THE GLOBAL SEARCH FOR GOLD SPECIAL — Gold projects in Java attract renewed interest

About 100 million people live in Java — more than in any of Indonesia’s other islands — and this population density makes it difficult for mining companies to secure properties there. (By comparison, Kalimantan, where the huge Busang gold deposit is situated, is sparsely populated.)

On the other hand, Java hosts several established mines that are looking for new capital, as well as known (albeit untested) prospects that are attracting the interest of a growing number of North American-based mining companies.

In May, First Dynasty Mines (FDM-T) announced plans to acquire the Gunung Pongkor gold mine and its related exploration concessions in western Java.

“We see the privatization of the mine as a first step in our strategic alliance with P.T. Aneka Tambang,” says First Dynasty President Marcus Randolph, pointing out that the state-owned mining company also owns and operates the country’s largest gold refinery, two nickel mines, a 2-line nickel smelter and numerous exploration projects throughout the country. “The objective of the alliance is to create a world-class mining enterprise, building on mutual synergies based in Asia, with significant Indonesian ownership, that will compete aggressively throughout the world.” To acquire the mine and related property, First Dynasty issued shares valued at US$120-145 million. The closing of this transaction is expected shortly.

Gunung Pongkor is a relatively new underground operation. Commissioned in 1994, it is currently producing 70,000 oz. gold annually at a cash cost of US$175 per oz. Resources stand at 4.9 million tonnes grading 0.46 oz. gold and 5 oz. silver per ton. The mine is accessible by an adit, which serves also as the main haulageway.

These reserves are distributed in the Ciguha Utama, Kubang Cicau and Ciurug veins, which extend about two-thirds of a mile, with widths varying from roughly 2 to 10 metres. The deposit is epithermal, occurring in steeply dipping quartz-adularia-carbonate veins hosted by propylitic-to-argillic, altered Miocene andesite and basalt.

“Gunung Pongkor has significant potential to expand reserves and production, and reduce costs,” Randolph says.

The mine complex has a rated capacity of 500 tonnes per day, with processing using cyanide leaching with carbon absorption. Gold recoveries are 95%, with silver recoveries rated at 75%.

Once the deal closes, First Dynasty expects to start exploration work and expansion engineering. By 1998, once a US$50-million expansion program is completed, the mine is expected to produce 200,000 oz. gold per year at a post-expansion production cost of US$125 per oz. The mine employs 750 people.

First Dynasty has interests in other gold projects in Southeast Asia, including an 81% stake in the Minika project in Papua New Guinea, which is adjacent to the huge Ertsberg copper-gold skarns and the Grasberg copper-gold porphyry deposits.

In Myanmar (formerly Burma), a subsidiary of First Dynasty has secured rights to explore properties believed to have potential for Carlin-type gold deposits, as well as fault-hosted gold deposits. And, more recently, the company joined a Teck-led consortium which is seeking rights to the multi-million-ounce Vasilkovskoye gold deposit in Kazakhstan.

Kendeng project

Toronto-based Java Gold (JVAG-C), a junior company held 18% by International Pursuit (IPJ-T), has signed a letter of intent to acquire a company that owns the Kendeng gold project in western Java, about 25 km on strike to the west of Gunung Pongkor.

Kendeng is reported to host an extensive area of gold-bearing, epithermal hot springs and diatremes with significant silica-chert capping. Java Gold reports that at least 12 gold showings representing this epithermal system have been identified over a 50-sq.-km zone of mineralization on the property.

Preliminary sampling has returned chip and channel samples averaging 1 gram gold, with the associated wall rocks regularly returning 0.5 gram gold. The junior is also encouraged by results from areas where assay values run as high as 5.2 grams, with highly anomalous values of antimony, arsenic and mercury.

Initial acquisition costs involve a cash payment of US$275,000 plus 200,000 shares, with additional payments of cash and shares to be made over two years if exploration work continues beyond the second anniversary date.

