output to 145,000oz/y. Eldorado holds an option to buy a 60% interest in Tocantinzinho for US$40 million.

In April, Crusader Resources Ltd said it has received positive results on metallurgical work for the Borborema gold project in Rio Grande do Norte. The company has the option to acquire 100% of the project.

ARGENTINE ACTIVITYThere is extensive precious-metals activity in Argentina. For example, NGEx Resources Inc continues to explore its Vicuña-area copper-gold deposits in the high cordillera, straddling the Chilean border. Japanese firm Jogmec has a joint venture on this project, and an option on the Josemaria property, where 460Mt at 0.39% Cu and 0.30g/t Au were previously outlined.

In Santa Cruz, Extorre Gold Mines Ltd is advancing permitting and preliminary economic assessment for the Cerro Moro project. In the same province, Andean Resources Ltd received encouraging results earlier this year from drilling at its Cerro Negro gold-silver project. The holes tested the Mariana Central vein, northwest of the Eureka West deposit that contrib-uted to the feasibility study for a +200,000oz/y mine.

Also in Santa Cruz, Andean Resources Ltd is looking at development of the Cerro Negro gold-silver project. A mine plan envisages a ten-year operation exploiting three deposits, using both underground and open-pit mining methods; Eureka West, Bajo Negro and Vein Zone.

Mariana Resources Ltd is drilling to define a gold-silver resource at its Calandrias project, and in June intersected further wide zones of mineralisation on the project’s Calandria Sur target. Mariana is also exploring Los Amigos in a joint venture with Hochschild.

Patagonia Gold plc reported in June that its Tranquilo gold-silver property in San Juan had returned high-grade results from the Cap Oeste and COSE prospects. A resource estimate for Cap Oeste outlined more than 655,000oz of gold, 88% within indicated resources.

In the Puna region of Salta province, Mansfield Minerals Inc is applying for a mining permit at Lindero to produce 161,000oz of gold during the first five years of an estimated nine-year mine life.

Mixed fortunes in South America The continent represents the extremes of investor sentiment

SIGNIFICANT WORK IN CHILESome US$366 million was spent on minerals exploration in Chile last year (according to Metals Economics Group), making the country the world’s seventh-largest exploration destination (behind only Peru in South America).

Although primarily spent by the major companies, with a focus on copper, there is also significant precious-metals activity. For example, Exeter Resource Corp is exploring the Caspiche porphyry deposit, in the Atacama region, under an agreement with Anglo American Chile Ltd and Mantos Blancos SA (an affiliate of Anglo American). Exeter announced in May that further drilling at Caspiche had expanded the central high-grade zone. The deposit was estimated to contain 14.3Moz of gold, 33.6Moz of silver and 1.6Mt of copper in indicated resources.

Corriente Resources’ Mirador copper-gold project in Ecuador

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GOLD EXPLORATION

14

GOLD EXPLORATION

From Exploration to Development...Assay Results Include 70.70 Metres of 53.59 g/t Gold, 20.77 g/t Platinum & 31.30 g/t PalladiumColossus Minerals Inc. is a development-stage mining company with a unique high-grade gold, platinum and palladium project in Para State, Brazil. Located in an area of excellent infrastructure, this project once hosted the largest precious metal rush in Latin American history. With the recent granting of the Installation and Mining License, and the acquisition of the down plunge extension of the mineralized zone, Colossus is forging ahead with an aggressive exploration and development program.

TSX:CSIWWW.COLOSSUSMINERALS.COM [email protected]

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Artha Resources Corp is exploring for precious metals at Vallecito and Pirquitas in Jujuy. In the same province, Soltera Mining Corp is exploring both lode and eluvial gold placers at El Torno, and has an agreement with Goldlake Group to develop the placer gold deposits at El Torno.

Golden Peaks Resources Ltd continues to explore its Fortuna gold property in Chubut where significant areas of low-grade, disseminated gold mineralisation have been discovered. Elsewhere, Yamana Gold says that it is unlikely to develop its Agua Rica deposit in Catamarca as a stand-alone mine, and that a future integration with Minera Alumbrera makes the most economic sense.

Troy Resources NL’s reassessment of its Casposo gold-silver project has continued, with a revised reserve and production plan announced in May. The company plans to use both open-pit and underground methods to exploit a probable reserve of 2Mt at 5.2g/t Au and 171.5g/t Ag.

COLOMBIA BACK IN VOGUEOne of the biggest gold producers in Spanish colonial times, Colombia hopes to attract almost US$50 billion in mining and energy investment over the next five years. This objective is thought to be obtainable now that the army is winning back mineral-rich areas from drug cartels and rebel paramilitary forces.

Unlike in neighbouring Venezuela, Colombia can boast eight years of political stability and rising investment.

The country is one of South America’s success

stories, and Ventana Gold Corp is a good example of the interest generated. Ongoing drilling at the company’s La Bodega gold property supports the theory that a high-grade area lies within the overall La Bodega zone. Earlier this year the company reported that it had nine rigs at La Bodega, with further rigs planned for the Baja project

In other recent news, the Colombian Ministry of the Environment, Housing and Territorial Development in June annulled its request for a new environmental impact assessment for Greystar Resources Ltd’s Angostura gold-silver project. The original request related to those parts of the planned mine above 3,200m (a modification in February to the mining law that set this elevation as the lower limit of a mountain ecosystem called Páramo).

Greystar subsequently outlined its underground resource at the project for the first time. The company said that it had delineated 8.9Moz of gold and 59.6Moz of silver within measured and indicated resources contained by the proposed open-pit outline, and an

additional 831,000oz of gold and 3.8Moz of silver in the same categories underground.

Vancouver-based Miranda Gold Corp owns the Pavo Real property in Tolima, 20km from Ibague. Channel sampling of outcrops and old workings returned what the company described as “very encouraging” results. Red Eagle Mining Corp subsequently signed an exploration deal whereby it can earn a joint-venture interest in the property.

The main asset in Colombia of Toronto-based Continental Gold Ltd is the high-grade Buriticá property, but the firm also owns numerous other gold projects in the country. These include the Berlin project, which produced over 413,000oz (at 16g/t Au) historically.

In April, Seafield Resources Ltd announced that it had taken its first step in a plan to consolidate exploration targets in Colombia’s Quinchia district. The Toronto-based company also announced an initial inferred resource of 776,000oz at the Miraflores deposit in the area.

Seafield had acquired properties in the district in March from privately-owned Caribbean Copper and Gold Corp, and subsequently completed an option agreement with the Association of Miners of Miraflores to acquire 100% of the Miraflores property (which includes a 124ha mineral exploitation contract and hosts a small underground mine).

PERU: GOLD ALSO IMPORTANTPeru is the world’s largest silver-producing nation, and is the second-largest producer of copper and zinc. Peru is also the largest producer of gold in South

Patagonian Gold exploring in Argentina



GOLD EXPLORATION

America. The mining industry contributed over 60% to Peru’s exports (by value) in 2009, and the government remains committed to the promotion of new investment in the industry.

This support is reflected in the ongoing activity in the country.

Gold Fields Ltd and Cia de Minas de Buenaventura have confirmed the Canahuire gold-copper-silver discovery at the Chucapaca joint venture as a major deposit, containing about 5.1Moz of gold, 75,300t of copper and 22Moz of silver. The partners report 83.7Mt in inferred resources within an open pit design, at an average grade of 1.9g/t Au, 0.09% Cu and 8.2g/t Ag. Canahuire was discovered about 18 months ago by Buenaventura, which was earning into the property. Gold Fields exercised its back-in right, and now holds a 51% interest, with Buenaventura holding 49%.

Minera IRL entered option agreements in July to purchase the Killincho gold exploration project from Ingerieria y Tecnologia Minero-Metalurgica sa. The deal would consolidate eight properties into one exploration project in southern Peru. Minera owns the 1.3Moz Ollachea project, 150km away, which is on the same gold-bearing geological formation. A pre-feasibili-ty study on Ollachea is expected during the first three months of 2011.

Minera also recently released results from phase one of its exploration at the Bethania project. Six drill holes intersected broad zones of gold-copper-molyb-denum mineralisation.

An optimised feasibility study in May for Andean American Mining Corp’s Invicta polymetallic VMS project changed metallurgical forecasts. The revised processing has resulted in a slightly lower gold recovery but much higher recoveries for the other metals contained within the deposit. Invicta is estimated to contain 7.8Mt in probable reserves, at an average grade of 2.1g/t Au, 18.8g/t Ag, 0.5% Cu, 0.4% Pb and 0.3% Zn.

A feasibility study has been completed for the San Luis gold-silver project owned by Silver Standard Resources Inc and Esperanza Silver Corp. The small, high-grade deposit will support a 3.5-year underground operation producing 400t/d of ore for 78,000oz of gold and 1.86Moz of silver.

The capital cost is estimated at US$90 million with average cash operating costs of US$313/ oz of gold (excluding silver credits). Silver Standard has satisfied conditions of the joint-venture deal to vest a 70% interest in San Luis, and it can earn a further 10% interest by paying all costs required to put the proposed operation into production.

Focus Ventures Ltd was ‘reactivated’ under new management early last year to target advanced gold projects in Peru. In mid-2009 the company acquired an option to acquire the small, high-grade, under-ground Nueva California gold mine for US$3 million in cash, and first-phase drilling was undertaken during the second half of last year. Nueva California has been in operation for 26 years but Focus plans to turn it into a bulk-tonnage surface operation.

Focus is currently extending its geophysical work to the south, and will undertake drilling to test a new interpretation of the geological system. An additional acquisition has been the nearby Chúcara project, which is in La Libertad district and lies on the same geological belt as Nueva California. The project covers most of the old Chuvilca mine (Ag-Pb-Zn), which operated from 1974 to 1981, but the deposit had never been tested for gold nor been drilled.

PROGRESS IN ECUADOREcuador is seen as having some of the least friendly policies towards miners worldwide. However, there have been signs of progress.

