Underworld Applies Full Metal Savvy to New Zealand

Vancouver-based Underworld Resources (UW-V) has completed two small drilling programs on its gold properties in New Zealand. The resulting assays will help determine how the company allocates the $3 million in private placement financing raised this summer.

Underworld was floated on the TSX Venture Exchange earlier this year by Michael Williams and Rob McLeod, the principals behind successful Alaska explorer Full Metal Minerals (FMM-V). Underworld’s president is Adrian Fleming, former exploration manager for Placer Dome in Sydney and vice-president of exploration for Denver-based Golden Star Resources (GSC-T). Fleming was part of the team that discovered the Porgera gold mine in Papua New Guinea, as well as other economic gold deposits.

Underworld’s mandate, Fleming explains, is to acquire properties in Australasia — starting in New Zealand — that have some previous indication of mineralization and prepare them for drilling inside a year.

“For a long time there wasn’t a lot of money available for exploration in New Zealand, so there has been a pattern of doing geophysics, geochemistry and remapping, instead of trenching or drilling to take your exploration to the third dimension,” says Fleming. “We’re looking at known occurrences either along strike or deeper and re-evaluating them. I am driven by wanting to put some drill holes into each property within twelve months, though I won’t necessarily walk away from a property after one drill campaign.”

Underworld just finished minor drill programs at both of its New Zealand properties: the 100%-owned Lottin Point volcanogenic massive sulphide property in the East Cape area of the North Island and the Golden Progress gold property in the Central Otago region of the South Island, 50 km from the Macraes gold mine, New Zealand’s largest gold producer.

At Lottin Point, Underworld is attempting to locate the bedrock source of high-grade boulders discovered in creek drainage during a regional exploration program by Anglo American Corp. in the 1970s. Despite subsequent exploration programs over the years, the source has never been found. Mineralization in the float consists of semi-massive barium and finely disseminated sulphides including copper, lead, zinc, gold and silver.

The Lottin Point property lies within the northerly band of Matakaoa volcanics in a sequence of basaltic lavas, dolerite dikes and sills, and gabbroic subvolcanic intrusions associated with and intercalated with sedimentary bands or lenses. The rocks have been sheared and faulted and the mineralization is considered syngenetic VMS (closest to Beshi) type.

Earlier this year, Underworld completed a geophysical program on Lottin Point, including follow-up IP, ground magnetics and detailed ground gravity. A subsequent 3-hole core drilling program tested two induced-polarization (IP) anomalies and one target selected as a result of detailed geological work, including an evaluation of the boulder distribution. At time of writing, assay results were pending.

Though Underworld also managed to move a drill onto the 75%-owned Golden Progress property to meet exploration permit requirements before lambing season starts in September, the program had to be cut short after drillers encountered the coldest, snowiest conditions in the area in 25 years.

“Everything was frozen solid,” said Fleming. “We managed to get four little reverse-circulation holes in, or five hundred odd metres of drilling. But before the drill tipped up or the diggers slipped into the creek I said let’s stop this and we’ll come back in November (when the lambing season ends).”

The plan is to complete 2,250 metres of core and reverse-circulation (RC) drilling at Golden Progress before the end of the year to investigate the potential for a gold deposit similar to the nearby Macraes gold mine, which contains about 3.4 million oz. of historic production and reserves. The target is a structurally controlled, quartz vein-hosted bulk tonnage gold deposit.

Historic production from Golden Progress amounts to about 5,000 oz. gold from steeply dipping quartz veins at an average grade of about 49 grams gold per tonne. The property contains a sheared vein system with at least 12 structures that have been minimally investigated by 20 RC holes since 1980.

Underworld is earning a 75% interest in the property by funding exploration and making cash payments. Before the beginning of November, Underworld must spend $150,000 on exploration and make a NZ$50,000 payment to Stracon Ltd., the property owner.

Meanwhile, Fleming is trying to secure some additional gold properties to add to the pipeline, rather than putting all the company’s eggs in one or two baskets. The company is waiting for an exploration permit application for part of an historic goldfield in the South Island and is in the process of a negotiating an option on another project on North Island.

Some of the recent financing also will be directed towards the Yukon Territory in Canada, where the company is exploring both sedimentary-hosted and vein-hosted gold mineralization at the 100%-owned White and Black Fox properties.

— The author is a freelance writer specializing in mining issues, and principal of Toronto-based GeoPen Communications ( www.geopen.com ).