ASIAN EXPLORATION — Steppe Gold expands presence in Kazakstan — Focuses on oxide resources in Central Mizek and Suzlik deposits

At the same time that it works toward completing a feasibility study on the heap-leach potential of its 59%-held Mizek gold project in Kazakstan, Steppe Gold Resources (SPE-V) is acquiring other joint-Venture projects in the former Soviet republic.

The company currently holds eight new exploration licences covering 84,650 sq. km.

Led by an Australian team, Vancouver-based Steppe Gold emerged on the scene last year after changing its name from Control Science. The name change was intended to reflect the purchase of Steppe Gold International, which gave the junior a controlling interest in the Mizek project — a joint venture involving two private Kazakstani companies.

Steppe President John Menzies cites several reasons why his company has been focusing solely on Kazakstan:

* It is a politically stable country offering a incredibly rich geological environment in gold and base metals.

* It can be explored relatively cheaply, with effective geochemical sampling programs.

* Access is easy.

* And there are literally no trees.

The Mizek project area is dominated by low, rolling hills. The climate varies from cold, snowy winters to hot, dry summers. Annual precipitation is in the order of 250 mm.

Steppe is focused on developing an oxide gold resource in the Central Mizek and Suzlik deposits. The oxide resource totals about 6.2 million tonnes grading 2.12 grams gold per tonne, equivalent to 422,000 contained ounces. A stripping ratio of less than 1-To-1 is projected.

A feasibility study on the heap-leach potential of a proposed 1.1-Million-Tonne-per-year open-pit mine is expected to be completed by the end of June.

In the latter half of 1996, Steppe completed preliminary feasibility work on the economics of using a conventional 750,000-Tonne-per-year carbon-in-pulp/carbon-in-leach plant to process the oxide reserve, which would later allow modifications to treat sulphide ore.

Underlying reserves

An underlying proven and probable reserve, potentially minable by open-pit methods, is estimated at 1.5 million tonnes grading 3.27 grams gold and 4 grams silver, plus 0.66% copper. Additional underground proven and probable sulphide reserves stand at 1.7 million tonnes grading 5.88 grams gold and 7.3 grams silver, plus 1.2% copper.

During the latter part of 1996, however, preliminary metallurgical testwork by Nevada-based Kappes, Cassidy & Associates indicated the oxide mineralization was amenable to heap leaching.

Representative ore samples, selected from different parts of the proposed open pit, were subjected to screening tests, bottle-roll and column-leach bench-scale testwork.

Column-leach testing on samples crushed to minus three-quarters of an inch yielded gold recoveries ranging from 65% to 96% over leaching times of between 22 and 61 days, for an average recovery of 86.4%. A low-grade sample of 0.77 gram achieved the lowest recovery.

Follow-up bottle-roll cyanidation tests on 24 wide-ranging, low-grade samples, which averaged a grade of 1.2 grams, yielded a gold recovery averaging 79%.

On the basis of this work, and with the potential for substantial savings in capital and operating costs, Steppe elected to fast-Track the project and proceeded with a feasibility study, which includes a consideration for heap leaching.

A preliminary scoping study suggests a heap-leach operation, based on an 80% gold recovery, could produce 60,000 oz. per year at a projected cash operating cost of US$183 per oz. Capital costs are pegged at US$15.1 million, which could fall to US$11.2 million if mining equipment can be leased.

Hydrological drilling for water has provided a possible source in a river valley about 8 km west of the Mizek site. Power will be supplied from the installation of diesel-powered generator units. Employees are to be housed on site.

.SChingiz belt

The Mizek deposits lie in the northwestern end of a 4,400-sq.-km exploration licence, which covers a 90-km-long portion of the north-west-Trending Chingiz belt — a complex, regionally folded sequence of Paleozoic volcanics and sediments which have been intruded by felsic-To-intermediate porphyries.

The Central Mizek deposit and the smaller, nearby Suzlik deposit are hosted by quartz-sericite-Chlorite altered porphyritic andesites and volcanic breccias, with interbedded sandstones and minor banded chert. Mineralization generally occurs along intensely altered zones within a broader zone of brecciation.

.SVariable width

Higher-grade mineralization is localized within pervasively altered, lens-shaped zones. The Central Mizek deposit is believed to contain 17 lenses within a host structure measuring 800 metres in strike length. The width is believed to vary from 70 metres in the south to 400 metres in the north.

Both deposits are capped by oxide mineralization, extending to a depth of 60 to 80 metres before grading into primary gold-Copper sulphide mineralization.

Within the oxide zone, silver ranges in grade from 0.8 to 400 grams, with recoveries averaging 33% to 36%. Copper grades are less than 0.1%, except for three isolated high-grade malachite zones, which will be mined separately.

Exploration work at Mizek dates back to 1936 with the discovery of a gold-bearing barite outcrop. From 1946 to 1956, a comprehensive surface and underground exploration and development program targeted the oxide potential of Central Mizek.

Exploration resumed in 1976, when drilling focused on the sulphide potential.

More than 200 holes were drilled by 1984, and further drilling and regional exploration were carried out between 1989 and 1992.

Between 1976 and 1994, a total of 775,800 tonnes of oxide ore grading 6.15 grams gold and 33 grams silver was mined by open-pit methods and transported to remote processing facilities.

Steppe Gold International became involved at Mizek in 1994 and, by the end of 1996, had completed 30,000 metres of largely infill reverse-Circulation drilling and 5,000 metres of diamond drilling. Some of this work defined the adjoining Suzlik deposit.

.SMore than 1 gram

Stepped drill-Tested eight prospects during the 1996 field season. The targets occurred in areas of outcropping gossan and widespread alteration.

Gold values exceeding 1 gram were encountered at four of the prospects, including a 20-Metre interval grading 1.9 grams from surface at Karabulak North.

Steppe believes the potential exists for the discovery of additional oxide reserves within the licence. A geochemical stream-sediment and soil-sampling program, carried out during the latter half of 1996 over a 1,500-sq.-km portion, defined several gold and base metal anomalies.

A significant geochemical anomaly with peak values of 3 grams gold was defined in an area 1 km to the south of the deposits. The anomaly extends over a strike length of 1,000 metres.

In addition, an 80-sq.-km stream-sediment gold anomaly centres on the Mizek deposit.

Infill stream and soil geochem sampling is continuing, and drilling of the higher-priority targets is planned for later in the year.

In terms of the recent acquisitions, Steppe has acquired a 69% interest in eight separate exploration licences comprising 84,650 sq. km in parts of Kazakstan. Local partners will hold a 31% interest.

The company is committed to spending US$13.5 million over the 6-year life of the licences.

Steppe is in the process of compiling all historical Soviet drilling and trenching data for the properties, which will be used to aid reconnaissance exploration programs in high-priority areas.

Steppe has 23.3 million shares outstanding, or 33 million fully diluted, and $860,000 in cash on hand. To arrange financing for Mizek, the company has entered discussions with several banks.