For example, in May, Canada’s Dynasty Metals & Mining Inc completed the substitution of all its mining titles with the Ministry of Non-renewable Natural Resources, and reconfirmed its previously-held concessions at the Zaruma, Jerusalem and Dynasty projects. The latter is the company’s latest discovery, which it believes has the potential to host a large bulk-mineable gold resource, with initial estimates of over 420,000oz of measured and indicated gold, plus 427,000oz in the inferred category.

International Minerals Corp’s assets in the country include the Rio Blanco gold-silver deposit, which has been described as ‘production ready’ but has not so far received the necessary permits.

Kinross Gold Corp, however, has full government support to press ahead with its Fruta del Norte project deep in southern Ecuador. The size of the deposit, the jewel in Ecuador’s minerals crown, might have something to do with it. Last year, Kinross upgraded the mineral resource estimate there to 15.9Mt grading 11.2g/t, for 5.7Moz of contained gold, plus an inferred resource of 24.3Mt at 7.85g/t, for 6.1Moz. Kinross bought the project in an US$815 million deal in 2008 through its takeover of Aurelian Resources.

Cornerstone Capital Resources Inc has three 100%-owned gold properties in the country, and a strategic gold alliance with Newmont Mining Corp. In May, Cornerstone announced that it had been issued a number of key permits needed to re-start exploration activities in Ecuador, as well as approval of the environmental management plan and water permit for its Gama project.

Another positive sign comes from Ecometals Ltd’s Rio Zarza gold project, near Fruta del Norte. The project was also put on hold for much of 2008 and 2009 owing to the moratorium on mining, but the company says it is now able to explore again on its diamond-drilling targets, and that signs are good enough to keep on with the project.

RECENT ACTIVITY ELSEWHEREIn Bolivia, Republic Gold Ltd has completed a feasibility study for development of its Amayapampa gold project, designing a seven-year operation that would produce about 680,000oz.

In Guyana, Sandspring Resources Ltd reported in June that the resource at its Toroparu gold-copper deposit had been updated to contain a total 3.9Moz of gold (all categories).

In Costa Rica, a court in Costa Rica dismissed challenges against the permits at Infinito Gold Ltd’s Crucitas gold project. The ruling in April meant that the company could recommence construction after nearly 16 months of inactivity.

Radius Gold Inc is focussed on precious metals in Central and North America. In Guatemala, Radius’s joint venture partner B2Gold Corp is exploring the Trebol bulk-tonnage deposit, and Radius has a royalty interest in the Tambor gold deposit. The latter is under development by Kappes Cassidy & Associates, with production expected later this year.

In its own right, Radius is investigating the wholly-owned Banderas gold-silver property. The deposit was discovered in 2002 (up to 2g/t Au outcropping) but no deep drilling has been conducted to date.



GOLD EXPLORATION

16

GOLD deposits are widely distributed throughout the world (as described in the article on page 3), but the palaeo-placer deposits of South Africa’s Witwatersrand basin

dominated the gold-mining scene of the 20th century. More recently, the deposits of west and east Africa have come into play (see page 25 for details of the latter).

Unfortunately, the political scene in Africa is not so encouraging. The continent regularly scores badly in the annual survey of mining company executives by the Fraser Institute.

This organisation, which aims to establish how mineral endowment and public policy factors (such as taxation and regulation) affect exploration investment, ranks African countries as amongst the least attractive to investors.

For example, in last year’s survey, there were no African countries in the Fraser Institute’s top ten countries, but there were two (Zimbabwe and the Democratic Republic of the Congo) in the bottom ten. Despite its mineral wealth, South Africa dropped 12 places to 61st out of the 72 jurisdictions ranked.

SOUTH AFRICAThe decline in South Africa’s ranking by the Fraser Institute for 2009/10 contrasts sharply with its position of 27 out of 47 jurisdictions in the 2003 survey.

This decline in the rankings has coincided with changes in the country’s minerals legislation. However, the outlook currently looks brighter, with the Department of Mineral Resources showing real commitment to the mining sector. Indeed, Minister Susan Shabangu has called for the country’s mining laws to be amended by early 2011.

The improvement can’t come too soon. A study in April by Citigroup Global Markets concluded that the country is one of the most under-producing regions in the world, with an average resource life of 184 years. Citigroup confirmed South Africa as the world’s richest country in terms of the value of its in-ground mineral resources (excluding energy).

For example, the country has nearly 90% of the world’s PGMs, and these metals contribute US$2,200 billion of the country’s total resource value of US$2,494 billion.

Despite the recent political difficulties, there has been continued gold-exploration activity in the country. Examples include recently-reported news from Pan African Resources plc (PAL) and Great Basin Gold Ltd.

The latter reported last month that overall resources at its Burnstone gold project were estimated to contain about 20Moz (16.2Moz previously). However, the independent estimate calculated a smaller amount of resources within the measured category.

PAL describes its focus as being on “strategic

alliances”, rather than exploration. PALR’s main asset is the cluster of operations in the Barberton area of east South Africa (the mines of Fairview, Sheba and New Consort), and it is also investigating what would be Mozambique’s first gold mine – the Manica project.

OTHER SOUTHERN AFRICAInvestors in the DRC have endured a problematic past year, none more so than First Quantum Minerals Ltd. The Vancouver-based company saw the government cancel its contract to mine the Kolwezi copper-cobalt tailings licence (this is now subject to international arbitration), and witnessed threats to its exploration rights.

These exploration rights are held through Société de Développement Industriel et Minier du Congo (Sodimico), and include land around First Quantum’s Frontier and Lonshi mines.

More positively, AngloGold Ashanti Ltd signed a joint venture agreement earlier this year with state-owned l’Office des Mines d’Or de Kilo-Moto (Okimo) over development of the Kilo gold project. AngloGold will hold an 86.2% interest and Okimo 13.8%, with exploitation permits over 6,000km2 of the Ituri district being transferred to the joint venture.

Also, Randgold Resources Ltd announced in July that the Kibali gold project could achieve production in mid-2011, six months ahead of schedule. Probable reserves were estimated to contain 9.2Moz of gold,

African dichotomyNo other continent has such a disparity between the ranking of its mineral wealth and its socio-political attractiveness to mining investors

Centamin’s Sukari operation in Egypt

16-17, 20Gold_exploration.indd 16 01/09/2010 11:34


GOLD EXPLORATION

Our Mining Group, working from our domestic Canadian offices and our international bases in London, China, the United States and the Gulf Region, have been involved in transactions on every continent involving a wide range of commodities. Our client base spans the spectrum from major multinationals to junior exploration companies. We act for mining companies and the banks and underwriters that finance them on mergers and acquisitions, joint ventures, listings, equity and debt financings and project finance. The team has carried out numerous secondary listings, re-domiciles and financings for Australian and other non-Canadian companies.

from exploration to development

MONTRÉAL OTTAWA TORONTO CALGARY VANCOUVER

NEW YORK CHICAGO LONDON BAHRAIN AL-KHOBAR* BEIJING SHANGHAI* blakes.com* Associated Office Blake, Cassels & Graydon LLP

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indicated resources 13.9Moz and inferred resources 5.8Moz. Randgold and AngloGold Ashanti each hold a 45% interest in Kibali, with the DRC government holding the remaining 10% (through Okimo).

Recent results in the DRC have included a resource upgrade at Mwana Africa plc’s 80%-owned Zani-Kodo property. The results extended the mineralised zone by 150m from the previous resource envelope. The company said the resource related to 700m of strike of a 9km-long trend, which it considered had potential for more mineralisation.

In Namibia, Auryx Gold Corp has begun drilling the Otjikoto orogenic gold deposit. The resource is currently an estimated 25.4Mt at 1.34g/t Au (indicated) and 17.2Mt at 1.28g/t Au (inferred). Auryx (then named Tova Ventures Inc) bought Otjikoto for US$28 million through a competitive bidding process (completed in June) from the delisted Teal Mining & Exploration (jointly owned by South Africa’s African Rainbow Minerals Ltd and Brazil’s Vale SA). Auryx subsequently listed on the TSX, and aims to produce a new resource estimate for Otjikoto by end- 2010.

WEST AFRICAThe countries of west Africa have enjoyed a resurgence in exploration and mining activity, especially for gold, in the past few years.

For example, in August, Perseus Mining Ltd intersected further gold mineralisation during drilling at its Central Ashanti project in Ghana. Elsewhere in the country, Signature Metals Ltd

completed initial drilling during July at the Boabedroo South zone of its Konongo gold deposit. The company was testing an 800m strike length of mineralisation to the south of an historical open-pit in the Ashanti gold belt.

A reverse-circulation drilling programme at Azumah Resources Ltd’s Kunche-Bepkong target on the Wa project has confirmed a zone of mineralisation 100m west of the main 212,000oz deposit.

The most recent drilling was designed to follow up an intersection of 6m at almost 9g/t from 58m. A further zone in a still relatively untested area, midway between the Kunche and Bepkong deposits, has also been confirmed by drilling. The company’s drilling programme this year is expected to total 100,000m.

Pelangio Exploration Inc is focused on a 290km2

land package in Ghana beside AngloGold Ashanti’s Obuasi mine.

The Canadian company has confirmed that the gold-bearing structures at Obuasi traverse at least 15km of its property, and initial drill results have been

encouraging. Further drilling is ongoing.Pelangio is also exploring on the 100km2 Manfo

property in the country. The property lies on the same fault structure as the Ahafo and Chirano mines, operated by Newmont and Red Back, respectively.

Elsewhere in Ghana, a preliminary economic assessment for development of Keegan Resources Inc’s 90%-owned Esaase gold deposit indicated in April that it could support a ten-year open-pit operation. The study was based on indicated resources of 2.28Moz, plus inferred resources of 1.65Moz (using US$850/ oz and a cut-off grade of 0.4g/t).

