EXPLORATION ROUNDUP — Gold potential strong in historically prospective Slovakia

Slovakia, the small Eastern European country whose gold production helped finance the various empires to which it belonged over the centuries, still has much gold to offer. Now, with the Warsaw Pact dissolved and the small nation diving into the global free-market economy, North American companies are free to go and get it.

Leading the pack is Vancouver-based Argosy Mining (AGO-V), now into the second phase of its Kremnica project, 145 km northeast of the capital city of Bratislava.

Having explored in Slovakia for more than a year, Argosy now controls 11.8 km in the heart of the Kremnica district through a joint venture with a Slovak company. It recently applied for an exploration licence on an additional 16.3 sq. km of adjacent land.

The Kremnica mines have been exploited for more than 1,000 years, mainly for the gold-silver mineralization associated with Tertiary volcanic rocks in the area. Extensive underground mining was practised as early as the 14th century, and continued, off and on, until 1970. Between 1956 and 1970, a total of 534,000 tonnes of ore was mined, the average grade of which was 2.83 grams gold and 9.46 grams silver per tonne. Production since 1328 is estimated at 1.5 million oz. gold and 6.7 million oz. silver.

“Of what was sticking out of the ground, they took almost everything,” says Argosy President Yale Simpson. “As they went deeper, however, they didn’t get everything because it would fall in on them as they tried to mine it.” Simpson says mining was stopped sometime in the 1500s, when an earthquake caused the workings to collapse. The miners simply moved on to other nearby veins.

Under later communist rule, a government-funded program in the 1970s and 1980s defined a near-surface resource at Kremnica of 8.3 million tonnes grading 1.45 grams gold and 11.6 grams silver. Argosy’s drilling has confirmed that most of the resource exists in the South Sturec zone.

Phase I drilling at Kremnica totalled 3,632 metres in 29 drill holes. Assays are now complete for 16 holes, and partial results are available for an additional eight holes. The results continue to confirm and expand the known deposit.

The most encouraging results Argosy has received to date are for the holes drilled below the known Sturec deposit. These holes, drilled on 100-metre centres, proved that the deposit continues at depth, with increasing grade.

The grade of the overlying deposit averages 1.45 grams gold and 10.84 grams silver at a cutoff of 0.5 gram gold.

The significant intercepts in the four holes, calculated at the same cutoff grade, were: 43.1 metres of 2.51 grams gold and 11.6 grams silver; 33.2 metres of 4.19 grams gold and 30.6 grams silver; 24.2 metres of 4.6 grams gold and 32.9 grams silver; and 38.7 metres of 3.95 grams gold, with silver results pending. These intervals range from 80 to 191 metres below surface.

Mine workings were intersected in each of the drill holes, giving rise to intercepts consisting of a combination of in-place ore and stope fill.

Drilling has yet to occur below these intercepts, where the deposit is open at depth.

High-grade mineralization, similar to that mined in the past at Kremnica, was encountered in each of the above intervals. One of the holes, for instance, contains an uncut, 1-metre interval assaying 67 grams gold, while another contains 1.1 metres assaying 73.3 grams gold.

An additional high-grade intercept was encountered 100 metres north of hole AS-7, where a 54.5-metre interval of hole AS-5.1.1.A assayed 4.27 grams gold (with silver results pending), starting 1.5 metres from surface.

Steven Potter, Argosy’s head of operations in Slovakia, believes the latest drill intersections represent an exciting development for the project. “The newly discovered high grade will lift the grade of the entire deposit and drive the economics of a deeper open pit,” he says.

Most of the holes drilled thus far are in a strip 1 km long and 100 metres wide. Although much of Kremnica had been explored before Argosy took control of it, Simpson says his company is increasing the amount of mineralization considerably. He adds that Argosy can easily keep up the present pace of exploration over the next year because it is still sitting on $15 million from a financing completed earlier this year.

Phase II

In Phase II, Argosy plans to go outside of that strip and drill an additional 20 holes on the 600-metre, southern projection of the Sturec deposit and on two targets in an area known as Katarina.

Simpson hopes the company can also define a resource between the South and North Sturec zones, and test the adjacent Katarina vein system, as well as the deep potential in the South Sturec zone.

He says he is confident the company can block out a resource of 1 million oz.

gold at Kremnica.

Argosy is now calculating a resource estimate based on its drilling and on previous work in order to arrive at “a prefeasibility indication of the project economics.” Cutoff grades and optimal drilling depths can then be determined. A preliminary pit design will be completed for the known reserves this winter.

