Special to The Northern Miner
Tanzania’s unique combination of prospective geology and stable government is drawing unprecedented amounts of mining investment at a time when spending in most of Africa is on the wane.
The country is “attracting more exploration dollars than any other country in Africa,” says Randall Oliphant, president and chief executive officer of
Bulyanhulu is expected to become the anchor of the Lake Victoria goldfields, an emerging mining camp just south of the huge lake that is its namesake. Although Tanzania is also considered prospective for base metals, gold is the main exploration target this year.
Barrick put its seal of approval on the new camp when it purchased Sutton Resources, owner of Bulyanhulu, for $490 million earlier this year.
“When Barrick took over Sutton, that put Tanzania on the exploration map,” says William Cavalluzzo, manager of investor relations for
Other major gold producers investing in the region are Anglogold,
The flood of exploration dollars pouring into Tanzania belies recent statistics from Halifax-based Metal Economics Group, which show that exploration spending for the continent as a whole is declining. Africa’s share of the total worldwide budget for exploration was US$323.4 million, or 14.9%, in 1999, compared with US$494.3 million, or 17.5%, the year before. Although declining spending is a global phenomenon, Africa is suffering the steepest decline amid concerns about civil unrest in the Democratic Republic of the Congo and other jurisdictions.
Investment in the Lake Victoria gold camp is an exception. The camp lies in the Tanganyika Shield, an Archean craton containing several greenstone belts. Like their counterparts in Western Australia and Canada, the Lake Victoria belts contain several substantial gold deposits. But unlike them, the Tanzanian deposits have been largely untouched save for small-scale exploitation by artisanal miners. This is because, until recently, the government has deterred foreign investment.
Now that Tanzania is encouraging foreign participation in the mining sector with new investment and mining codes, the Lake Victoria region may become one of the biggest producers of African gold outside of South Africa.
The two main ovoid-shaped belts in the Lake Victoria district form parts of the upper and lower Nyanzian systems. The outer (upper) zone consists of banded iron formation and felsic-to-mafic volcanic rocks. It hosts the Geita, Kukuluma and Golden Pride deposits. The inner (lower) zone consists mainly of mafic volcanics, lava and tuffs. It hosts the Bulyanhulu and Buckreef deposits. The whole system has been intruded by granites, granodiorites, quartz porphyries and dolerite dykes.
Mineralization at Bulyanhulu consists of a series of discrete semi-parallel quartz-sulphide reefs that dip steeply to the northeast. The reefs have been sheared and, for the most part, are conformable to the volcanic stratigraphy.
Barrick expects production at Bulyanhulu to begin in early 2001 at a rate of 300,000 oz. per year. Output will then rise to an average of 400,000 oz. per year at an average cash cost of US$130 per ounce. The company also plans to double resources to 8 million from 4 million oz. with further drilling.
The underground Bulyanhulu mine will be the first to operate in Tanzania in many years, but more mines are coming on-stream as exploration accelerates at several prospective deposits. The most advanced of these is Ashanti’s Geita project. Construction began earlier this year on the project, where an open-pit operation is expected to mine several shallow deposits hosted by banded iron formations.
But Ashanti’s recent financial troubles have clouded Geita’s fate. In October, the company announced it was facing some US$280 million in margin calls from its hedging activities because of the recent spike in the gold price. Ashanti recently won a 3-year reprieve on the payments and rejected a takeover offer by its major shareholder, Lonmin. But industry insiders speculate that the company may sell Geita to a major gold producer, such as Barrick or Anglogold, in order to raise financing and focus on its main assets in Ghana.
Juniors active
As part of an effort to consolidate its position in the promising Lake Victoria goldfields region, Barrick is keeping a close eye on juniors holding ground near its advanced Bulyanhulu gold project.
Barrick recently agreed to buy a 4.6% interest in Pangea Goldfields, which holds numerous properties in the region, including a 70% stake in the promising Tulawaka project, just west of Bulyanhulu. The remaining interest in Tulawaka is held by
To acquire its interest, Barrick will purchase 1 million units of Pangea at $4 per unit. A unit consists of one share and 1.2 warrants, with one warrant exchangeable for one share at $6 apiece two years from closing.
As part of the deal, which is expected to close Nov. 24, Barrick retains a right of first refusal to match any third-party offers for Pangea’s interest in Tulawaka.
The deal increases Pangea’s cash position by $4 million to nearly $11 million. As operator of Tulawaka, Pangea plans to use some of the proceeds to begin a feasibility study. The 355-sq.-km property covers the western extension of the Rwamagaza greenstone belt, host to numerous gold deposits in the region. However, the greenstone belt does not outcrop at Tulawaka.
The partners recently reported gold values ranging from anomalous to as high as 42 grams per tonne over 1-15 metres (T.N.M., Nov. 21/99). Fifteen holes sunk in the East zone, combined with previous results, have outlined three plunging shoots over a strike length of 1 km.
Pangea’s Cavalluzzo says the 5,000-metre program at Tulawaka continues to uncover shallow, high-grade gold veins, including a recent intersection of 23 grams over a true width of 9 metres at a depth of 100 metres.
Pangea has funding commitments on its other properties in the district through joint ventures with both majors and other juniors, including Anglogold, Ashanti Goldfields, Explorations Minires du Nord and
The list includes the Golden Ridge project, where partner Barrick is in the midst of a 20,000-metre drill campaign.
Barrick recently doubled to 20,000 metres the size of its drill program at Golden Ridge, southeast of Bulyanhulu. The program is designed to find depth extensions of a 1.6-million-oz. resource outlined in the top 100 metres from surface. Barrick is funding the project as part of a 50-50 joint venture with Pangea. The major can increase its interest to 65% by completing a feasibility study and arranging project financing.
Drilling is also under way at Pangea’s Kakindu project and at the newly acquired Imwero property, near the Geita deposit. The work at Kakindu is funded by Ashanti, which is earning a half-interest.
Barrick also signed an agreement with
The deal, announced last June and still subject to regulatory approval, calls for Barrick to provide $1 million and subscribe for 1.4 million shares at 70 cents per share. Tan Range must use 80% of the proceeds to explore Itetemia.
As part of the agreement, Barrick can subscribe to three additional placements: 1.2 million shares at 85 cents within six months of closing; 1 million shares at $1 per share within 12 months; and
740,741 shares at $1.35 within 18 months. It also retains the right to increase its level of funding to accelerate development.
Itetemia covers 136 sq. km and hosts a 400-metre-long, sulphide-rich horizon known as Golden Horseshoe Reef (GHR). The unit lies at the contact of felsic and mafic volcanics and has returned several wide gold-bearing drill-intercepts, including 13.4 metres grading 9.07 grams gold per tonne.
The deposit has been drill-tested to a depth of 150 metres from surface, and rotary-air-blast drilling has confirmed gold values coincident with a geophysical anomaly interpreted to represent an extension of the GHR.
Upon completing all placements, Barrick will receive the right to earn a 60% interest by completing a feasibility study and arranging project financing. Another 10% can be acquired by paying net smelter return royalties owed to the Tanzanian government. The option agreement stipulates an annual production rate of at least 100,000 oz.
Tan Range has other properties in Tanzania, some of which have been optioned to major companies for exploration. The list includes the Geita East deposit, where Ashanti is looking for extensions of its Geita gold mine. Newmont Gold is earning up to a 70% interest on four more of Tan Range’s properties.
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