In Burkina Faso recently, Channel Resources Ltd reported a new gold discovery at its Tanlouka property, and Avocet Mining plc has received drilling results from the first phase of the programme at its Dynamite prospect. The latter is part of the Souma Trend, a gold-in-soil geochemical anomaly near Avocet’s Inata gold mine.

In July, Volta Resources Inc announced a maiden NI 43-101 compliant resource for its Kiaka project. The estimate, compiled by SRK Consulting, was based on more than 25,000m of drilling by Volta and the previous owner Randgold Resources Ltd.

Indicated resources contain some 1.38Moz of gold, with a further 0.48Moz in the inferred category. The estimate incorporates a strike length of just over 1km and to a maximum vertical depth of 230m.

Also in Burkina Faso, Etruscan Resources Inc has intersected high-grade gold mineralisation during reverse-circulation drilling at its Ouaré prospect, part

A Burnstone headset in South Africa

Continued on page 20



COMPANY PROFILE

18

Since 1999, the company’s key focus has been developing the Ocampo land package. This prospective area has been transformed from a grass-roots exploration property to one of the largest gold-silver mines in Mexico.

Today, the Ocampo mine generates significant positive cash flow from operations. This robust cash flow has allowed the company to implement a strategic re-investment programme that enhances shareholder value. This initiative has included a capital expansion programme at Ocampo as well as an aggressive exploration programme at all the company’s assets in

Mexico. These strategic programmes continue to deliver promising results that bode well for Gammon’s

future growth. The company’s exploration

programme is led by an experienced team of seasoned professionals. Their expertise allows the company to fully leverage the potential of our assets by developing a pipeline of properties that supports a longer-term growth plan. Strategic exploration programmes have been launched at Ocampo, as well as the company’s advanced development

property, Guadalupe y Calvo. Grass-root programmes have been launched at new properties the company acquired in 2010. The acquisition of these new

“Supported by a 2010 budget of US$28-

“Supported by a 2010 budget of US$28-

“Supported by a

30 million that includes 2010 budget of US$28-30 million that includes 2010 budget of US$28-

142km of drilling, the company is well

142km of drilling, the company is well

142km of drilling, the

positioned to develop its company is well

positioned to develop its company is well

growing portfolio of positioned to develop its

growing portfolio of positioned to develop its

properties in Mexico”

Gammon Gold Inc, active since 1999, steps up exploration in Mexico

Gammon Gold focuses on stategic growthin North America

GUADALUPE Y CALVO PROJECT, CHIHUAHUAThe Guadalupe y Calvo gold-silver exploration project is a 54,853ha property in the Guadalupe y Calvo mining district of southern Chihuahua State, a prolific past-productive gold-silver district. A scoping study is under way that is expected to be completed during the fourth quarter of 2010. As part of this scoping study, recent bottle-rolls metallurgical work completed to date on four samples has shown promising recoveries for gold (93%) and silver (69%) for -100 mesh ores. Additional test work is taking place.

The 2010 drilling programme at the Guadalupe y Calvo property launched in April has focused on extend-ing the known mineralisation northwest from the outcropping deposit drilled in 2008. The northwest extension is covered by a sequence of post-mineral tuffs typical of the Sierra Madre Occidental.

The 2010 programme has completed of 3,459m of drilling on the Rosario Vein system to date and has extended the Rosario mineralisation by about 350m along strike and 100m further at depth. Assays received have been highly encouraging and include bonanza-grade intercepts at Hole GC-0185, with 1.1m grading 62.37g/t gold and 56g/t silver, or 63.39g/t gold equivalent(1) and Hole GC-188, with a 0.7m interval grading 48.25g/t gold plus 525g/t silver, or 57.80g/t gold equivalent(1). The latter drill hole intercept is at 1,810m elevation, 100m below previous drilling on this vein. This year’s programme extends previous drilling results completed in 2008 including Hole GC-104, with 1.0m grading 5.43g/t gold equivalent(1) and Hole GC-135, with 1.0m grading 17.83g/t gold equivalent(1). The company is now in-fill drilling this new extension to the Rosario Vein under the post-mineralisation rocks with the goal of defining an underground-mineable orebody.

OG-1821.0m @

2.06 AuEq

2008 Drilled Resource VolumeDrill Spacing 25 x 40m

Post-Mineral Tuffs

OG-1881.4m @

30.51 AuEq

OG-1862.0m @

3.30 AuEq

OG-1851.1m @

63.39 AuEq

OG-1831.0m @

11.83 AuEq

Planned Drill Pattern to100 x 100m

properties has increased the company’s land position in Mexico by more than 59%, to over 131,000ha.

Supported by a 2010 budget of US$28-30 million that includes 142km of drilling, the company is well positioned to develop its growing portfolio of properties in Mexico.

The company also began to dedicate resources to evaluate and strategically invest in high-quality companies and assets, as well as to consider other accretive opportunities.

OCAMPO EXPLORATIONOcampo is the company’s flagship operation, which includes an underground mine complex, a series of five open-pit mines, a 3,300t/d mill and a heap-leach facility.

In 2009, after several years of inactivity, the company launched an aggressive exploration programme in and around the Ocampo mine to extend known deposits and discover new ones. The programme has consisted of building a new explor ation model for the district, extensive geologic and geochemical work and a targeted drilling programme. During the past 18 months, the company has focused on drilling new exploration targets both by extending the underground mined-vein, and by exploring newly defined targets from surface. Since launching the drilling programme in 2009, more than 176,800m have been completed with an additional 60,000m of drilling targeted for the second half of 2010.

As a result of this drilling campaign, new deposits were discovered at the Las Molinas open-pit/underground target, a series of targets at the Altagracia area, on the extreme southeast part of the district, as well as underground vein targets at Santa Juliana, Belen, Picacho Deeps and Molinas Northwest. Resource estimation and reserve conversion for these discoveries is planned for 2010.

The investment in exploration has demonstrated that the Ocampo district is open to expansion in all directions and that ore-grade mineralisation has been delineated over 700m vertically.

VENUS, CHIHUAHUAGammon signed an option to buy the 4,491ha Venus property, just 2km north of the Ocampo properties, in April 2010 and immediately began basic geology and geochemistry. This work has already discovered an

Gammond Gold_co_profile.indd 18 01/09/2010 11:13


COMPANY PROFILE

outcropping direct target for underground and open-pit-style mineralisation at the La Boleta vein system. This system has surface dimensions of 400m long by up to 150m wide, within which, there are a myriad of small veins and sheeted vein occurrences similar to the ores being mined in the Ocampo district to the south. Of the 234 surface geochemistry samples collected on the target to date, 101 (43%) contained over 0.2g/t gold equivalent using a gold-to-silver ratio of 55:1 and if gold values are capped at 8g/t, these 101 samples average 1.55g/t gold equivalent using a gold-to-silver ratio of 55:1. Maximum values in the first pass sampling were 25.08g/t gold and 210g/t silver. A core drilling programme is being launched to test the La Boleta target. The company also is continuing its district-wide geology and geochemistry programme, and anticipates that other high-quality drill targets will emerge from this programme.

LOS JARROS, CHIHUAHUAGammon also completed another strategic option agreement to buy 43,229ha of mineral rights from Valdez Gold Corp covering the Los Jarros properties north, east and southeast of the Ocampo land package. The property surrounds portions of Ocampo, Pinos Altos (Agnico-Eagle) and Concheño (Frisco) land packages as well as a high-sulphidation epithermal system 25km southeast of the Ocampo mine. Historical drilling by Valdez discovered disseminated gold mineralisation in a breccia, with the best intercept grading 0.56g/t gold over a 105.6m drilled length from 1.5m depth, including 26.1m grading 0.70g/t gold from 81m depth. Basic exploration initiatives were launched in August 2010 with a drilling programme targeted for next year.

GAMMON GOLD INCExecutive Office56 Temperance StreetSuite 500Toronto, ONCanada M5H 3V5

E-mail: [email protected]: +1 416 646 3825www.gammongold.comgammongold.com

MEZQUITE, ZACATECASThe Mezquite Project, in Zacatecas State, covers 460ha and lies 45km southeast of Goldcorp’s Peñasquito property and 22km northeast of Camino Rojo, which was recently acquired by Goldcorp. The property lies on a 70km belt with over 27.4Moz of gold and 1,611Moz of silver, or about 57Moz gold equivalent at a gold-to-silver ratio of 55:1, in published reserves and resources in all categories.

Gammon has recently completed a ground magnetic survey and a dipole-dipole induced polarisation (IP). The results, interpreted in three dimensions, show a distinct magnetic body near the centre of the claim, with a halo of high IP chargeability response partly within as well as outside the magnetic body. The target, as presently conceived, is about 500m in diameter. Drill permits are under application for this project and the company plans to initiate drilling in the third quarter of 2010.

STRATEGIC INVESTMENTSGammon has leveraged its strong cash position to make strategic investments in high potential projects. To date, the company has completed two investments including a 5% investment (C$8 million) in Golden Queen Mining Ltd (GQM), and a 12% (C$ 3.2 million)

investment in Corex Gold Inc (CGI). The Golden Queen investment exposes the firm to

the positive advances at the Soledad Mountain Project in Kern County, California. This prospective property has a mineable reserve of 46.1Mt grading 0.70g/t gold and 13g/t silver. The Corex investment exposes the company to Corex’s Santana Project in Sonora, Mexico, where recent drilling has discovered an extensive system of breccias bodies and silicification with grades typical of open-pit mines in the region.

Gammond Gold_co_profile.indd 19 01/09/2010 11:13


GOLD EXPLORATION

20

of the Bitou exploration permit, about 40km from the company’s Youga mine.

In Mali, Randgold Resources Ltd began a feasibility study in May for development of its 80%-owned Gounkoto project. Randgold said the open-pit design for the project had to be revised following information from infill drilling, raising the stripping ratio from the scoping study’s design, and preventing the capture of resources.

The deposit has probable reserves estimated at 7.47Mt at 6.83g/t Au.

Also in Mali, Reverse-circulation drilling at North Atlantic Resources Inc’s FT gold project during June intersected gold mineralisation in areas previously thought to be unmineralised.