“The best grades are at the bottom, and we’ve got to know, in a pit situation, what the bottom’s going to be,” Simpson explains.

But the numbers crunched so far also indicate that an open pit may not be the only possibility for Kremnica.

“With those sorts of grades and widths, clearly you could contemplate an underground mine.”

As for the milling of ore, Simpson says there are facilities at Kremnica, “but they’re not at a scale that would be of any use to us.” The production rate with the existing facilities might be 50-60,000 tonnes per year, he says, whereas Argosy expects to mine 1 million tonnes per year.

The company is also drilling the Pukanec property, 35 km southwest of Kremnica, and has started exploring other licence areas in Slovakia.

Low technical risk

Simpson says Argosy was attracted to Slovakia because it posed a low technical risk, but he adds that the country’s politics took some getting used to.

“The political risk was something we had to come to terms with, and we spent a few months doing just that. We went to some lengths to ensure that, as a foreign investor in Slovakia, we were entitled to the same rights as Slovaks.” A large gold fund controlled by the World Bank assisted Argosy in this regard, and became Argosy’s largest institutional shareholder.

Simpson says Argosy’s efforts in Slovakia have been closely watched by Slovak government officials, with whom Argosy shares a good relationship.

“We’ve had support all the way, from the federal government to the local government.”

He praises the Slovak government for persevering and managing the small country’s economy since 1993, when it split from the Czech Republic.

Slovakia began life as the clear underdog in newly open Eastern Europe, but in recent months its economy has grown faster than that for other Eastern European countries except the Czech Republic. Inflation is running just 6%.

“They will never go back to how it was, because there is a very strong business class now,” says Simpson. “And who runs that class? It’s the old [communist] cronies, and they’ve redistributed the assets very nicely.” Argosy is also exploring for minerals in neighboring Austria, where it holds rights to 248 sq. km, including the Schellgaden and Goldeck properties.

Cinobana permit

Elsewhere in Slovakia, Golden Regent Resources (GRR-A) and its joint-venture partner, Profile Resources (PFI-A), have completed a core stepout hole at their Cinobana permit.

The hole, drilled 15 metres west of the discovery hole, penetrated a 5-metre intercept of mineralization at a depth of 125 metres and averaged 1.5 grams gold and 1.12% antimony. The discovery hole, drilled in 1994, encountered 6 metres of 5 grams gold and 6% antimony, while a third hole, drilled updip from the discovery, penetrated 3.5 metres averaging 2 grams gold (but was not analyzed for antimony). A fourth hole, 30 metres west of the discovery hole, encountered six gold-bearing zones, with the main target zone averaging 3.6 grams gold and 4.6% antimony over 1 metre. This and the five other mineralized intervals are within 100 metres of surface.

The companies are now evaluating the potential of the area in preparation for further drilling along the 2-km strike length indicated by geophysical surveys. Golden Regent believes the shallow source and the potential for uncovering multiple zones, combined with the current price of antimony (about US$1,050 per tonne at presstime), renders the area favorable for further exploration.

Meanwhile, at the joint venture’s Pila permit, also in Slovakia, a 50-hole program has confirmed that the Pila structure is broken by continuous, en echelon, longitudinal shear zones. All the zones that have been drilled or trenched have contained disseminated gold. The zones range from 1 to 7 metres in width and contain gold and silver values ranging up to 6.86 grams and 85.71 grams, respectively.

The 1-km-long Pila structure has a known width of 400 metres. When the current program of shallow drilling is completed, the joint venture will initiate deep drilling to evaluate the depth of mineralization.

Podpolom quarry

Preliminary drilling by Australian-based junior Rhodes Mining (RHO-V) has confirmed the continuation of gold mineralization beneath the floor of the Podpolom quarry near Javorie, Slovakia.

Horizontal sampling of a quarry face revealed an average grade of 1.6 grams gold over 95 metres, within which 1 metre contained 22.5 grams gold.

Rhodes began immediate followup drilling, but the lack of availability of appropriate drill rigs resulted in some holes having sections of poor core recovery. Results are available from four of the eight holes drilled, though only two of these yielded significant intersections. Hole R4 contained 10.3 metres of 2.65 grams gold and 5.4 metres of 1.8 grams, whereas R6 contained 14.7 metres of 1.28 grams gold and 3.3 metres of 1.68 grams. Core recoveries for the reported intervals varied from 21% to 100%, though most exceeded 80%.

The Podpolom quarry is in a 1-sq.-km area of hydrothermal alteration with outcropping ferruginous breccias.