EXPLORATION 1998 — Yamana granted first CoW, awaits approval for eight more

Yamana Resources (YRI-T) has secured its first contract of work (CoW) from the government of Indonesia on its Block 1 property in Kalimantan.

On Feb. 19, the Indonesian Minister of Mines and Energy signed the seventh-generation CoW, enabling Yamana and partner Barrick Gold (ABX-T) to start drilling the 165,000-ha property, which is situated about 170 km northeast of Rio Tinto’s Kelian gold-silver mine. They nevertheless plan to wait until the political and economic situation in the country stabilizes before continuing work.

Yamana President Victor Bradley said ten “exquisite” targets on three prospects have been singled out for drilling. Based upon remote sensing and airborne geophysics, he believes the company could be on to “a new epithermal gold and silver district concealed in the jungle.” Yamana geologists were drawn to Block 1 after viewing Landsat satellite and radar images that revealed a circular feature, 4 km in diameter, at the intersection of two major crosscutting faults. On the ground, they found a volcanic system containing dacite porphyry dykes and stocks intruding basement metasedimentary rocks and a volcanic carapace. The field team also discovered numerous gold-bearing hydrothermal breccias associated with the intrusives.

Yamana’s manager in Indonesia, James McGregor-Dawson, believes the system is an eroded mid-Tertiary volcanic complex in which the circular feature represents a magmatic collapse structure.

Mapping and sampling have defined a zone, measuring at least 10 km long and up to 5 km wide, with anomalous gold, silver, arsenic and antimony values (the latter two elements are used as pathfinders for precious metals).

The most prospective area is HSB-10, which is more than 1.2 km long and up to 200 metres wide and contains outcrops of brecciated metasedimentary rocks and intrusives. Hand trenching has exposed a breccia body up to 150 metres long and 20 metres wide, with samples assaying up to 3.5 grams gold and 50 grams silver per tonne. A second breccia, which measures 350 metres by 50 metres, averaged 1.4 grams gold and 100 grams silver per tonne.

Yamana has defined four priority drilling targets on HSB-10.

Another prospect, HSB-19, is situated 2.5 km to the north and measures 1.5 km by 700 metres. It contains at least four drill targets, one of which is a breccia body 500 metres by 120 metres in which altered mudstones are set in a quartz matrix. Pyrite and arsenopyrite are found disseminated in fragments, as well as in the matrix.

Further north, at HSK-3, Yamana has two targets over an area measuring 600 metres by 400 metres. Chip samples on a large outcrop of silicified brecciated shale ran 4.5 grams gold and 460 grams silver. Other outcrops also contained silver-rich mineralization.

Yamana has a number of other prospects that have seen only limited boulder and stream-sediment sampling. Yamana states that further mapping is needed to evaluate their mineral potential.

Yamana notes that because Block 1 is in the same neck of the woods as Bre-X’s infamous Busang project, every possible step has been taken to ensure the accuracy of its assays. The company retained independent consultant, Watts, Griffis & McOuat (WGM), to evaluate its sampling procedure.

Rock chip samples are sent to Geoservices, and Intertek Testing Service has been contracted to complete check assays. WGM has investigated the methodology, precision and accuracy of both labs, collecting its own duplicate field samples for assay by Indo Assay.

Yamana has eight remaining CoW applications, which are expected to be considered for approval later this year. Barrick has the right to earn a 75% interest in these CoWs, with Yamana retaining a carried interest. Barrick can develop any resource greater than 750,000 oz. gold found on up to three CoWs.

The seventh generation CoW agreement stipulates that the Indonesian government is entitled to a royalty of US$7 per oz. gold and US65cents per oz. silver.

Bradley said any further exploration on Block 1 must wait until the Suharto government can get a handle on its economic crisis. In early March, Indonesia will hold elections; it is widely believed that Suharto will win a seventh term

as president.