In the Ivory Coast, Perseus Mining Ltd intersected further high-grade mineralisation earlier this year at the Sissingue deposit, part of its Tengrela project.

In Liberia, African Aura Mining Inc has intersected high-grade gold mineralisation during drilling on a new zone at its New Liberty mine. The Latiff zone already extends for 235m and remains open at depth.

In Senegal, Axmin Inc received drilling results in June from Mineral Deposits Ltd (MDL), which is earning a 51% interest in Axmin’s tenements in the country. The holes tested the Gora property, located about 25km from MDL’s Sabodala processing plant.

Oromin Explorations Ltd reported earlier this year that drilling at its OJVG project in Senegal has extended the Kourouloulou deposit to 300m depth and expanded the Maki Medina deposit.

NORTH AND EAST AFRICAAs outlined on page 25, the Nubian side of the Nubian-Arabian Shield, comprising Egypt, Sudan, Eritrea and Ethiopia, represents a large geological opportunity.

The shield comprises late Proterozoic volcano-sedimentary units, and high levels of magmatic activity have created significant potential for mineral deposits, including a current gold endowment of more than 20Moz.

In Egypt, Centamin Egypt Ltd increased the resource estimate for its Sukari gold project once again in June, raising gold contained in measured and indicated resources to about 11Moz. The mine poured its first gold earlier this year, and an expansion from 4Mt/y throughput to 5Mt/y is underway.

In May, Alexander Nubia Inc announced further details of its intention to list on the TSX venture exchange by reversing into Chrysalis Capital VII Corp.

The company acquired two concessions in Egypt in March 2008; Fatiri (in the Eastern Desert) and Abu Marawat (previously held by Centamin Egypt Ltd).

Over US$3.5 million has been spent to-date exploring the two primary targets; at Abu Marawat and at Hamama.

In Saudi Arabia, Citadel Resource Group Ltd has received the mining licence for its 50%-owned Jabal Sayid copper-gold project, which lies 350km north-east of Jeddah.

In Eritrea, Sunridge Gold Corp has begun prefeasibility studies for development of its Asmara polymetallic project.

The latest study found that potential existed for early production of direct-shipping copper mineralisa-tion from the Debarwa deposit with selective mining. Later development of the lower-grade mineralisation in conjunction with copper-zinc mineralisation in the Adi Nefas and Emba Derho deposits was found to be possible.

In addition, oxide gold mineralisation from these three deposits responded well to cyanidation recovery, so a central leaching plant would be possible. Combined indicated resources at the project were estimated to contain 580,000t of copper, 1.1Mt of zinc, 1Moz of gold and 31.8Moz of silver.

Chalice Gold Mines Ltd says that its Koka gold project in the north of the country could support production of more than 100,000oz/y. Consultant Lycopodium has designed an open-pit operation feeding a gravity, cyanidation and carbon-in-leach

processing plant at 600,000t/y initially, designed for expansion to 700,000t/y.

In Ethiopia, Nyota Minerals Ltd reported that an independent resource estimate for its Tulu Kapi gold deposit put the amount of gold contained at 1.38Moz, compared with 690,000oz for the previous calculation.

Consultant Venmyn Rand compiled the data from about 4,600m of reverse-circulation drilling that targeted an extension to the known resource. Inferred resources were estimated at 25.5Mt at 1.68g/t Au, at a cut-off grade of 0.5g/t Au.

There has also been significant exploration to the south of these countries, in Tanzania. For example, a feasibility study for Shanta Gold Ltd’s Chunya project in Tanzania’s Lupa goldfield has confirmed the feasibility of a 360,000t/y metallurgical plant that is fed from a number of open-pit operations within 3km of Chunya. The operation would produce 28,400oz/y over an 11-year life.

Elsewhere in the country, Canaco Resources Inc has received further results from drilling at the Magambazi property. Canaco, 35%-owned by Sinotex Mineral Exploration Co, can earn a 100% interest in the property.

In May, MDN Inc announced that revived drilling at its Ikungu property in Tanzania had confirmed grade and continuity of mineralisation along a strike length of 2.5km.

Continued from page 17 Pelangio exploring in Ghana



GOLD EXPLORATION

Far Eastern promiseAs a continent, Asia has punched below its weight in terms of gold exploration and production but that might be changing

ASIA has hardly been the favourite destination for international mining investors during the past ten years. Few doubt, however, that this vast region has significant undeveloped

potential. For example, gold-rich porphyry and epithermal deposits are enticing targets in the Altaid belt of the Commonwealth of Independent States (CIS), Mongolia and northern China.

Asia also boasts arguably the world’s best-known mine development at the moment, namely the Oyu Tolgoi deposit in Mongolia of Ivanhoe Mines Ltd and Rio Tinto.

RUSSIAN RESERVENowhere in Asia is the gap between mineral potential and investor interest wider than in Russia (see also p27).

Earlier this year some 200 delegates at a seminar in London on mining in Russian and the CIS heard 24 experts discuss the investment outlook in the region. Despite the accepted difficulties, many of the speakers talked of the opportunities for foreign investors, and that the situation was better than portrayed overseas.

For example, Kirill Kirilenko, a senior analyst at the engineering consultancy NBL Inter-national Ltd, noted that gold production grew 9% in 2009, lifting the country’s global ranking to fifth. He accepted, nevertheless, that this still represents an underperformance compared with Russia’s share of global gold-ore reserves.

Mr Kirilenko commended the Russian gold-mining sector to investors, saying that the investment climate had improved during the past few years and that the country had a relatively stable financial system. Indeed, he criticised those that found the region ‘scary’.

As an example of delivering value in the region, it is hard to do better than Petropavlovsk plc (previously Peter Hambro Mining). To encourage investors, the company has switched to JORC for reporting of its mineral wealth. The company is busy converting the figures for its numerous projects but, in the meantime, proven and probable reserves have doubled to 6.7Moz, with a further 8.2Moz of measured and indicated resources, and 3.66Moz of inferred resources.

Peter Hambro, the chairman of Petropavlovsk, said at the seminar that his team is “building a regional champion”, and expects gold production to reach 1.15Moz/y in 2015.

Another gold-mining company active in Russia is Highland Gold Mining Ltd. The company’s chief operating officer, Brent Horochuk, talked at the Mining Journal seminar of the improving operating Mining Journal seminar of the improving operating Mining Journalconditions but described a lack of qualified personnel as “a challenge”.

The company now operates two mines (MNV and Novo) and has two development projects (Belaya Gora and Taseevskoye) plus four exploration properties. Gold production this year is expected to exceed 200,000oz from corporate resources put at

around 5.5Moz.At the seminar, the chief executive officer of Ovoca

Gold plc, Tim McCutcheon, described Ovoca as the only independent junior still operating in Russia (management owns 45% of the company). Ovoca acquired three gold properties in the Magadan region in January this year (Rassoshinskaya, Nevsko-Pestrin-skoye and Stakhanovsky).

Elsewhere, OAO Polymetal announced last month that it will develop the Birkachan gold project in Russia as the first of a number of deposits in its Omolon project. The company has completed a feasibility study, audited by SRK, on Birkachan that designed a combined open-pit and underground mine exploiting resources estimated to contain 2Moz of gold at an average grade of 2.4g/t Au. Mineralisation at Birkachan comprises gold-silver enriched veins and disseminated stockworks, hosted by a volcanosedi-mentary sequence.

Polymetal had previously announced that it will also develop its Mayskoye gold deposit in Russia’s Far East Chukotka region as one of a planned series of mines producing concentrate for the Amursk hydrometallurgical plant in Khabarovsk.

OTHER CISIn Kyrgyzstan, Manas Resources Ltd recently received further intersections from diamond-drilling at its Shambesai gold property, with the latest holes testing areas outside the resource model.

In May, Chaarat Gold Holdings Ltd announced the

discovery of near-surface, quartzite-hosted gold mineralisation at its eponymous gold project. Chaarat said that work is being conducted to investigate early exploitation, by open-pit mining methods, of the new zone at Tulkubash.

In the latest resource estimate, inferred resources at Tulkubash were estimated to contain 2.5Mt at an average grade of 4.18g/t Au. Overall resources at Chaarat, including measured, indicated and inferred categories, were estimated to contain 4Moz of gold.

Kentor Gold Ltd, meanwhile, is planning development of the Andash gold-copper project, and reported earlier this year that it is on track to commence development of its first mine this year and be in production late in 2011. Andash

has a JORC reserve of 540,000oz of gold and 63,000t of copper. Production is planned at a rate of 60,000oz/y of gold and 6,800t/y of copper in concentrate for an initial 6.5-year mine life.

Kentor Gold’s other interests in the Kyrgyz Republic include the small, high-grade gold project at Savoyardy, where the company increased the resource estimate last year to 210,000t at 6.1g/t Au.

Manas Resources Ltd owns nine projects, covering a total of more than 4,400km2, in Kyrgyzstan. The company now has a resource base of 875,000oz of gold at its Shambesai and Obdilla prospects, and is targeting up to 2Moz by the end of 2010.

In Tajikistan, an independent resource estimate has defined nearly 3Moz of gold contained within Kryso Resources plc’s Pakrut gold project. The latest calculation included data generated by drilling at the project during the second half of last year, and will be used in the preparation of the ongoing feasibility study.

In Azerbaijan, Anglo Asian Mining plc announced in July an increase of over 50% in the contained gold and copper at its 54,000oz/y Gedabek operation (which has been in operation for over a year). A reserve statement, following further drilling, is expected by the first quarter of 2011.

Armenia is being targeted by Lydian International Ltd, whose flagship Amulsar gold property has an inferred resource of 1.4Moz. This followed a 14,000m drilling programme last year, centred on the Artavasdes, Arshak and Erato deposits.

ADVANCES IN KAZAKHSTANIvanhoe Mines Ltd, 50%-owner of the Kyzyl gold project, announced in July that a prefeasibility study had indicated that the project could support a ten-year operation yielding a total of 3.31Moz of gold.

