BASE METALS — Maluku base metal project a prospecting triumph

Half a world from their Newfoundland homes, prospectors working for Inco (N-T) and Indo Metals (IOM-V) are proving that mineral exploration is indeed a high-tech industry, and that the highest technology of all is mounted on human shoulders.

Boot-and-pick prospecting has outlined dozens of showings on two Indonesian islands, bringing some new base metal projects to the drill stage. The effort marks a partnership between a big nickel producer with assets and expertise and a Vancouver-based junior with the willingness to bet on a good geological environment.

Having tied up much of its capital budget in the development of the Voisey’s Bay nickel-copper-cobalt project in Labrador, Inco was left with promising exploration projects that would starve for funds unless a partner could be found. Enter Indo Metals, which agreed to fund Inco’s large polymetallic project in the Moluccan Islands of eastern Indonesia.

Inco, through its subsidiary Ingold Holdings, first took on a joint venture there with the Indonesian state mining enterprise Aneka Tambang (Antam) in March 1994. Antam’s share in the project is 20%.

Inco started work on Haruku Island, one of four islands in a group about 550 km west of New Guinea. In 1993 an Antam geologist had suggested that Inco might want to examine a copper showing on the island, and Inco followed up almost immediately with a program of geophysical and geochemical prospecting — an indication of the nickel producer’s immediate interest in the area, and of the security it felt in dealing with Antam despite having only a letter of understanding in hand.

Inco drilled a few holes on the most promising prospect it found, a polymetallic showing called Wai Ira, and by 1996 and 1997 it was expanding the area covered by the agreement to cover parts of the three other islands near Haruku — Ambon, Saparua, and Nusa Laut. Aneka Tambang holds a Kuasa Pertambanggan land permit at Haruku, and the remaining properties are covered by applications for seventh-generation contracts of work, which have been ratified. With the new ground came a new name: the Maluku joint venture.

Indo Metals’ holding is an option deal dating from the beginning of 1997.

The agreement allows it to earn a 49% stake in Inco’s holding — that is, 39.2%. Under re-negotiation provisions in the Inco-Antam agreement, Inco’s holding can be increased to 85%, which would allow Indo Metals to earn up to 41.6%.

The terms of the deal with Inco include an obligation to issue 500,000 shares to the major in each of 1997, 1998, and 1999, and to fund exploration for four years at US$2 million annually. Once Indo Metals has met its obligations, Inco must fund a further US$8 million in work, after which the partners will pay pro rata, with Inco continuing as manager of the project.

Indo Metals is cashed up for the next phase of work, having privately placed 2 million shares at 60 cents in early April for proceeds of $1.2 million.

The shares had attached warrants, each of which entitles the holder to buy another share at 70 cents. Still, the current low market for junior mining stocks has made raising funds difficult. James Clucas, Indo Metals’ president, says, “I don’t think I’ve ever seen a junior metals market like this.”

Indo Metals’ geological picture is not nearly as bleak. The 110-km archipelago, from Ambon on the west to Nusa Laut on the east, consists of volcanic islands, locally mantled with limestone sediments on the shoreline.

It shows the classic island-arc setting, in which a felsic volcanic core with associated subvolcanic dykes, sills and stocks gives way to intermediate volcanic rocks on the slopes nearer the ocean. The terrain rises quickly toward the volcanic centres in the middle of each island.

“It’s not an Irian Jaya topography, but it is rugged,” says Terrance MacGibbon, who is overseeing the work for Indo Metals.

Island arcs are prime massive-sulphide country, but also prime porphyry-copper country. Both Ambon and Haruku show the two styles of mineralization, as well as some showings that appear to be transitional between them — conformable replacement zones and stockwork structures in the volcanic rocks.

Central to the prospecting effort on the islands has been a body of 12 prospectors. Inco realized that many of its property holdings in Indonesia had never been systematically prospected, and remedied this by hiring six prospectors from Newfoundland in mid-1997. This crew spent some time at an Inco project in Sumatra, gaining familiarity with jungle and deep tropical weathering, before three of them headed to Haruku to start a campaign of detailed prospecting on the island.

Haruku’s road system circles the island, with only a single track crossing the interior. In a typical day’s work, a prospector would head out by road with an interpreter and two helpers, park at the mouth of a creek, then prospect upstream — sometimes 7 km in and out in a day.

Inco’s first drill prospect at Wai Ira is in the southwestern part of the island, but stream geochemical work showed high zinc concentrations in sediments along many of the island’s creeks. In short order, the prospectors had found a string of showings — either outcrops or mineralized float — in the upper reaches of the island’s streams.

Inco, delighted with the results, hired six more Newfoundlanders and moved its crews to Ambon. There, on the first day out, a prospector found the Nahaii copper-zinc prospect, a 50-metre stretch of mineralized dacite porphyry 100 metres from a road. “Geologists have walked down these rivers,” says MacGibbon, “but it’s our Newfoundland prospectors that really tore this thing apart.” Nine showings were known on Ambon before the prospecting program; now there are 51, and many are quite impressive. Nahaii, the first rock-breaking success, yielded a 5-metre chip sample assaying 1.74% copper.

Grab samples from the East Kahuli prospect, an outcrop of clay-altered felsic volcanic rocks inland from the northern shore, ran as high as 1.32% copper and 14.1% zinc, with 72 grams silver and 0.9 gram gold per tonne.

At Luang, in the southwestern part of Ambon, a 300-metre strike length of mineralized outcrop carries massive sulphide zones up to 4 metres wide that have copper, zinc, lead, silver and gold values. The best Luang sample ran 0.92% copper, 6.97% lead, 6.2% zinc, 134 grams silver and 1.1 grams gold.

A geological picture of the islands is now emerging, with the felsic core zones of the volcanic complexes showing porphyry-style veins and disseminations, with copper dominating the mineralization. Farther from the centres, in the flanking intermediate volcanic rocks, replacements and massive sulphides carry polymetallic showings with zinc and lead the main metals. Gold values tend to be greater in the porphyry-style showings and silver values higher in the lead-zinc bodies. But here, silver does not show a strong correlation with lead, suggesting that the metal is carried not only in galena, but in other sulphides or sulphosalts.

The Hornbill area, in the northwestern part of Ambon, is now known to have a 10-km belt of showings with copper mineralization in veins and fractures.

The host rock, a diorite, carries stringers and disseminations of chalcopyrite grading up to 1.1% copper. A preliminary soil-geochemical survey outlined an area of high copper values about 700 metres by 600 metres.

Another 5 km to the southwest, the West Ela showing displays diorite and chlorite-breccia float that carries up to 10% chalcopyrite.

Porphyry-copper guru Richard Sillitoe, who recently visited Ambon and viewed the prospects, saw considerable potential for porphyry-style mineralization at Hornbill. He recommended the core of the island as the most favorable target for future exploration, and Inco plans mapping and stream sediment sampling in the interior. Detailed work is also planned for East Kahuli.

Inco also expects to drill at the Wai Urkenal prospect on Haruku, about 2 km north of Wai Ira. The best intersection from four previous drill holes carried grades of 1.67% zinc, 1.21% lead, and 40 grams silver.

The rec
ent social unrest in Indonesia has had no effect on the project, Clucas says. The project was between phases when the Jakarta rioting broke out, but the Moluccan Islands have been insulated from the situation in any event. “We can function in the field 2,400 km from Jakarta, no problem,” says Clucas. “There have been no signs of unrest in the Moluccas and, once the program is approved by Inco we’re proceeding.”