Harrods launches program in Mongolia

Denver — With the backing of Egyptian financier Mohamed Al Fayed, Harrods Minerals is getting back to the basics, with a focus on grassroots exploration.

The privately owned, Denver-based company has quietly picked up a portfolio of 18 copper and gold properties in Mongolia and Peru and intends eventually to go public.

Vice-President Keith Laskowski says the company has compiled the largest mineral database in all of Mongolia.

Harrods’ reconnaissance program in Mongolia and elsewhere focuses on areas of favourable geology, particularly in arid environments, where oxide deposits are known to occur. Soviet exploration, while thorough, left much of Mongolia unexplored; this is because the Soviets lacked the knowledge and expertise for certain kinds of deposits, such as Carlin-style oxide gold mineralization.

The company uses hyperspectral remote-sensing geophysics as a fundamental tool in generating exploration prospects. Then the company proceeds through a systematic appraisal of available data to evaluate the potential of the properties.

“We are taking a big-company approach to grassroots exploration, even though our company is the size of a junior,” Laskowski says.

When Fayed put together the company, named after the famous London department store which he owns, he wanted to focus on grassroots work. No stranger to natural resources, Fayed gained an interest in the oil industry in the 1960s, prior to relocating to London. There, he acquired a sizable stake in Lonrho (5.5 million shares, or 11%) — enough to become a member of the board of directors. Despite liquidating his holdings in Lonrho after becoming dissatisfied with the company’s direction, he wanted to stay in the mining game, and in 1997 he formed Harrods Minerals.

Remoteness

Mongolia was the company’s first destination, after Fayed received invitations from the government. The country, sandwiched between Russia and China, spent much of the 20th century in a no-man’s land between two superpowers. The fall of Soviet Russia, which had governed Mongolia like a satellite nation to other regions of East Asia, opened the door for Mongolia to become a democracy in 1990. Because of its remoteness, however, it has remained an obscure destination for explorationists.

Nonetheless, mining contributes significantly to Mongolia’s economy. In fact, nearly 30% of the gross domestic product comes from one operation: the Erdenet copper mine, north of the capital of Ulaanbaatar.

Under the direction of Laskowski, Harrods spent the past three years picking up properties in Mongolia. At this point, it is the fourth-largest mineral licence- holder in the country. However, Harrods is by far the most active, says Laskowski. In the past year, Harrods’ generative team evaluated more than 250 prospects across the country.

The most prospective of Harrods’ 13 properties is Toste, in south-central Mongolia, where geologists have outlined three main areas of mineralization. Two of the targets are possible porphyries, associated with altered volcanic domes. Initial drilling has identified leached capping above ore-grade copper mineralization. The third is a gold target, associated with quartz-sericite alteration.

At the Hasar project, in southwestern Mongolia, near the Chinese border, the company is reviewing a package of calcaereous rocks similar to Nevada’s Great Basin. For that reason, Harrods is on the lookout for jasperiods and other epithermal features for possible gold targets.

The Bor Khairhan project, also in the southwestern part of the country, contains two known high-sulphidation alteration zones in andesitic volcanics, which could host porphyry mineralization. A third target could represent sediment-hosted copper mineralization.

Peru

After Mongolia, Harrods’ largest landholdings are in Peru. However, its grassroots approach has more competition from other international companies. In the past 10 years, the discovery of the Yanacocha and Pierina gold deposits has established northern Peru as a premier destination for bulk-tonnage gold exploration.

With that in mind, Harrods is looking to southern Peru, hoping to duplicate the feat in a region known more for copper mineralization. Across the southern Andes, Harrods has picked up five properties, looking for vuggy silica and high-sulfidation epithermal systems that could host gold mineralization similar to that found at the Yanacocha or Pierina mines.

The most promising of the bunch is the Humajala prospect, in the department of Arequipa. Initial work has outlined large areas of vuggy silica and chalcedony-altered rhyolite tuff.

The Cerro Cori project covers 50 sq. km in Ayacucho department, and hosts altered Tertiary volcanics and epiclastic sediments.

In 2001, Harrods will continue generating new targets, while pursuing more detailed exploration, including drilling at its previous properties in both Mongolia and Peru. It is also evaluating possibilities in developing countries around the world.