Kyzyl comprises both the Bakyrchik and the Bolshevik deposits, and consultant Scott Wilson has designed an underground mine at the former to produce 4,300t/d, exploiting three lenses of the deposit utilising drift-and-fill mining.

Also in Kazakhstan, Central Asia Resources Ltd intersected further gold mineralisation during drilling in July at its Altyntas property. The programme was designed to test for depth extensions of known mineralisation.

In June 2009, Orsu Metals Corp sold its only operating mine, Varvarinskoye in Kazakhstan, to Polyus Gold. The company said it would refocus its resources on the exploration and development of projects in Kyrgyzstan and Kazakhstan, including the Talas project, a joint venture with Gold Fields Ltd. The project has an estimated indicated resource of 141Mt at 0.66g/t Au, 0.17% Cu and 0.01% Mo, and inferred resource of 153Mt at 0.66g/t Au, 0.15% Cu and 0.012% Mo.

Further intersections from diamond-drilling at Manas Resources’ Shambesai gold property

21,23Gold_exploration.indd 21 01/09/2010 10:48


COMPANY PROFILE

22

Archipelago was formed in 2002 and is focused on gold and silver exploration and development in South East Asia. The company is listed on AIM but is managed from Perth Western Australia.

Toka Tindung was acquired from Aurora Gold in February 2002 and lies about 200m above sea level at the northern tip of the island of Sulawesi. It is 85%-owned by the company, but 100% of proceeds are receivable until all debt owed to Archipelago by the minority holders is repaid. Toka Tindung has a near surface resource of 1.7Moz gold equivalent, of which 1.1Moz will be mined via open pits.

Gold production is due to start by the end of 2010 with a first year’s production of 140,000oz of gold equivalent and an initial six-year mine life with an average production rate of 160,000oz/y of gold equivalent.

It is a decade since substantive exploration was undertaken at Toka Tindung and the company will restart exploration in the second half of 2010 with a view to finding replacement ounces necessary to maintain the mine life during production.

In terms of infrastructure, there is an established base camp, along with an administration office, laboratory and workshop/warehouse. The processing plant is under construction and 60% built. Power will be provided by an onsite leased 15MW power station producing 8MW of base load power output for the fully operational mine.

Toka Tindung will have an average cash production cost of US$425/oz. Using a gold price of US$1,000/oz, the company determines a pre-tax NPV of US$376 million and an EBITDA averaging US$90 mil-lion per annum. The company’s broker targets a share price of 67p (Ambrian, January 10). This valuation ignores the excellent exploration potential inherent in the Toka Tindung project as well as its other projects.

Gold projects are one of the few assets currently in high demand, and with 1.7Moz of gold together with a relatively low cash production cost, Archipelago offers an attractive gold investment.

Archipelago’s Vietnamese asset is the Pac Lang gold

project, located130km north of Hanoi together with applications covering the Cam Thuy – Ba Thuoc Gold Project, 105km south-west of Hanoi. The 65%-owned Pac Lang area has never been evaluated by modern exploration methods so Archipelago’s work, which includes drilling, surface and underground surveys and sampling, aims to determine the extent of the large historic gold mineralised system.

Cam Thuy – Ba Thuoc lies on a fault structure parallel to the Red River suture and is the centre of a lot of alluvial gold workings. Archipelago’s focus is to discover extensions or repetitions of this known mineralisation.

Archipelago Resources: quality gold project with near-term output

ARCHIPELAGO RESOURCESAdministration Office17 Strome Road, ApplecrossPerth, Western Australia 6153

EPIC AR.Share price 33pIssued shares 493 millionMarket cap £163 million12-month range 21.25p – 33.00pNet Cash $28 million Market AIMContact Colin Loosemore,

Managing DirectorE-mail: [email protected]: +61 (0)8 9364 8301www.archipelagoresources.co.uk

Archipelago is developing its flagship Toka Tindung gold project in Sulawesi, Indonesia and exploring the Pac Lang gold project in Vietnam

Archipelago_FP_co_profile.indd 22 01/09/2010 10:56


GOLD EXPLORATION

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GOLD HOARD IN MONGOLIAIn April, Mongolia suspended the issuance and transfer of mining permits as the government plans to introduce new laws to protect the industry from corruption and bribery. President Elbegdorj Tsakhia said the suspension will remain in place until a new law is passed. He noted that the order “addresses, and aims to resolve”, critical issues that have been “causing a great deal of concern”.

The Oyu Tolgoi copper-gold project in Mongolia is capable of supporting an average annual output of 544,000t of copper and 650,000oz of gold during the first ten years, according to an independent study completed in May by a group of leading consultants led by AMEC Minproc.

Ivanhoe Mines released a new resource estimate for Oyu Tolgoi in April to incorporate the Hugo North extension and Heruga deposits. The total resources contained within these two deposits was estimated at 117Mt in the indicated category, at an average grade of 1.8% Cu and 0.61g/t Au, and 910Mt in inferred resources at an average grade of 0.48% Cu, 0.49g/t Au and 141ppm Mo (using a 0.6% copper-equivalent cut-off grade).

Robert Friedland, executive chairman of 66%-owner Ivanhoe Mines Ltd, said the project has the potential to become one of the world’s top three copper-gold producers.

Elsewhere in the country, Voyager Resources Ltd completed an initial drilling programme in July to investigate the geometry and nature of gold mineralisation below trenching results at its Daltiin Ovor property.

OTHER ASIAAfter a two-year hiatus, Continental Minerals Corp announced earlier this year that it was resurrecting its Xietongmen copper-gold project in China’s Tibet Autonomous Region, 200km west of Lhasa.

The company has applied for a mining licence, and is hopeful of a decision later this year. Continental is affiliated to the Hunter Dickinson group, with Taseko Mines Ltd owning 5.1% of Continental, and management a further 9.6%.

In Laos, PanAust Ltd has discovered high-grade skarn gold mineralisation at the Tharkhek gold property, near its Tharkhek copper-gold deposit. The first four discovery holes have intersected

mineralisation over an area 100 x 100m, with an estimated true thickness of 15-20m. Tharkhek is in the north of the property that hosts PanAust’s Phu Kham and Phu Bia projects.

In Thailand, Kingsgate Consolidated Ltd has intersected a new zone of gold mineralisation near proposed open-pit mining areas in the northern

portion of its Chatree gold mine. The company regards the Q East zone as having potential for underground mining.

In Indonesia, the Aceh Province, in northern Sumatra, is considered to be particularly prospective, especially for shallow porphyry and epithermal gold-copper mineralisation. The area comprises a volcanic arc, a long-lived zone of subduction, rapid uplift, and a moderately fractured igneous suite of volcanics and intrusives.

The region’s prospectivity is illustrated by East Asia Minerals’ Miwah epithermal gold discovery. Earlier this year the company sampled 4.11g/t over 200m in the eastern zone and 4.35g/t over 27m in the west.

Another company operating in the area is Centurion Minerals Ltd. The Vancouver-based firm already has an interest in four properties near the Miwah discovery, of which three received the country’s new type of exploration licence before the end-April deadline (representing a significant competitive advantage as newcomers to the region will face barriers to entry).

Archipelago Resources plc was formed in 2002 to develop mines in south-east Asia. Managed from Perth, the company’s principal project is at Toka Tindung in

north Sulawesi.Toka Tindung has a resource of 1.8Moz,

of which 1.1Moz will be mineable from five open pits (with processing through a central CIL plant). Construction is well advanced with an average production target of 160,000oz/y (gold equivalent) over the first six years of production.

Kingsrose Mining Ltd acquired an 85% stake in the Way Linggo high-grade, underground, gold-silver project in January 2009. The project, located in Lampung Province, southern Sumatra, is described by Kingsrose as being at “an advanced development stage”. Various other highly prospective targets have been identified in the region, and will form the basis of an extensive explora-tion programme.

Ongoing foundation work for the headframe over Shaft No 2 that will access the Hugo North deposit at Ivanhoe’s Oyu Tolgoi mine

“In Indonesia, the Aceh Province, in northern Sumatra, is considered to be particularly prospective”

21,23Gold_exploration.indd 23 01/09/2010 10:48


COMPANY PROFILE

24

Miranda Gold Corp is focusing on Nevada, the fourth-largest gold-producing region in the world, and Colombia, one of only five regions to produce a 10Moz-plus gold discovery since 2000.

Five of Miranda Gold’s 12 properties lie in the Cortez Trend portion of the Battle Mountain-Eureka Gold Belt, which, along with the Carlin Trend, accounts for over 80% of Nevada’s total gold production. The management team has been involved in over 20Moz of gold discovered in this area. The recent addition of Colombia as a regional focus was a strategic decision to balance the mature nature of Nevada’s mining history with a more underexplored area that exhibits similar world-class potential.

As an emerging mineral exploration company, known for its expertise as a project generator, investors have the opportunity to participate in a diverse number of projects and, in turn, numerous possibilities to take part in a major gold discovery.

With a strategic property portfolio and partner-ships with various mining companies, Miranda Gold’s goal is to mitigate the risk of exploration through a uniquely executed joint-venture model, thereby increasing opportunities for discovery and preserving the treasury.

KEY PROJECTSThe Red Canyon project is a sediment-hosted gold project in Eureka County, Nevada. The property adjoins US Gold’s Tonkin Springs property on the west and covers an erosional ‘window’ that exposes altered, brecciated and silicified lower plate carbonate rocks that are age-equivalent to the host rocks at the Cortez Hills discovery (+12Moz). In June 2008, an exploration funding agreement was signed with Montezuma Mines Inc. Drilling has confirmed that Carlin-style alteration exists on the project. Three core holes were drilled in 2009 to understand the structures causing this mineralisation. Assays from hole MR09-05C confirmed previous results intersecting 119ft of 0.152oz Au/t (36.3m of 5.25g Au/t). The 2010 exploration programme will include

14,000ft (4,270m) of both reverse-circulation and core drilling.

