Pacific Minerals tables resource in China (March 20, 2003)

Vancouver — A resource estimate suggests the 217 Gold project in northern China is be amenable to low-cost, open-pit mining, reports Pacific Minerals (PMZ-V).

Situated in the autonomous regiond of Inner Mongolia, the project hosts a measured and indicated resource of 35 million tonnes grading 0.848 gram gold per tonne, or 953,000 contained ounces, based on a cutoff grade of 0.6 gram gold per tonne. The inferred portion contains 85 million tonnes grading 0.928 gram gold, or an additional 2.5 million oz.

“The independent resource estimate has established a large resource near the surface,” says Pacific Minerals President Daniel Kunz. “This allows us to calculate capital and operating costs. Given the deposit’s proximity to several large industrial centres in northern China, we expect the cost of developing and operating a large open-pit gold mine will be low.”

Westervelt Engineering performed the resource estimate, in compliance with standards outlined in National Instrument 43-101.

The 36-sq.-km project is accessible from Baotou, a large industrial city, via a series of paved and gravel roads. (Ivanhoe Mines‘ [IVN-T] large copper-gold discovery at Turquoise Hill is in southern Mongolia, 160 km north of the 217 Gold project.)

Recent drilling focused on the main Northeast zone, which measures 1.6 km long and up to 200 metres wide. This zone is part of a much larger mineralized package of rocks that has been traced for more than 4 km.

Drilling to date indicates mineralization is 100 metres wide and continuous over 800 metres of tested strike length; it extends downdip for at least 280 metres. The deposit remains open both along strike and downdip. The upper 40-50 metres of the mineralized zone is strongly oxidized and amenable to cyanide leaching.

Gold mineralization is hosted in Proterozoic-age, carbonaceous slates that have been highly deformed and intruded by a series of Caledonian and Hercynian-age granitic plutons.

Pacific Minerals has initiated an in-house scoping study for an open-pit operation at 217. In-fill diamond drilling will continue on the Northeast zone of the deposit, and further close-spaced holes will test the Southeast extension of the deposit. Pacific Minerals also intends to perform metallurgical tests. Preliminary gravity separation and cyanidation tests indicate 87.7% gold recovery from the oxidized portion of the deposit and 97.7% from the primary sulphide portion.

Mineral resources at the 217 project are similar in size and grade to the Fort Knox gold deposit in Alaska, which is being mined by Kinross Gold (K-T). Open-pit mineral reserves at Fort Knox total 123 million tonnes grading 0.96 grams gold per tonne. Last year, the mine produced 440,000 oz. gold at a cash cost of US$200 per oz gold.

Pacific Minerals is exploring for precious and base metal deposits in China. It is earning a 96.5% interest in the 217 Gold project, 70% in the JBS platinum-palladium project, and 90% in the Dandong gold project. The company is also active at the Yunnan Copper project, where two joint ventures have been formed. Pacific Minerals is earning a 75% interest in one, and 70% in the other.

Ivanhoe holds a right of first refusal to acquire up to 80% of Pacific Minerals’ interest in any new project picked up by the latter anywhere in China (excluding Anhui province).

To date, Ivanhoe has exercised this right on the Yunnan Copper properties and the Dandong property. Initially Ivanhoe can earn a half-stake in the joint-venture company created for each project by equally sharing the first US$1 million in expenses. Ivanhoe can acquire an additional 10% of Pacific Minerals’ interest by completing a feasibility study. On successful completion of the feasibility study, Ivanhoe can acquire a further 20% of Pacific Minerals’ interest by arranging the funding necessary to take the project to production.

Similar agreements cover the 217 Gold and JBS platinum-palladium projects. In the former, Ivanhoe can earn a 60% interest by completing a feasibility study. Once vested, its interest will be reduced and converted to a 36.5% carried interest. Once the feasibility study is completed, Ivanhoe can increase its stake to 76.5% by arranging financing to take the property into production. Pacific Minerals will then have a 20% carried interest. Once the second option is exercised, Pacific Minerals’ stake will be reduced to a 20% carried interest.