Java Gold, Pursuit launch programs in Mongolia

Alluvial gold production is under way at the Gazar property of Java Gold (JVAG-C).

The company’s two gold production plants have arrived at the property, situated in Mongolia’s Zaamar Valley. Commissioning of the plants began in late May, and full production is now being realized. Java Gold expects to operate the two plants through to late October at a combined rate of 150 cubic metres per hour. A third plant, to be deployed on additional properties acquired in the Zaamar area, is planned for later this season.

Java Gold acquired a 100% interest in the Gazar licence in December 1996.

Indicated recoverable gold resources total approximately 225,000 oz. These reserves lie in dry-Terrace alluvials, 100 to 400 metres from the current course of the Tuul River.

A stripping ratio of 2.53-To-1 is required to reach the pay zone, which ranges from 1.3 to 3.6 metres in thickness. The 1997 production program will mine two blocks with an average grade of 1.21 grams gold per cubic metre.

Assuming a recovered grade of 1 gram gold per cubic metre, Java has a projected production rate of 2,000 oz. gold per month. The company has budgeted production of 10,000 to 12,000 oz. gold for 1997 at an estimated cash operating cost of US$100 per oz.

Java Gold will carry out a drilling program to increase the confidence level of the indicated resource on the company’s Toson Valley alluvial licence. The Toson gold resource represents a true alluvial deposit in the Tuul River, with an indicated resource of 487,000 oz. gold at a grade of 0.48 gram per cubic metre, as determined by previous Mongolian geological work. According to Java Gold, several profitable gold dredges are currently operating in the Tuul River, with similar reserves and grades.

The company is also evaluating the potential of a mining operation on the TAS property, also in Mongolia. Java secured rights to mine this property, which has an alluvial resource of approximately 180,000 oz. gold.

In total, Java Gold’s three alluvial gold properties have a total indicated resource of about 800,000 oz. gold. The overall gold production target this year is between 10,000 and 12,000 oz.

Work will begin shortly on Java’s five hard-rock exploration licences in Mongolia. Each licence exists within a known gold belt and incorporates numerous known gold showings. Drill-Testing will take place this season on at least three priority targets, and additional targets will be tested by geophysics and trenching.

In Indonesia, Java Gold is exploring the Kendeng property in West Java province. A program of airborne geophysics has recently been completed, and these results, together with the discovery of additional gold-bearing outcrops, will assist in the definition of priority drill targets. A program of diamond drilling is planned for the second half of 1997.

Meanwhile, International Pursuit (IPJ-T), which owns a 19% interest in Java Gold, is advancing its own Mongolian projects. Pursuit currently holds the largest land position in Mongolia, with direct and indirect interests in five hardrock exploration licences. Each licence is about 400,000 ha in size, for a total of 2 million ha.

Geologically, the areas chosen by Pursuit represent several environments conducive to the development of large-Tonnage gold deposits, including shear zone, intrusive-related stockwork, skarn zone, Carlin type and epithermal stockwork systems.

Pursuit’s exploration teams are evaluating some of the company’s priority targets. Exploration programs will include geochemical sampling, trenching, geophysical surveys and drilling.

Pursuit will also be evaluating additional target areas in the country for potential acquisition. One of Pursuit’s priority targets is on the Khan-uul licence, which lies within the Bayanhongar gold belt in central Mongolia.

Gold mineralization has been observed in broad zones of limonitic and silicified quartz-sericite schists intruded by porphyry. Zones of alteration and mineralization are found along a major east-west structure.

One zone is reported to contain a possible resource of 550,000 oz. gold. This prospect area has been evaluated only by trenching and will be one of Pursuit’s first drill targets this season.

Also in the Bayanhongar gold belt is Pursuit’s Huh Bulagin Hundig (HBH) gold-Copper skarn deposit, which consists of several mineralized lenses along a 2-km contact of a metamorphosed limestone and a diabase sill. One of the lenses was found, by trenching, to be 160 metres long by 20 metres wide, grading 8.8 grams gold per tonne. Based on a cutoff grade of 4 grams, this lens is reported to hold a possible resource of 110,000 oz. gold. Pursuit plans to drill-Test these lenses in August.

Pursuit’s geologists have recently identified a 1-km-by-500-Metre quartz stockwork zone near HBH. A detailed sampling program has begun at that site.

Pursuit’s other licences include Khargas and Tsahkin Khudag in western Mongolia, and Erdene-dalai in the central region. Each of these licences includes numerous gold showings and prospects which will be evaluated by preliminary surveys during the 1997 season. Pursuit plans to drill-Test at least four priority targets and complete trenching and geophysics on several others.

The Mongolian government has passed a new mining law aimed at attracting and promoting new foreign investment in the poor, landlocked Asian country.

Some of the key policies adopted include: introduction of a mineral authority to serve the mining industry exclusively; a Cadastral office within this mineral authority to issue mineral exploration licences and mining permits on a first-Come/first-serve basis; introduction of a 3-year exploration licence with two 2-year renewals available on request; a 60-year mining licence with an additional 40 years on renewal; licences made transferable; royalty rates reduced to 2.5% per cent on all minerals; and accelerated depreciation on fixed assets with no tax on infrastructure development costs.