Angel Wing is a low-sulphidation vein and disseminated gold system in Elko County, Nevada. High-grade surface samples up to 2.7oz Au/t (92.5g Au/t) occur in steeply dipping quartz-calcite-adularia ‘bonanza’ veins within Triassic limestone. These high-grade veins remain untested. Miranda Gold geologists have identified several well-defined drill targets on the property. Ramelius Resources Ltd is funding exploration at Angel Wing. A 4,000ft (1,220m) reverse-circulation drill programme is expected in 2010.

Pavo Real is the first project acquisition in Colombia. The property lies within the department of Tolima 12.5 miles (20km) south of the city of Ibague and 28 miles (45km) southeast of AngloGold Ashanti’s La Colosa project (+12Moz Au). Recent channel sampling of outcrops and old workings at Pavo Real has returned very encouraging results. Of the 82

samples collected, 32 samples, or 39%, assayed in excess of 0.03oz Au/t (1.0g Au/t) with the highest sample assaying 0.46oz Au/t (15.9g Au/t). Red Eagle Mining Corporation recently signed a definitive agreement for exploration whereby Red Eagle may earn a joint-venture interest in the Pavo Real Concession. Drilling, following mapping and geo-chemical surveys, is expected in 2010. Other Miranda Gold properties include: Big Blue, Coal Canyon, HOG, Iron Point, PPM, Redlich, Red Hill, and TAZ.

Miranda Gold: exploration and discovery in world-class jurisdictions

MIRANDA GOLDShares issued: 51,279,452Fully diluted: 61,632,944Listed on: TSX-V: MAD; OTCBB:MRDDF; FSE: MRG52-week high/low: TSX-V: 0.84 / 0.32

OTCBB: 0.80 / 0.29FSE: 0.57 / 0.21

Cash position: C$10.5 millionAnnual burn rate: C$2.5 millionNumber of properties: 12Total joint ventures: 7

Suite 1500 - 701 West Georgia St.Vancouver, BC, Canada V7Y 1C6Tel: +1 604 689 4580Fax: +1 604 801 5911Toll Free: +1 877 689 4580Contact: Fiona Grant, Manager, Investor RelationsE-mail: [email protected]: www.mirandagold.com

Miranda Gold Corp aims to create shareholder wealth by discovering world-class gold deposits

■ Strong management team with extensive worldwide mining expertise and a Board of Directors with decades of experience in financing and public mining company management;

■ Focused in Nevada and Colombia with emphasis on finding multi-million-ounce gold deposits; ■ Share project risk by joint-venturing properties, thus providing shareholders exposure to numerous

gold exploration projects while preserving capital;■ Ongoing partnerships with Ramelius Resources Ltd, NuLegacy Gold Corporation, Piedmont Mining

Company Inc, Montezuma Mines Inc, Red Eagle Mining Corporation and SIN Holdings Ltd;■ Attractive capital structure with 51 million shares issued and outstanding; ■ Fully cashed up treasury with C$10.5 million and a C$2.5 million annual burn rate.

HIGHLIGHTS

Miranda_FP_co_profile.indd 24 01/09/2010 10:53


GOLD EXPLORATION

THE Nubian side of the Nubian-Arabian Shield, comprising Egypt, Sudan, Eritrea and Ethiopia, is a geological opportu-nity so large it is “literally off the map” according to Simon Gardner-Bond,

mining analyst at Ocean Equities.The shield comprises late Proterozoic volcano-

sedimentary units, and high levels of magmatic activity have created significant potential for mineral deposits.

The region has a current gold endowment of more than 20Moz, Mr Gardner-Bond says, and is also highly prospective for base metals.

For example, La Mancha Resources Inc’s Hassaï land holding in Sudan is comparable to the size of the entire Iberian Pyrite Belt, historically one of the most prospective belts ever developed. But, until recently, the region has been overlooked by juniors and majors alike.

A lot of the reason for this lack of investment has been political, Mr Gardner-Bond says.

In the 1990s, when many companies were beginning to explore the prospective gold projects of west Africa, north-east Africa was still in the midst of civil war.

Even today, La Mancha is the sole mining company active in Sudan, where the stigma of war and the refugee camp at Darfur continue to dissuade many investors.

Yet the geological potential can not be denied. For example. La Mancha has been mining at Hassaï since 1992, producing more than 2Moz of gold with no disruptions.

The company is currently producing 60,000-70,000oz/y from the gold oxide cap at the operation, and although this is fast becoming exhausted, the company still has the volcanogenic massive sulphide (VMS) to exploit (with more than 50Mt of reserves already delineated from just two targets) and is working on studies for the development of a plant to process the VMS material.

GROWING INTERESTWhile political tensions in Sudan continue to make many potential investors nervous, Eritrea and Ethiopia are faring better.

Eritrea is increasingly gaining attention from the exploration community with a number of companies now active in the country, led by the success of Nevsun Resources Ltd.

Nevsun’s Bisha project, set for production in the March quarter next year, has become a ‘poster child’ for the region, Mr Gardner-Bond says.

“With Nevsun coming on stream, people will see what can be made of a good VMS deposit in this region,” he comments.

Bisha is set to produce an average of 450,000oz/y of gold in the first two years of production from an open-pit operation, placing Nevsun as one of the top-twenty gold-producing companies in the world.

The operation will go on to produce approximately 80,000t/y of copper in years three to five, with 98,000t/y of zinc and 18,000t/y of copper in the

remaining five years of the mine-life.Nevsun’s success in Eritrea has resulted in a surge

in investment with at least a dozen companies now exploring in the country.

These include Sunridge Gold Corp, which plans to proceed on a pre-feasibility study having defined four deposits at its Asmara project.

To date the three VMS deposits and one gold deposit have estimated indicated resources containing 1.05Moz of gold, 580,000t of copper, 1.1Mt of zinc and 31.8Moz of silver.

Other companies active in Eritrea include Chalice Gold Mines Ltd, Gippsland Ltd and Thani Eritrea Ltd (a subsidiary of AngloGold Ashanti Ltd).

Eritrea’s government is supportive of mining development, Mr Gardner-Bond says, and the mining law, developed in 1995 is fairly standard, with a 5% royalty on precious metals, 3.5% on other metals, a 30% tax and up to a 30% equity interest for the state.

The country remains one of the poorest in the world, however, and with no oil wealth to draw on, mining investment will be crucial to its development.

ETHIOPIAN ATTRACTIONEthiopia meanwhile, is the most attractive investment destination of these three countries, Mr Gardner-Bond says.

The country is politically stable, has a strong mining code (developed in 1996) and high levels of support for mining development from the government. It also has good infrastructure.

Ethiopia has an abundance of water and is set to become a net energy exporter in the next three to five years, and although the road network still requires some development, the Chinese government has become involved in a road-building programme.

Mining investment to date has been quite limited, however, with agriculture dominating exports and employment, and only one privately-owned operating gold mine, Legadembi, which has been producing 100,000oz/y since 2000.

With the government keen to diversify the economy, exploration interest in the country is beginning to grow.

“There’s starting to be a lot of activity [in Ethiopia]; it’s becoming very interesting to a lot of people”, Terry Tucker, chief operating officer at Nyota Minerals Ltd says.

“Even ten years ago it was very different from today,” he adds, “I don’t think many realised the [Nubian-Arabian] Shield was as prospective as it is”.

Nyota has been enjoying a first mover advantage in Ethiopia where it has been developing the Tulu Kapi gold project.

The project currently has an estimated inferred resource of 25.4Mt at 1.68g/t Au for 0.38Moz of contained gold (at a 0.5g/t Au cut-off), and Mr Tucker says the company’s investment has been welcomed from the local community through to the ministry of mines.

“We’ve had nothing but a good response in Ethiopia,” he says, “the people have been generally welcoming to the investment opportunity.”

The company also received a boost earlier this year when the IFC took a 10% interest.

Mr Tucker says this is a positive development for both the company and Ethiopia, showing the IFC is confident about the future of mining development in the country.

These positive developments have led to new interest in Ethiopia Mr Tucker says.

Juniors and majors alike are beginning to take an avid interest, with companies including Newmont Mining Corp, AngloGold and African Barrick Gold plcnow setting up exploration offices.

IMPROVING POLITICAL SITUATIONThe political situation in north-east Africa has been difficult but is improving, Mr Gardner-Bond concludes, and the geological potential remains huge.

“Where west Africa is ‘elephant country’ north-east Africa is more like ‘big game fishing’” he says. “The targets are smaller but there are lots of them.”

Furthermore, if the handful of near-term projects continue to show value, the region could see the same investment witnessed by west Africa a decade ago.

The new west AfricaThe Nubian-Arabian shield has excellent geological potential, but past political instability has caused north-east Africa to be overlooked by exploration companies

Ocean Equities is hosting its inaugural African Gold Conference in London on September 14-15, with ten companies presenting to institutional investors. Nyota Minerals, Nevsun Resources, Sunridge Gold and La Mancha Resources will all be participating.



COMPANY PROFILE

26

Kopylovskoye AB is now listed at Nasdaq OMX First North. The company owns six exploration projects, with total Russian GKZ C1-P2 classification of 1.8Moz of total resources and reserves, in a world-class gold prospective area. Its short-term target is to prove JORC resources while long-term, it aims to start production in 2013 at the Kopylovsky deposit.

The company’s listing is the next logical step towards its vision of becoming a world-class gold exploration and production company. It will also strengthen its financial foundation and ensure continued growth.

HOw THe COMPANy sTARTedKopylovskoye AB was created three years ago as a subsidiary of Central Asia Gold AB, another Swedish exploration and production gold company. In 2008 the shareholders of Central Asia Gold AB took a decision to dividend out shares of Kopylovskoye AB. Since then, the company is fully independent. It has been a rapid rise to where the firm is today.

