More gold in Papua New Guinea for New Guinea Gold

Vancouver – With a small gold-silver mine providing exploration funds for a host of prospective properties, New Guinea Gold (NGG-V) seems to be finding gold all over Papua New Guinea.

New Guinea operates a small mine at Sinivit, in East New Britain province, that taps into a quartz-telluride gold system at surface. In May the mine reached its first year of commercial operation. During the last quarter of the year the mine produced 3,600 oz. gold and 633 oz. silver; New Guinea expects to produce between 15,000 and 25,000 oz. gold in 2009.

The defined resources at Sinivit – 713,000 indicated tonnes grading 5.7 grams gold and 340,000 inferred tonnes averaging 3.2 grams gold – will alone not support a mining operation for very long. But New Guinea is still actively exploring the property and in recent months discovered two new oxide zones while confirming substantial gold mineralization in the untapped Central Oxide zone.

In the Central Oxide zone, 37 short, vertical holes in a tight grid returned strong grades in advance of mine planning. Some good results include 8 metres of 9.24 grams gold and 1.9% copper, 14 metres of 3.27 grams gold and 2.1% copper, 12 metres of 3.25 grams gold, 6 metres of 39.7 grams gold and 2% copper, and 10 metres of 6.55 grams gold and 2.8% copper.

As for the new oxide zones, the Eastern Vein is just east of the northern end of the South Pit and has thus far been traced along 200 metres strike. Strong results from this new zone include 2 metres of 18.6 grams gold and 9.8 metres of 13.3 grams gold. The Western Vein, which sits just west of the northern end of the South Pit, has also been traced for 200 metres strike. The best results from the Western Vein include 4 metres of 22.85 grams gold, 16 metres of 4.95 grams gold, and 7.54 metres of 2.96 grams gold.

And the main deposit at Sinivit remains open for expansion. The deposit covers 1 km of a 10-km long structural zone that contains sporadic, largely untested gold mineralization over its entire length. And while the current operation is only mining the oxide cap, sulphide mineralization is open at depth. From the few deep holes completed to date New Guinea expects the sulphide zone to carry between 10 and 12 grams gold.

New Guinea uses the profits from Sinivit to fund its exploration efforts on other Papua New Guinea projects. One of those is Weioko, which is part of the Sehulea property on Normanby Island. At Weioko a recent 15-hole drill program has left New Guinea with sufficient information to calculate a resource estimate for the oxide gold-silver zone that starts at surface, measures roughly 300 metres by 120 metres, and extends to 70 metres depth. Gold grades average between 1 and 2 grams gold per tonne and the company is excited that silver grades are also reasonable, ranging from 5 to 9 grams silver per tonne.

For example, hole 47 cut 64.6 metres grading 2.24 grams gold and 8.88 grams silver. Hole 43 returned 44.5 metres averaging 1.74 grams gold and 7.76 grams silver; hole 42 hit 46.6 metres carrying 1.95 grams gold and 6.12 grams silver. All intercepts start within 2 metres of surface.

Adding the new results to earlier data from 20 reverse-circulation holes and 23 diamond core holes, New Guinea is now calculating a resource estimate for Weioko. Weioko is on an island but is nevertheless only 10 km northeast of the company’s other key project – Imwauna – and so any development at Weioko would likely occur in conjunction with development at Imwauna.

And Imwauna, which is part of the Normanby property in south-east Papua New Guinea, is also receiving considerable exploration attention. The property sits along the same structural trend as the historic Misima mine, which produced 5 million oz. gold. Imwauna is a 1.5-km long structural zone that is up to 100 metres wide and hosts numerous semi-continuous zones of gold mineralization.

In 2008 New Guinea proved up an initial resource at Imwauna, which came in at 1.8 million inferred tonnes grading 12.2 grams gold and 20 grams silver. The resource lies within a 5 km by 2 km zone of anomalous gold soil and rock, most of which has not yet seen detailed exploration efforts.

New Guinea is currently advancing a preliminary economic assessment of a mine at Imwauna producing between 50,000 and 100,000 oz. gold annually. The company hopes to achieve production at the project by 2011 and to that end already completed a trial mining test; the average head grade over a 2.2-metre mining width was 14.1 grams gold.

News is also flowing from Mt Penck, an epithermal gold-silver project in New West Britain province, where a first round of diamond core drilling is underway. And the first few results from the program indicate potential for a sizeable gold zone hosted in an eroded strata-volcano.

Hole 42 returned a solid mineralized intercept: 133 metres from surface grading 1.83 grams gold and 3.79 grams silver. Hole 39 hit 69.5 metres grading 1.82 grams gold and 2.88 grams silver, also from surface, and hole 40 cut 21 metres of 3.13 grams gold and 10.83 grams silver from 2 metes downhole.

Mt Penck and is a 60-40 joint venture between New Guinea and Vangold Resources (VAN-V). The partners plan to calculate a resource for Mt Penck by the end of the year.

In the middle of May New Guinea had just $1 million in the bank but the company expects proceeds from its Sinivit mine will finance liquidity requirements for the next 12 months. Currently trading at 18¢, the New Guinea has a 52-week trading range of 15.5¢ to 49¢ and has 156 million shares outstanding.