EXPLORATION ROUNDUP — Indomin takes on prospects in South Africa, Zimbabwe —

Junior spreads out from Indonesia

Once known mostly for its Indonesian gold and diamond projects, Indomin Resources (IRL-V) has entered the African exploration scene with promising grassroots gold projects in South Africa and Zimbabwe.

Indomin has acquired 7-year options on the mineral rights to 13,500 ha in the centre of the 90-million-oz. Target, Sun and Oribi gold projects in the western Witwatersrand basin of South Africa. The projects are held by South Africa-based major Avgold, itself a gold exploration spinoff of Anglo Transvaal Consolidated Investment (Anglo Vaal).

The mineral rights under option cover 20 km of the Witwatersrand basin margin along strike to the north of the Target-Sun project (79 million oz.) and south of Oribi (11 million oz.).

Indomin’s property, known as the Bothaville Strip, is along strike to the north of Target-Sun and south of Oribi; the three Avgold projects represent the largest new gold mine development in the country.

South Africa’s Witwatersrand Basin is the world’s largest known repository of gold. Since its discovery in 1889, the Witwatersrand mines have produced a staggering 40,000 tonnes, or 1.28 billion oz., gold. The published resources of Witwatersrand gold mining companies total another 40,000 tonnes.

Most Witwatersrand gold mines are established on deep, narrow (20-to-30-cm) reefs that are not amenable to mechanical mining methods. This lack of mechanization results in labor-intensive mining operations with average production costs in excess of $US300 per oz. gold.

But in the late 1980s, at the Loraine mine in the western Witwatersrand basin margin, Anglo Vaal discovered multiple stacked reefs in ancient delta fans. The grade and thickness of these reefs were sufficient to permit stoping widths of between 5 and 100 metres. Subsequent exploration by Anglo Vaal along the basin margin to the north resulted in the Target, Sun and Oribi discoveries.

After finding the underground Loraine fan, Anglo Vaal carried out surface drilling along strike to the north and discovered the Eldorado fan, where one hole intersected 121.6 metres of stacked reefs grading 5.19 grams gold per tonne. Stepout drilling along the basin margin to the north intersected another fan, where drill intersections included 6 metres of 25.84 grams gold and 6.86 metres of 21.34 grams. Together these two fans form what is now Avgold’s Target project, where total gold resources of 21.24 million oz.

have been reported.

Further drilling through the 1990s demonstrated a cyclical repetition of these fans north along the west Witwatersrand basin margin. North of Target, Anglo Vaal intersected fans in the Sun South and Sun North project areas, which now contain reported gold resources of 33.47 million oz. and 24.47 million oz., respectively.

Stepout drilling 20 km north of the Sun project resulted in the discovery of another fan, at Oribi, where Avgold’s reported gold resources now stand at 10.87 million oz.

“The west Witwatersrand project of Avgold is going to be one of the world’s great gold mines,” says Indomin President Paul Loudon, noting that Avgold expects to produce 500,000 oz. gold per year at a cost of less than US$200 per oz. “When we discovered that the adjoining ground was available on 7-year options, we picked it up.”

The Bothaville Strip mineral rights were assembled under the supervision of Daniel Boshoff, who was Anglo Vaal’s chief exploration geologist when the Target, Sun and Oribi targets were discovered. Boshoff now serves as a consultant to Indomin and acts as supervising geologist on the Bothaville Strip exploration.

Loudon said Indomin has been working on the project for more than a year but kept the acquistion quiet until it had tied up as much of the ground in the vicinity as possible.

The Bothaville Strip, which has never been drilled, represents the only known contiguous land holding on the west Witwatersrand basin margin that is considered to have economic potential and that is not owned by one of the major South African mining houses.

Indomin’s exploration target is a repetition of the multiple stacked reefs contained in the Elsberg fans discovered by Avgold. The resource target is 70 million tonnes of mineralization grading 9 to 20 grams per tonne, containing between 20 and 40 million ounces of gold — a size and grade similar to the Target, Sun and Oribi discoveries.

Plans call for a US$5-million exploration program, including a seismic survey and deep drilling.

Indomin is expecting to hit the bulk of the mineralization 2,500 metres below surface; the gold horizons in the Rand, unlike most mining camps, are so consistent and familiar that such predictions are rarely wrong.

Twenty farmers

Indomin’s 7-year options on the mineral rights covering the Bothaville Strip project were arranged with more than 20 individual farmers, whose farms overlie the project area. Most of the option agreements were executed in October and November of 1996, so six years remain on the options. The options include annual payments to the farmers totalling US$2.50 per ha with an exercise price at the end of the agreement of about US$1,000 per ha.

The options are held by Afrimin, a South African registered company owned 33% by Indomin and 67% by Afrimin Holdings, a company registered in the British Virgin Islands.

Indomin had acquired its 33% interest in Afrimin through the provision of seed capital and loans which funded the option acquisitions and preliminary exploration. Subject to regulatory approval, Indomin has now reached agreement to increase its interest in Afrimin to 100% by converting the loans to equity and giving Afrimin 1.2 million shares and a cash sum of $150,000 in exchange for its 67% interest. Under the agreement, Indomin will also pay Afrimin Holdings a further $1.4 million, either in cash or Indomin shares, on Oct. 22, 1999, and a further $1.4 million in cash or shares one year later.

“If you take a long-term view, the gold price will return,” Loudon says.

“And during the life of these options people will realize we control a prime piece of ground.”