On splitting with CAG AB, the company reviewed and questioned all its exploration projects: are they worth spending more funds and developing into the next stage? Is the exploration technique optimal – cost-effective and to the best industry standards? Does the company have in-house competence to develop the projects? Which knowledge does the company miss? What should be its strategy for the next five years? The company contracted SRK Consulting to help it review its projects along with us and has been advising since. With their expertise, Kopylovskoye has revised its exploration approach and developed a clear strategy. This gave the correct background for the board of directors to authorise exploration and other development activities in 2009-10. In short: question–analyse–take decisions.

BRIGHT PROsPeCTsIn five years, Kopylovskoye AB aims to produce 0.2Moz/y of gold with resources of 5Moz of gold to support gold output. The region announced in 2009 plans to increase gold production from 15t to 80t in

five years. This gives a good indication of the potential of the region. Kopylovskoye expects to start production at the namesake deposit in 2013, with total capacity 70,000-90,000oz. This will be followed by production start at Kavkaz and Prodolny in 2014 and by Krasny in 2015. In all this will give potentially more than 0.2Moz.

Before production, Kopylovskoye’s schedule is to develop and upgrade reserves and resources at all its exploration properties. It has resource and reserves of about 1.8Moz and the immediate target is to make it JORC-classified. By the end of 2010 it plans to prove resources for the total area of Kopylovskoye property to BFS JORC stage, prove JORC-classified resources for part of Kavkaz and small part of Prodolny area, potentially for Krasny area. The Prodolny property alone is expected to host several Kopylovskoye size deposits (it has identified 11 gold mineralisations). Development of the existing and new properties under consideration for acquisition will lead it towards 5Moz.

Kopylovskoye has found opportunities to acquire licences in the area within the financial recession.

It is obviously more difficult to raise funds for exploration projects now compared to 2007. Appetite for risk is low. The company’s recipe is simple: keep going. It reduced administration costs last year and limited exploration work scope. Kopylovskoye was able to negotiate costs of various exploration activities down or reschedule them. It used momentum to make a few acquisitions in March. It left the crisis slim, structured and hungry for develop-ment. 2010 has been a success, with two rights issue of 100% + 87%, a US$5.5 million subscription and latest the listing according to that. Further acquisition has also been done and all prospects have developed.

RussIAN GOldFIelds Kopylovskoye’s projects focus on 215 square km in Lena Goldfields, Russia. The company is developing six bedrock gold exploration projects there. All properties lie near each other within the Artemovsky

district in the area with long history of alluvial gold production and good mining infrastructure. The most advanced is Kopylovskoye prospect, which gave the company its name. It has historic 0.2Moz of C1&C2 Russian reserve classification. The company forecast total resources of Kopylovskoye of above 1Moz. This year the company plans a 5,000m RC-drilling programme to prove JORC resources. The second advanced project is Kavkaz. It has 0.03Moz of C1&C2 Russian reserve classification. The company expects the resources of above 0.6Moz for Milliony area which makes up 30% of the Kavkaz property. Scheduled exploration activities (RC drilling, trenching and sampling) aim to validate this forecast. The Prodolny prospect borders the Kavkaz property. It has 11 identified historic gold mineralisations. In 2009 the company prospected one of them: the Uspensky site. Detailed exploration follows at Uspensky with a target to prove JORC resources and start prospecting at the Zolotoy site (all within Prodolny).

Krasny has 0.6Moz historic Russian P1 resources. The team is reviewing and digitalising all historic exploration data for Krasny and performing a limited exploration programme to validate historic data. If Kopylovskoye is successful, classification will be done and potentially extend the historic resources under JORC. For the second and third new properties, Pravovesenny and Vostochnaya, the focus is on reviewing and digitising historic exploration data.

Kopylovskoye goes from strength to strength

KOPylOvsKOye ABEngelbrektsgatan 911432 Stockholm, SwedenContact: [email protected] www.nasdaqomxnordic.com/firstnorthshare: KOPY

The company’s recent listing is the latest step in its vision of becoming a world-class gold exploration and production company


GOLD EXPLORATION

THE

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new deposits is dropping, leading to a Tnew deposits is dropping, leading to a Tdecline in the resource base. The Tdecline in the resource base. The Tsituation could be characterised as a Tsituation could be characterised as a Tdepletion of the residual exploration Tdepletion of the residual exploration Tsearch ‘space’.

The possibility of discovering new large, outcropping, or even close to surface, deposits in known gold-producing areas is approaching zero.

But there are areas in the world with legendary high alluvial gold production and pristine exploration search space for primary gold deposits. They are Siberia and the Russian Far East.

Historically, Russia has been one of the world’s leading gold producers (for many years it was reliably in second place, after South Africa). However, unlike most other countries, about 80% of Russian gold was mined from alluvial deposits.

The grade and resources of these alluvial gold deposits were so high that it detracted attention from primary gold exploration. But even the limited amount of exploration that targeted primary gold deposits had led to the discovery of a number of world-class deposits.

Russia has lost its position of one of the leading gold producers in recent years. This is largely because the country’s alluvial gold resources are significantly depleted, and also because of a lack of investments in hard-rock gold exploration. But Russia has potential to regain the leading position.

HISTORICAL GOLDMost of gold had been mined in Siberia and the Far East of Russia, as demonstrated in the graph above, which shows accumulated gold production by the leading mining regions of Russia.

Most remarkably, gold mining in the leading region (Magadan) only started in the 1930s. Also, gold production in the Irkutsk region comes only from a very compact province (Lena, which is located next to Bodaibo).

Perhaps the names of the regions, ‘Siberia’ and ‘Far

Gold exploration potential of Siberia and Russian Far East

BY ALEX MIKHAILOV

Globally, explorers face increasing challenges, forcing them to look deeper and smallerEast’, contributed to the wrong presumption that region is not developed and almost unreachable.

Instead, decades of intensive alluvial mining have led to significant infrastructure development. The roads are not highways, of course, but are well maintained, all season, roads that can take you to almost all of the gold districts.

GOLD GENESISThere several theories of the genesis of alluvial gold deposits and its correlation with the primary mineralisation. No matter what these theories say, the existence of alluvial gold is a direct indicator of primary mineralisation.

Even more importantly, alluvial mining is the best stream sediment sampling programme. One of the good examples of the spatial correlation of unique primary deposits and alluvial mines is that of the Natalka gold deposit (which contains more then 40Moz).

Another example of this spatial correlation between alluvial mining and a hard-rock deposit is Sukhoi Log (in the Lena gold province), which is the largest undeveloped gold deposit in the country.

The mineral potential of Siberia and the Russian Far East exceeds 6,000Moz. And this potential is waiting for active, enthusiastic and ambitious junior exploration companies.

Moscow

Russian Federation

Magadan

Irkutsk

Distribution of gold mineralisation in RussiaDistribution of gold mineralisation in Russia

Alex Mikhailov is an associate principal exploration geologist, based in Cardiff (UK) with SRK Exploration Services

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Mineral Exploration Consultants and Services

“From target generation to resource definition”

Field Exploration Management • Target Generation& Data Handling • Sampling & Quality ControlProject Auditing • Geophysics • Exploration Logistics

+44(0)2920 233 [email protected]



COMPANY PROFILES

28

Kingsrose Mining Ltd’s (‘Kingsrose’ ASX:KRM) near-term strategy is to produce over 45,000oz/y of gold and 650,000oz/y of silver at a cash cost of US$147/oz of gold.

The company achieved a major milestone in its objective of becoming a low-cost gold producer whenit successfully commissioned, in August 2010, its 140,000t/y ore-processing plant and high-grade underground gold mine at its Way Linggo project (pictured) in southern Sumatra, Indonesia.

Kingsrose holds 10,540ha of highly prospective ground centred on the Way Linggo mine. This lies over a zone of complexity where pull-apart basins, fault splays

and dilational jog settings give favourable settings for epithermal precious-metal mineralisation. These features are related to the Trans Sumatra Fault Zone. All significant gold deposits on Sumatra are related to this structure. An aggressive exploration programme now under way will focus on 22 identified targets to underpin future mine/project expansion.

Kingsrose is also carrying out a pre-feasibility study on its potentially massive zinc-lead tailings retreatment operation on the island of Sardinia, Italy. Early research has delineated targets totalling over 90Mt grading over 2% zinc plus lead with significant tonnages reaching over 4% combined metal.

KINGSROSE MINING

Esperanza Resources is an emerging precious-metals producer committed to developing its two late-stage projects. Since start-up in 2002, its geologists have discovered these two except ional gold projects: San Luis, a joint venture in Peru; and the 100%-owned Cerro Jumil in Mexico – both advancing to production.

Cerro Jumil is a heap-leach gold project. The deposit contains 642,000oz (gold equivalent) classified as measured and indicated plus 442,000oz (gold equivalent) classified as inferred. In late 2009, the company announced the results of a Preliminary Economic

Assessment. At a gold price of US$1,000/oz, the project has a value of US$109 million and IRR of 38% The project has now moved into the feasibility level of study.

San Luis (shown right) is a high-grade gold and silver epithermal vein system. Current resources contain 485,000oz (gold equivalent).

A ‘bankable’ feasibility study has been completed and the Environmental Impact Statement will be filed in the third quarter of 2010. San Luis is a joint venture with Silver Standard Resources, which owns 55% and can earn up to an 80% interest by funding the property to production. The large land position has high potential for new discovery.

ESPERANZA RESOURCES

After its incorporation in the UK in late 2006, KEFI Minerals plc established itself as an innovative gold and copper exploration company and quickly expanded its explora-tion portfolio in Turkey.

The company aims to create shareholder value through strategic exploration to discover gold, copper and other base-metal deposits equivalent to 1Moz of gold. Its strategy is to explore the highly prospective regions of Turkey and surrounding countries. KEFI Minerals owns exploration licences in Turkey as well as an extensive database containing information about numerous prospective sites in the region. KEFI Minerals recently

expanded its activities when it formed a mineral exploration joint venture in Saudi Arabia with ARTAR, a leading Saudi construction and investment group.

