Nelson mining gold along historic Silk Road

In former times, this enclave in Central Asia formed part of the famous Silk Road, a trade route that saw silk, jade and other treasures flow from the Orient to the financial capitals of Europe in return for silver and gold. Yet, although traffic on the road was lucrative, little, if any, of the profits remained in this region.

Today the road continues to be a conduit for capital and goods, albeit with different results.

Gold, which, in ancient times, came chiefly from Europe and passed eastward to the Orient, is today being mined from the mountainous regions of many Central Asian countries. Moreover, a significant portion of the profits remain with local joint-venture partners.

As a result, countries like Tajikistan are beginning to realize the benefits of foreign investment. They are developing a modern mining industry with the influx of new technology and skilled labor and, in the process, retaining hard currency.

One mining company participating in this new exchange is Nelson Gold (TSE), a London-based enterprise that holds a 49% interest in and manages the Tajikistani joint stock company Zeravshan Gold. The remaining interest is held by the Tajikistani government. Zeravshan derives its name (which, translated from ancient Tajik, means “gold-bearing”) from a nearby river.

The joint stock company recently began producing gold from the Jilau open pit and hopes exploration and development plans will, by the turn of the century, turn this 80,000-oz.-per-year producer into a 300,000-oz.-plus mining operation.

The Northern Miner recently visited Tajikistan to see the results of improvements made by Nelson to the former state-run mining operation.

Nelson’s involvement in the project was sparked by political events that transpired in the early 1990s. When the Soviet Union collapsed in 1991, Tajikistan was abandoned and, consequently, much of the capital and technological expertise needed to operate the Taror mine and metallurgical plant, fled the country. In addition, metallurgical test work indicated the Taror ore was complex, with copper mineralization being high in arsenic.

Faced with these disadvantages, the Tajiks developed the Jilau open pit themselves and began processing the high-grade oxide ore through a crushing, grinding and flotation circuit. Because the Jilau ore was non-sulphide, the resulting flotation concentrate was poor in quality, and gold recoveries were in the 45% range.

With the decline of the Soviet system, many Western countries saw an opportunity to investigate ground that had previously been off limits. Nelson, through an affiliated company, signed a joint-venture agreement to form Zeravshan in early April 1994 and has not looked back.

To date, Nelson has spent more than US$10 million on exploration and development. These expenditures culminated in the completion of the first phase of a 3-phase development program that includes construction of a 1,600-tonne-per-day, carbon-in-leach plant and expansion of the Jilau pit. In addition, Nelson has completed feasibility studies for the planned Jilau heap-leach operation and development of the nearby Taror deposit.

In order to complete the 3-phase development program and boost production to the 300,000-oz.-plus target, the company will spend an additional US$110 million. This will enable Nelson to develop the Jilau heap-leach operation and construct and develop the Taror mine.

Jilau

The Jilau deposit was discovered in 1948 by members of the West Zeravshan geological field team (part of the Tajik state geological survey). Despite the presence of gold mineralization, the deposit was first put into production as a tungsten mine (a scheelite-bearing skarn was discovered earlier, near the present Jilau pit).

It was not until 1963 that attention was directed to the gold-bearing stockwork associated with the skarn deposit.

The Jilau gold deposit is hosted in a quartz stockwork within the Chinorsai granodiorite, an elongate intrusive 12 km long and 5 km wide. The intrusive was emplaced within Carboniferous-aged, calcareous sediments and is overlain by younger sediments to the north.

The stockwork comprises a latticework of quartz veins of varying ages and features a central, high-grade core surrounded by low-grade material. The mineralization is associated with the intersection of the

southeast-northwest-trending Jilau fault, and the

northeast-southwest-trending Vedushy fault. The higher-grade core plunges to the southeast at 40!, parallel to the fault intersection. The lower-grade material consists of lenses and stringers, which emanate from the high-grade core.

In the upper levels of the deposit, the gold is free-milling within quartz veinlets and silicified, altered granodiorite. At depth, the oxide material passes through a transitional zone and then changes to sulphide ore. A recent feasibility study on the Jilau heap-leach project indicates measured, indicated and inferred resources total 105.2 million tonnes averaging 1.06 grams gold per tonne at a cutoff grade of 0.5 gram. This equates to a contained resource of about 3.6 million oz.

In addition to the Jilau deposit, zones of nearby mineralization include the Jilau north extension, Dykovy and Olympic. Exploration this year will focus on these three structures, which could be included in a larger pit, as well as skarn targets found west and southwest of the pit. Nelson expects to complete 35,000 metres of reverse-circulation drilling.

Taror

The Taror deposit was discovered by the Soviets in 1937 and was intended to be developed as an underground mine. During 30 years of exploration, more than 14,000 metres of exploration adits were driven, 4,500 metres of channel samples were taken and 40,000 metres of drilling were completed. Additional work was completed by the Tajiks after the Soviets abandoned the project.

Taror is a large gold-copper skarn related to the intrusion of a granodiorite body that cuts Devonian carbonate rocks. Mineralization, which can be divided into three categories, appears to be controlled by faulting and the position of favorable host rocks. At elevations higher than 1,620 metres above sea level, mineralization is oxidized. Between 1,620 and 1,500 metres of mineralization is transitional, while, below 1,500 metres, mineralization is sulphide.

The three mineralization types are found in both calc-silicate skarns and quartz carbonate rocks, at the contact between the granodiorite and carbonate rocks. The mineralized body is lenticular in shape and dips 38! to the southwest, with a plunge to the southeast at 121!.

3 million oz.-plus

The Taror deposit consists of a measured, indicated and inferred resource of 22.3 million tonnes averaging 4.3 grams gold at a cutoff grade of 2 grams; this equates to a resource of just over 3 million oz.

Nelson intends to complete underground drilling on the 1,580-level, together with surface drilling. It will also map the oxide-transitional-sulphide front, and carry out channel sampling.

If all goes well, Nelson will complete a prefeasibility study at Taror in 1999, with the goal of bringing the deposit into production as an open-pit mine in the early part of the next century.

As well as exploring around Jilau and Taror deposits, Nelson plans to spend US$4 million in an attempt to evaluate targets within a 3,000-sq.-km area that flanks the Zeravshan River Valley. Already, the company has outlined four mineralized belts that have excellent gold potential.

Previous exploration on the property identified more than 60 targets, most of which are on surface.

Nelson will explore for gold hosted in stockworks, inter-formation breccias, epithermal-mesothermal deposits and skarns in areas known as the Chinorsai, Shing-Maghian, Chore and Meridnalnoye mineralized belts.

The targets in the Chinorsai belt are related to the same intrusive that hosts the Jilau and Taror deposits. Exploration will focus on identifying zones close to the margins of the intrusive, along with those that are on regional faults that cut the intrusive.

The Shing-Maghian belt, which lies in the southwestern corner of the property, stretches some 40 km in length and is 8 km wide. Mineralization is found both in skarns and strata-bound, silicified breccias which vary in composition from jasperiod bodies to silicified quartz stockwork bodies.

Since the Soviets focused on exploring for antimony and mercury, little effort was made to determine the potential for gold. Nevertheless, some analyses were completed and a pattern has emerged indicating the potential for gold is considerable.

A program will be completed on the Sharshaga stratabound breccia in the western part of the belt and the Chorroga inter-formational breccia in the east.

The Chore belt hosts four targets that appear as sulphide zones related to regional and local structural features. Work to date has focused on extending previously detected targets, and Nelson anticipates outlining a stockwork-type target that could be favorable to processing.

Meridionalnoye is in the eastern portion of the exploration area and the targets, which are related to structure, are at an early stage of discovery.