Joint ventures

But despite the project’s promise, he says Indomin is not going to be the company that will see it through to production. Several South African majors have already approached Loudon with joint-venture proposals.

“We’re an exploration company, and we’ll stay that way. We will bring in a South African partner sooner rather than later. We will not do the drilling ourselves. We’re looking for a party to come in and earn an interest by spending US$5 million demonstrating that there is a fan system on the property, [at which point] we can put a value on the project.” Once the preliminary exploration program is completed, Loudon says, Indomin will consider getting a “main board” listing for the project in London.

As for the still-turbulent political climate in South Africa, Loudon says the country has been through uncertain times in the past decade, and yet the mines continued to operate.

“[South African President Nelson] Mandela and his party are committed to the mining industry — they have to be, because it’s so important to the economy. So even if there’s more political instability there, the mines will be protected, because South Africa is a mining country.”

As for the geological situation, Loudon says: “The traditional skepticism North Americans have is that South African gold is in narrow reefs, and that there are high mining costs and declining grades. What North America doesn’t understand is this new style of [stacked-reef] deposit that Avgold is developing in the West Wits. It’s the future of South African gold mining.” Zimbabwe

A thousand-odd kilometres to the north of Bothaville Strip, in Zimbabwe, Indomin has completed the acquisition of the Pickstone-Peerless gold project and a large portfolio of gold properties with open-pit potential.

Indomin believes the Pickstone-Peerless project, acquired from Rio Tinto (RTP-N), has the potential to contain between 500,000 and 1 million oz. gold extractable by open-pit methods. The known resource already exceeds 500,00
0 oz. gold. Of this amount, 110,000 oz. grading 3.3 grams gold to a depth of 50 metres are considered to have open-pit potential.

Indomin has assembled a senior geological team in Zimbabwe to manage the exploration of this property, and drilling to establish the reserve base will begin shortly.

A low-level aeromagnetic survey is being flown over the property to assist in the definition of additional drill targets outside the main Pickstone-Peerless deposit. Mapping by Indomin has shown the project area contains numerous additional targets — banded iron formation (BIF), stockwork mineralization associated with quartz feldspar porphyries, shear-hosted mineralization in dolomitic host rocks, and quartz-vein mineralization in sheared greenstone between major strike-slip faults.

Testing of the 1.2 million tonnes of tailings averaging 1.7 grams gold has shown that more than half of the gold can be recovered by cyanide leaching.

Indomin is negotiating with an established tailings retreatment operator to treat the tailings on a joint-venture basis, which would provide the company with a small early cashflow.

Indomin can acquire Pickstone-Peerless from Rio Tinto in exchange for US$1 million cash and royalty payments of US$10 per oz. gold payable on the first 100,000 oz. of production, and US$5 per oz. on the next 800,000 oz. — to a maximum total payment of US$6 million. The option to acquire Pickstone-Peerless, along with 100% interests in large gold projects in the Kwekwe, Battlefields and Sherugwi greenstone belts of Zimbabwe and extensions of these structures in Mozambique, were acquired from Australian-listed North Rand. Indomin has paid North Rand $650,000 and 2 million Indomin shares to complete the acquisition. Up to 1 million additional performance shares may be issued to North Rand for economic minable ounces (as determined by an independent feasibility study) in excess of 400,000 oz.

Other projects

The Kwekwe district in central Zimbabwe hosts some of the country’s largest gold mines. Indomin’s Kwekwe property lies between the 4-million-oz. Globe & Phoenix mine and the 1-million-ounce-plus Indarama mine of Trillion Resources.

Examination of this area by Indomin indicates an altered mineralized quartz porphyry in highly sheared greenstone rocks. The contact zone is occupied by a quartz vein that was previously mined by a small-scale miner who regarded the quartz porphyry as footwall waste. Sampling of this material by Indomin, however, has returned assays of up to 4.26 grams gold, and, as a result, the company considers it to have significant open-pit potential.

In the nearby Gweru mining district, Indomin is acquiring properties containing a series of targets for mafic volcanic-hosted mineralization associated with the Whitewater and Topaz Thetis shear zones. There is also potential for porphyry-associated open-pit mineralization. The Kwekwe and Battlefields properties cover a total area of 7,169 ha and represent exciting exploration targets in a proven gold province.

The Shurugwi property area, 30 km southeast of Gweru, covers a series of large open-pit targets in and around numerous old gold workings. The project area comprises 2,271 ha and includes the Providential, Pretty Polly, Toss Up, Impali, Highlands, Pacific and Umtebekwe prospects. Indomin will undertake preliminary trenching over the next two months to identify targets for drilling.

The 8,820-ha Sesombi property area consists of large open-pit targets associated with the Lusitania shear zone. Here, Indomin will undertake a preliminary exploration program to identify drilling targets.

The 8,400-ha Mundonguara project lies 20 km inside the Mozambique border from Zimbabwe and covers a 10-km-long zone in the Mutare-Manica Greenstone belt, Mozambique’s most prolific producer. The property covers the margin of a BIF and talc-carbonate altered komatiites. United Kingdom-based Lonrho previously operated extensive alluvial gold operations in the valley adjacent to the Mundonguara BIF. On the Zimbabwean side of the border, this belt hosts Lonrho’s Red Wing-Rezende mine. Initial work will concentrate around the Dot’s Luck area, where preliminary exploration identified 200,000 tonnes of open-pit material grading 4 grams gold.