SOUTHEAST ASIA SPECIAL — Yukon Gold starts work program at Buduk property in Kalimantan

In many tropical countries, the gold is where the miners are. Indeed, local, independent miners with hand tools and sluice boxes often pave the way for large-scale operations.

Craft mining activity in the Bengkayang area of northwestern Kalimantan helped to draw Yukon Gold (VSE) to the area. Local people have been doing small-scale mining there for years, particularly on the company’s recently acquired Buduk property.

Local miners with hydraulic equipment have started to expose significant amounts of hard-rock mineralization beneath the weathered material they are exploiting, and the company sees potential for a vein system.

Yukon’s acquisition, which cost 200,000 shares and US$1 million, included the Buduk property, about 20 sq. km in area, and two other land packages nearby called Sebakan and Bawani. All are mining claims held domestically, rather than contracts of work. Buduk has been worked before, notably by Homestake Mining (NYSE) in 1989 and 1990.

The geology at the Buduk property includes a sedimentary and volcanic package with local subvolcanic intrusions. Contact-metamorphic rocks on Buduk Hill suggest that a larger intrusive body lies at depth. Hard-rock gold occurrences are in strongly bleached rocks that have probably undergone argillic or sericitic alteration. Copper and bismuth occur with the gold.

The weathered soil profile overlying the rock is what the local miners are now exploiting. Homestake established a preliminary reserve of 2.5 million tonnes grading 1.6 grams per tonne in the weathered material. It also did some drilling on hard-rock prospects that intersected 5 metres grading 37 grams gold per tonne, and 24 metres grading 1.8 grams per tonne.

The company has engaged Mineralindo Rejeki Alam, a major Indonesian geological consulting firm, to manage the project. The project, just under way, will include upgrading the access road to the property and starting a 15-hole drilling program at Buduk. A separate program of auger drilling will test for extensions of the reserves in the soil profile.

The company also plans an airborne magnetic and radiometric survey of all three of its properties, and a mapping and prospecting program on Sebakan and Bawani.

Yukon Gold’s exploration commitment is for US$1.5 million which it is financing in part through a special-warrant issue of 600,000 units at $9.

The units are convertible to one common share and half a share purchase warrant; in turn a full purchase warrant is convertible to an additional share at $11.