GLOBAL SEARCH FOR GOLD — Barberton camp struggles with low gold prices — Canadian companies ease up on once-promising projects

The cramped, creaky cage that lowers miners to the depths of Avgold’s Sheba mine is a potent reminder that the Barberton area of South Africa is one the world’s oldest gold camps. For more than 100 years, the Barberton mines have overcome periods of political upheaval, volatile precious metal prices, changing ownership and union discontent to produce more than 10 million oz. gold. But whether the camp can emerge unscathed from the latest round of low gold prices is looking increasingly doubtful.

This spring, optimism in the camp was running high. Several cash-rich Canadian companies, including Noble Peak Resources (NPK-A), Caledonia Mining (CAL-T) and Eldorado Gold (ELD-T), were acquiring properties and doing deals in the area. At the same time, South African mining houses Gencor and Avgold were negotiating a merger of their Barberton operations, including the Fairview, Sheba, Agnes and New Consort gold mines, in order to increase overall production and reduce costs. The camp appeared to be on the verge of a renaissance.

But by the time The Northern Miner had arrived, in August, the gold price’s plunge to the US$310-to-$330 range was taking its toll. Caledonia had just closed its fledgling Barbrook mine, citing low gold prices, and the proposed Barberton merger, which would have created a single entity producing 150,000 oz. gold per year at a cash cost of US$250 per oz., was called off.

More recently, Vancouver-based Eldorado cancelled a $US194-million bid to purchase from Gencor a package of African properties, including the Fairview mine. The company said poor investor sentiment for gold stocks forced it to abandon the deal, which was widely expected to breathe new life into the Barberton area.

Meanwhile, most of the South African mining houses are taking advantage of their post-apartheid status to redirect exploration dollars to parts of Africa where they used to be unwelcome. To many South African companies, Barberton looks expensive and picked-over, compared with the shallow, underexplored gold deposits of West Africa.

But in spite of the recent blows, both the Fairview and Sheba mines, which have together contributed more than one-third of all the gold produced in Barberton, are introducing innovative survival strategies. At Fairview, for example, production has taken a significant leap with the introduction of chairlifts to transport personnel in and out of the mine. Not only have the chairlifts (similar to the lifts at ski resorts) freed up the mine’s three shafts for ore and equipment transport; they are capable of transporting up to 1,000 miners an hour.

Gencor has also implemented cost-cutting measures at the aging mine, where cash costs currently hover at about US$300 per oz. Staff has been slashed to 800, down from close to 1,800 in the early 1990s. The company has also replaced its expensive, environmentaly unfriendly roaster with sulphide-eating bugs that thrive on the arsenic-rich ore. The Fairview BIOX (biological oxidation) plant patented by Gencor boasts recoveries of about 90%.

Gencor’s aggressive underground exploration program has also paid off. Most of the credit for the mine’s new resources goes to chief mining geologist Roelf Le Roux, who led The Northern Miner on a tour of Le Roux Reef, a high-grade (17-to-20-gram-per-tonne) gold zone discovered in 1991. The reef, associated with green chloritic alteration and arsenopyrite mineralization, now produces about 65-70% of the mine’s gold. The Commitment Reef, a second zone, discovered in 1994, will enter production when Le Roux ore is exhausted.

Next door at the Sheba mine, Avgold recently adopted mechanized mining in an effort to increase production and lower costs. The use of load-haul-dump machines imported from Canada has lowered the mining cutoff grade to 4.7 grams from 11 grams per tonne, allowed miners to exploit structures as narrow as 50 cm, and reduced the workforce by half.

The company is also finding new ore at depth, including about 2.25 million tonnes below the lowest level of the mine (about 1 km below surface).

Sheba fault

The Fairview and Sheba mines, which share the same orebody, lie along the Sheba fault — a major structure that forms the boundary of two regional fold systems. Gold mineralization is structurally controlled and tends to be associated with quartz veins developed in quartzite interlayered with shales, greywackes and bedded chert. Although much smaller and somewhat older, the Barberton belt is comparable to the Abitibi greenstone belt of northern Ontario and Quebec.

When it comes to surface exploration, Toronto-based Noble Peak Resources is the main player in the camp. Believing that another Fairview or Sheba is waiting to be found, the junior has acquired an impressive land package along the Sheba fault and on the Jamestown Schist belt (the northwestern arm of the Barberton belt). The same structural controls that concentrated mineralization at Fairview and Sheba are also in evidence on Noble Peak’s ground.

Recent work has focused on extending the orebody at the Worcester mine, which produced about 200,000 oz. gold at the turn of the century. So far, Noble Peak has intersected gold in four of seven holes drilled to test the potential below the old workings. Results have ranged from 3.53 grams gold over 2 metres to 3,647 grams over 1 metre, suggesting that the mineralized structure does continue at depth, though the “pay shoots” remain elusive.

Noble Peak’s chief geologist, Braam Jankowitz, is excited about the region’s potential for not only quartz vein-hosted gold deposits but also for gold deposits in sulphide-rich volcanics, such as those found in the Abitibi. “I would be very surprised if we don’t find anything here,” he said. “But before we continue with the drilling, we need to do some more mapping for geological control.”