EXPLORATION 1998 — Juniors gain CoWs in Indonesia — Government screening process weeds outs potential Bre-X copycats

The CoWs are coming home for junior companies exploring for minerals in Indonesia.

After a period of scrutiny meant to weed out potential rogue operators, the Indonesian Ministry of Mines has ratified more than 30 contract-of-work applications for properties in the country, half of which involve Canadian companies.

Among the juniors given the thumbs-up was International Dunlap Minerals (IDZ-V), which secured a CoW for the Sikalangan property, covering 140,000 ha in southwestern Kalimantan. The company has a 95% interest in the joint-venture company that holds the CoW, with a private Indonesian company holding the remainder.

Dunlap also has other properties in Indonesia, including two sixth generation CoWs: Aceh, in northern Sumatra, and Flores, on Flores Island. It also holds a 93% participating interest in the Wae Dara exploration permit on Flores Island, where a 1,500-metre, 8-hole reconnaissance drill program is testing six prospects believed to have potential for volcanogenic massive sulphide (VMS) deposits.

Iriana Resources (IR-T), which shares common management with Dunlap, secured a seventh generation CoW for the Sentani property in northern Irian Jaya.

Past work there is reported to have outlined a resource of 44.3 million tonnes grading 1.3% nickel and 0.11% cobalt. Iriana has numerous other properties in Irian Jaya, including minority stakes in a number of sixth generation CoWs.

Indo Metals (IOM-V), Inco (N-T) and their local partners have a newly ratified, seventh generation CoW covering 9,207 ha on Haruku Island and 34,550 ha on Ambon Island. Indo has the right to earn a 49% interest in Inco’s 85% share of the land package. The state-owned mining company holds the remainder.

Indo has reported 42 new mineral showings on Ambon Island, of which 23 are in outcrop and 19 are in boulders and float trains. Assays of grab samples ranged from 0.2 to 21.8% copper, 0.1 to 9.1% lead, 0.1 to 7.8% zinc and 0.1 to 17.7 grams silver per tonne.

Jim Clucas, president of Indo Metals, says the partners intend to proceed with their aggressive exploration program, including drilling. “We are confident that drill-testing of the numerous silver-rich, polymetallic and porphyry-style targets identified to date will bring additional positive results.”

International Pursuit (IPJ-T) also passed muster with the Indonesian government and had two seventh generation CoWs ratified by the mines ministry at an official signing ceremony in Jakarta last month. The Toronto-based company’s CoWs cover the Mahakam East and Mahakam West areas of Kalimanatan, which total about 400,000 ha and feature a number of mineralized porphyries.

Pursuit is mobilizing two field teams to carry out further geological and geochemical evaluation of the Manto and Tebihi prospects, where preliminary sampling has shown potential for large porphyry targets.

The program at the Manto discovery is aimed at expanding an area of copper-rich mineralization believed to be 1.5 km long and up to 500 metres wide. Molybdenum and gold are also present.

Field work at Tebihi will seek the source of abundant porphyry float, where samples have graded up to 0.4% moly and 0.5% copper.

A third target, Luso, will also be examined in the current program, with work aimed at expanding outcrops of skarn mineralization grading up to 0.1 gram gold.

Pursuit says Manto, Tebihi and Luso constitute three of six prominent anomalies identified in recent geophysical surveys. This semicircular cluster of anomalies is interpreted to be part of a collapsed caldera structure lying within the Mahakam East CoW. Reconnaissance surveys at one end of the caldera have shown potential for epithermal gold deposits, with float samples grading up to 9 grams gold and outcrops up to 1.1 grams.

Preliminary geophysical surveys have identified three other targets — Tasan, Tekori and Pyangi — with anomalous gold and copper values from geochemical and float samples.

Pursuit says all of its targets require more technical evaluation before drilling programs can begin later this year. The company is also exploring gold and copper deposits in Mongolia, Nevada, and the Philippines, where a scoping study was recently completed for the Hinoba-an project. The study indicated that Hinoba-an contained a geological resource of 440 million tonnes grading 0.41% copper, using a cutoff grade of 0.25% copper. Of this total, 312 million tonnes grading 0.41% copper are amenable to open-pit mining methods, with a waste-to-ore stripping ratio of 1.1-to-1.

A tentative agreement with Minoro Mining would see that company provide all necessary mining equipment for Hinoba-an; Pursuit would receive US$15 million and retain a 40% interest. Minoro’s nearby mining operations would be the source of the equipment.

The study shows that under such a deal, Hinoba-an would have a robust rate of return of 77% and a pay-back period of 10 months. It also shows that cash costs (including smelting and refining) would average US48cents per lb.

copper over the 20-year life of the project.

Pursuit is also examining the option of securing, on its own, the estimated US$100 million in capital costs required for a stand-alone mine. By mid-year, Pursuit expects to complete a final feasibility study of the project.