Golden Star signs deal for Andorinhas

Golden Star Resources (TSE) has signed an agreement with Brazilian mining giant Companhia Vale do Rio Doce (CVRD) for the Andorinhas gold project.

Golden Star signed the deal through its wholly owned subisidiary, Southern Star Resources. Both Southern Star and CVRD will have a 50% interest in the project.

Golden Star, which submitted a successful tender for the Andorinhas property in late 1995 (T.N.M., Jan. 1/96), is the first outside partner to become involved in the development of CVRD’s vast mineral potential.

In the 1970s, CVRD’s exploration subsidiary found gold mineralization on the Andorinhas property, which comprises 25,000 hectares near the town of Rio Maria in eastern Para state. Its work included extensive soil surveys and geological mapping, as well as 15,000 metres of diamond drilling. Significant production has also been reported by local, small-scale miners.

To expand known deposits and locate others, Southern Star will begin a 30-month program of mapping and geophysics; in addition, a 12,000-metre drill program is scheduled for the third quarter. However, Southern Star will need to secure permission from landowners to conduct its exploration.

Southern Star must match CVRD’s previous exploration expenditures of US$5.5 million and pay half of any additional costs required to complete a positive feasibility study.

Southern Star President Jeffrey Abbott says Andorinhas is the largest item in Golden Star’s 1996 exploration budget.

“We believe the project provides Southern Star and CVRD with an outstanding opportunity to fast-track the discovery and development of at least one new gold mine.”

The mine would be operated by CVRD.

The geological setting of the Andorinhas area is believed to be similar to Canada’s Abitibi mineral province. Mineralization occurs as high-grade, gold-quartz veins in multiple oreshoots within a 14-km shear zone. The property contains three known zones of mineralization, including the Babacu, Lagoa Seca and Mamao. Mineralization at Mamao has been developed down-plunge for 240 metres and is open on strike and at depth.

CVRD is the world’s largest producer of iron ore and is also a major producer of bauxite and manganese. Moreover, it is Latin America’s largest gold producer, having turned out 530,000 oz. in 1995.