KEFI Minerals is the operating partner with a 40% inter-est and its aim is to discover and develop a +1Moz gold deposit in the underexplored Arabian Shield in Saudi Arabia. The company is awaiting the granting of applications for strategically selected prospective tenements through its joint venture in Saudi Arabia. KEFI Minerals’ expatriate and local management team has extensive Australian and European mining experience. Its reputation has been built on treating safety, environment and community relations as a priority at all times.

KEFI MINERALS

The 75,000km2 Deseado Massif in Argentina’s southern Patagonia region continues to emerge as a world-class gold and silver district host to precious metals mines, new projects under development, recent new discoveries and active explora-tion. Exploration and mining in the Deseado Massif is strongly supported by the Santa Cruz provincial government.

Minera IRL Ltd is a Peru-based gold production, development and exploration group. With 256,000ha, the company holds the third-largest tenement package in the Deseado Massif. Minera IRL has a two-pronged

strategy to fast-track the Don Nicolas Project into production while exploring for major new gold deposits.

A feasibility study, due for completion in 2011, is being conducted on the Don Nicolas Project. The study includes infill and extension drilling, metallurgical testwork, hydrology and environmental studies. The aim is to develop a new mine in 2012.

Exploration is assessing many prospects, including Escondido, a bulk tonnage target, and Pan de Azucar, a high-grade epithermal vein target. A heliborne magnetic geophysical survey has been carried out over four areas and drilling on the above two projects is imminent.

Minera IRL adds value for its shareholders.

MINERA IRL



Way Linggo Gold Project Sumatra, Indonesia 85% Feasibility study completed and all Government approvals, including Forestry permit,

obtained. Mineral rights held under 4th Generation Contract of Work. Construction of 140,000 tonnes p.a. underground gold mine and processing facility. Commissioning July/August 2010. Projected steady state annual production of 45,000 oz Au and 750,000 oz Ag at an

operating cash cost of US$147/oz gold (after silver credits). 25,000 tonne high grade stockpile ready for processing. Experienced Indonesian miners. Highly prospective setting with 22 near-mine targets already identifi ed. US$5m to be spent on exploration during next 12 months.

Way Linggo Gold Projecta highly prospective geological setting

Kingsrose Mining Limited (ASX: KRM)Suite 9, Level 2, 12-14 Thelma Street, West Perth WA 6005 T: +61 8 9486 1149 F: +61 8 9486 1151www.kingsrosemining.com.au

Contact:William Pincus+1 303 830 [email protected]

• An emerging precious-metals producer• San Luis, Peru – development stage• Cerro Jumil, Mexico – feasibility stage• Ongoing exploration on 11 prospects

TSX-V:EPZ www.epzresources.com

Discover – Develop – Deliver

KEFI Minerals Plcwww.kefi -minerals.com info@kefi -minerals.com

Tel: +90 232 381 9431 Fax: +90 232 381 9071Listed on AIM (Code: KEFI)

Excellence in Discovery

EXPLORING FOR GOLD AND COPPER IN TURKEY AND SAUDI ARABIA

KEFI Minerals is a dynamic exploration company focussed on exploring for world class mineral deposits in the well-

endowed and under-explored Tethyan Mineral Belt of Turkey and Arabian-Nubian Shield of Saudi Arabia.

The company’s experienced management and board have highly demonstrable track records in Australia and Europe.

Our reputation has been built on treating safety, environment and community relations as a priority at all times.

KEFI Minerals plans to grow through rapid exploration of existing properties and acquisition of prospective

new projects in Turkey and, with its strategic partner the ARTAR Group, in Saudi Arabia.

AIM-BVL: MIRL / TSX : [email protected] / www.minera-irl.com

Operates the Corihuarmi Gold Mine in Peru, and has 2 new gold mine development projects underway in Latin America



COMPANY PROFILES

30

Pelangio Exploration is a well-funded junior gold exploration company focused on acquiring and exploring camp-sized land packages on world-class gold belts.

The team that re-envisioned the Detour Lake deposit in northern Ontario (at which Detour Gold has proven 11.4Moz in reserves) is now focused on a 290km2 land package in Ghana beside AngloGold Ashanti’s high-grade Obuasi mine (production of 30Moz since 1897). Pelangio has confirmed that the structures hosting gold at Obuasi traverse at least 15km of its property and initial drilling on these structures was encouraging. Further drilling is planned for autumn 2010.

Pelangio is also actively exploring its latest acquisition in Ghana, the 100km2 Manfo property. On the Sefwi greenstone belt, the Manfo property lies on the same fault as the Ahafo and Chirano mines, operated by Newmont and Red Back, respectively. Five major geochemical anomalies have been identified at Maufo and Pelangio is confirming further positive historical exploration work. An initial 13-hole, 1,800m drilling programme is near completion, with drill results expected in September 2010.

Pelangio has a track record of success and the expertise to attain even greater returns from its world-class exploration properties.

PELANGIO EXPLORATION

San Gold’s game-changing exploration model emerged in 2007 after lead geologist Bill Ferreira noticed deposits where they were not expected to be – outside the historic mining unit.

After rethinking the regional geology, a grid pattern was developed across the claims area where every intersection indicated a potential new deposit.

The company started drilling core at these locations and was encouraged by the high-quality samples.

In the past two years, the new model has resulted in two new high-grade, near-surface producing regions.

The Hinge mine has been producing since Q3 2009

while the 007 zone has just begun bulk sampling.Three additional high-grade, near-surface zones are

also on deck, at Emperor, Cohiba, and L-13. The original Rice Lake mine has been mined for

more than 75 years and has produced 1.4Moz of gold.As well as providing ore for San Gold’s 1,250t/d mill,

the Rice Lake mine’s workings have helped determine whether these zones extend to depth.

Once just a small mine north-east of Winnipeg, Canada, San Gold now has a $1 billion market capitalisation and $90 million in liquid assets.

San Gold is traded in Canada on the TSX Venture (SGR) and in the US on the OTCQX (SGRCF).

SAN GOLD

Continental Gold (TSX:CNL) is an advanced stage exploration company focused on growth of its gold projects in Colombia.

Continental Gold is following an aggressive develop-ment plan for its flagship project, Buritica, is rapidly advancing its Berlin exploration project and is actively evaluating several additional projects within its portfolio of 100%-owned gold properties in Colombia.

Buritica is a high-grade porphyry-related carbonate gold/base-metal vein system where gold is hosted in steeply dipping veins with drill intercepts including: 14.3m at 446g/t Au and 166g/t Ag including 3.0m at 2,106.1g/t Au and 738.7g/t Ag. Nearly all holes drilled

have encountered multiple high-grade veins varying in true width from less than 0.5-1.5m and to as much as 5-10m which have been traced over a strike length of more than 1km and vertically over 500m.

Continental completed 17,000m of diamond drilling in 2008/09 and has mapped and sampled about 800m of underground development.

The company is advancing its understanding of these vein systems through a 50,000m surface and under-ground drill programme. Continental has begun engineering, metallurgical and geotechnical studies and baseline environmental work to be followed by initiation of a resource estimate.

CONTINENTAL GOLD

Editorial directorChris Hinde PhD, [email protected]

Deputy editorDominic Mercer MSc, DIC, [email protected]

Features editorKatherine Welch [email protected]

Assistant editorsBen Creagh [email protected]

Gareth [email protected]

Production editorTim PetersSub editorsVickie JohnstoneWoody Phillips

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Mining Journal, published weekly, is available only as part of a subscription with Mining Magazine, Mining Environmental Management and online access.

Published by Aspermont UKAlbert House, 1 Singer St, EC2A 4BQPrinted by Stephens & George, Merthyr TydfilRegistered as a newspaper at the Post Office

Chief executive officer David NizolChairman Andrew Kent© Aspermont UK 2010Member of the Periodical Publishers Association

Disclaimer:Aspermont UK, publisher and owner of Mining Journal (‘the publisher’) and each of its directors, officers, employees, advisers and agents and related entities do not make any warranty whatsoever as to the accuracy or reliability of any information, estimates, opinions, conclusions or recommendations contained in this publication and, to the maximum extent permitted by law, the publisher disclaims all liability and responsibility for any direct or indirect loss or damage which may be suffered by any person or entity through relying on anything contained in, or omitted from, this publication whether as a result of negligence on the part of the publisher or not. Reliance should not be placed on the contents of this magazine in making a commercial or other decision and all persons are advised to seek independent professional advice in this regard.



Camp-sized land packages on world-class gold belts in Ghana Obuasi – 290km2 beside the 30Moz Obuasi Mine

Manfo – 100km2 between Ahafo and ChiranoPX:TSX-V

Pelangio Exploration Inc440 Harrop Drive, 2nd FloorMilton, OntarioCanada L9T 3H2

E-mail: [email protected]

Tel: 905-875-3828Fax: 905-875-3829Toll Free: 1-877-746-1632 www.pelangio.com

Find out more at www.sangold.caDiscoverDevelopment•�Two new mines in two years•�Operating mill on site

Results•��Consistent growth in revenue andproduction since 2005

Potential• Game changing exploration model• Three new zones on deck

O N E O F C A N A D A ’ S M O S T E X C I T I N G N E W G O L D P R O D U C E R S

:SGR OTCQX:SGRCF TSXV:SGR OTCQX:SGRCF TSXV:SGR OTCQX:SGRCF TSXV:SGR OTCQX:SGRCF TSXV:SGR OTCQX:

TSX:CNL

High-grade gold in Colombia – over 200,000 hectares 100%-owned

Well financed for pre-development phase at flagship Buriticá project

Buriticá intersections include 14.3m @ 446.0g/t Au166g/t Ag

Superior exploration potential at Berlin gold project

One University Ave, Suite 401, Toronto, ON, Canada M5J 2P1

www.continentalgold.com

Investor RelationsNaomi Nemeth

Phone +1 416 643 7638Email [email protected]


gold exploration from the mining journal magazine

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