Canadian juniors scramble for Kilometre 88 positions

Canadian junior companies are scrambling to tie up ground in Venezuela’s Kilometre 88 district where Placer Dome (TSE) is exploring a gold deposit mining analysts speculate has multi-million-ounce potential.

The Bolivar state gold camp is found within a highly prospective greenstone belt with potential for “company-maker” deposits, particularly secondarily enriched saprolite-laterite targets. But Venezuela still has considerable political risks (two coup attempts were made last year), and efforts to acquire concessions can be complicated by uncertainties relating to mining law and the authority to grant concessions.

One of the most sought-after properties was the Oro Uno concession contiguous to the northern boundary of Placer Dome’s Las Cristinas discovery. This concession is reported to host preliminary reserves of about 13 million tons averaging 0.14 oz. gold per ton.

Venezuelan Goldfields (VSE) was believed to be the front-runner, and the investment community was caught off guard when Toronto-based International Kengate Ventures (VSE) announced plans to acquire 100% of an investment company that owns 100% of Minex C.A., a Venezuelan company whose principal asset is the Oro Uno gold and diamond concession.

International Kengate said Minex had liabilities of about US$8 million related to exploring and developing the property. But the junior also said it was satisfied that the gross value of the concession “is well in excess of the existing liabilities.”

Venezuelan Goldfields is now negotiating with International Kengate toward the formation of one or more joint ventures for the exploration and exploitation of the Oro Uno concession. These ongoing negotiations involve representatives of Grupo Zubillaga and the Ancieta family (the proposed major shareholders of International Kengate).

Venezuelan Goldfields is also involved in joint ventures for Kilometre 88 with Carson Gold (VSE) and Queenstake Mining (TSE). Through a recent private placement, Venezuelan Goldfields realized gross proceeds of $10 million to be used for the acquisition of mining properties in Venezuela.

Elsewhere, Randstrom Manufacturing (VSE) released details of agreements with two private Venezuelan companies to acquire an 80% interest in two concessions in Bolivar state.

President Randy Reifel said the concessions are west and adjacent to Monarch Resources’ La Comorra concession where gold mineralization consists of laterally persistent, parallel quartz veins within a shear zone. The Main zone on the Comorra concession is reported to host an estimated reserve of just under one million tons grading 0.55 oz. gold per ton, and a 500-ton-per-day mining operation is being proposed.

Murray Pezim’s Eurus Resource (VSE) intends to exercise its option to fund a 400-ton-per-day mill on the Albino property where it has the right to earn a 50% interest from Crystallex International (VSE). Metallurgy of the surficial material to be processed was found to be “extremely simple,” and gold production of 84,000 oz. annually is expected at a cash operating cost of less than US$100 per oz.

The Albino concession is also in the Kilometre 88 district. Eurus plans a minimum 3,200-ft. drill program to upgrade oxidized saprolite reserves and test the depth potential of the high-grade La Conductora shear zone.