Once the acquisition is completed, Java Gold intends to launch an exploration program to target the potential for bonanza-style, stratabound and vein-type systems. The company hopes to drill-test several targets on this project within the next four months.

Elsewhere in Java, the company is mobilizing a drill to its Arjuna project.

Drilling will begin on the Mejinklak prospect, followed by drill-testing of several other gold showings on the property in south-central Java. The company notes that the Mejinklak prospect has returned assays of 1.5 grams across 100 metres true width, with 20 metres averaging 3.5 grams gold within the zone, which is open on all sides.

Bayah Dome district

By getting in ahead of the competition, junior Atapa Minerals (ATAP-C) has secured rights to explore the 101,400-ha Cikotok property on southwestern Java, 180 km from Jakarta.

The Cikotok domestic mining permit (KP) is situated in the prospective Bayah Dome district, which, since the 1930s, has been mined by Dutch and Indonesian interests; it is currently held under a 75-25 joint venture with PT Aneka Tambang.

Between 1940 and 1992, the Cikotok and Cirotan mines produced in the order of 8 tons gold, 185 tons silver, 4,000 tons lead and 5,000 tons zinc concentrates.

The Cikotok mine area is reported to contain numerous quartz vein-breccia zones with extensive, silicified, alteration zones that have yet to be fully explored.

The Cikotok KP is made up of seven properties. Of these, Cikidang, Pasir Ela, Pasir Keris and Rabig lies along a prominent, northeast-trending zone of dislocation, which extends farther northeast to include Gunung Pongkor.

Atapa notes that the former producing properties of Cikotok, Cirotan and Cipanglesseran are contained within a section of precious metal vein swarms, breccia zones and alteration that stretches 15 km north-south and 3 km east-west. To confirm the continuity of this trend, mapping programs are being carried out, to be followed by sampling to provide targets for an initial 2,000 metres of core drilling.

Atapa is also conducting a 9-month program aimed at testing the Cikidang target, which is considered prospective for bulk-tonnage deposits. The work has already led to the identification of three zones that contain widespread gold-silver mineralization in veins, veinlets and stockworks. To date, none of these structures has been drill-tested.

Atapa is currently drilling the Pasir Ela and Pasir Keris targets. On the former, the main target area measures roughly 700 by 700 metres and is reported to consist of moderate-to-dense stockwork veining, with gold values in the soil/bedrock consistently greater than 0.1 part per million.

The Pasir Keris target has been worked by local miners. Atapa’s geochemical program has outlined a 1.3-km-long zone of recent gold workings containing a core anomaly (400 by 300 metres) in which local miners are working 10-25 grams gold from widespread, quartz-veined, silicified and argillized volcaniclastics. The Rabig target also contains geochemical gold anomalies.

Atapa notes that about 70% of the Cikotok KP has been subjected to little or no exploration. A regional program is testing this potential, and results to date have identified an initial five distinct target areas.

Atapa also has mineral properties in North and South America, including the Maui concession in Peru’s Huarachiri province. This concession has a history of past mining dating back to the Spanish Conquest and is considered prospective for epithermal gold-silver deposits.

Jampang project

Drilling by Mispec Resources (MPE-M) is under way at the Jampang gold project in western Java. With results reported from three diamond-drill holes and 12 reverse-circulation holes, Mispec is pointing to
the discovery of a large, gold-bearing zone.

Selected results from the program include 16 metres grading 3 grams gold, 6 metres of 8.5 grams, and 38 metres of 2.59 grams. Mispec says these results, together with previous surface work, “indicate a well-developed mineralized system similar to Gunung Pongkor, about 50 km north.”

Mispec is also exploring the bulk-tonnage gold potential of wide epithermal systems elsewhere on the property. Drilling is currently focused on an area of known gold-silver mineralization.

The junior can earn up to a 90% interest in the Jampang property from an Indonesian company.