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The Unique World of Minerals Mineral Drawings in Russia

February 16, 2014

Gold

Mongolian Gold Mining Opportunity

 

 


Why Mongolia?

Mongolia is the new frontier for gold and copper exploration. Mongolia's unique geology, proximity to Chinese metal markets, recent significant mineral discoveries and economic and political reforms have all combined to create an environment favorable to mineral exploration and mining.

Mining in Mongolia

The mining sector is Mongolia's single largest industry, accounting for 55% of industrial output and more than 40% of export earnings.

In recent years, gold mining has emerged as one of the most dynamic sectors of the Mongolian economy. Gold production has grown tenfold from 1993 to 2003, with 11.'1 metric tonnes of gold being produced in 2003.

Foreign investment and direct participation in the exploration, extraction and processing of mineral resources is actively encouraged by the Mongolian government. Over 400 mining licenses have currently been issued and more than 200 foreign and joint ventures are conducting mineral exploration in Mongolia.

The Mineral Resources Authority of Mongolia (MRAM) regulates mineral and mining activities in Mongolia.

An exploration license grants to the holder the exclusive right to conduct exploration within the boundaries of the license, the right to transfer or sell the license to others.

The holder of an exploration license has the right to apply for a mining license at any time during the term of the license. The holder of a mining license has the exclusive right to engage in mining of minerals within the area covered by the mining license and the right to sell minerals mined at market prices on domestic and foreign markets. The mining license holder also has the right to use water derived from sources within the license area, subject to compliance with applicable laws.

A mining license is granted for an initial term of 60 years and the holder has the right to extend the term of the license once for an additional 40 years. The government royalty rate for all minerals is 2.5% of the sales value with the exception of a 7.5% royalty on sales of gold extracted from alluvial (placer) deposits.

Opportunities

Over the last few years exploration programs have been carried out on the company's licenses which initial reconnaissance indicated greatest interest. In addition to our geological staff we engaged the services of the Russian Academy of Sciences from the Institute of Geochemistry, which has carried out fieldwork on our Ikh Sala and Batin Shand properties as well as processing a large number of samples analytically.

Properties

I. Ikh Sala (Copper gold deposit)

We have identified an area of major interest in our Ikh Sala license with geochemistry, magnetic IP geological surveying and surface sample analysis showing a porphyry copper-gold system exists over a substantial area. Out highest grade chip sample analysis showed gold at 20 gr/tonne.

Porphyries are large tonnage mineral deposits commonly associated with gold, molybdenum and copper. Porphyries are divided into different types based on their metal content - copper, copper -gold, copper - molybdenum and molybdenum. A typical copper - gold porphyry deposit contains hundreds of millions to billions of tonnes of ore grading from 0.2% to more than 1% copper and 0.4 to 2 grams of gold per tonne.

The copper - gold porphyry at Ikh Sala is over a substantial area. The total area of interest extends over a 30 kilometers length.

Geology and Mineralisation

1. Introduction

The results of the prospecting work on the Ikh Sala area in 2002 identified the potential for copper-gold porphyry, gold porphyry, and slate belt orogenic gold style mineralisation. This style of mineralisation was discovered on the western portion of the Bayan uul volcanic depression however, it has not been previously recognized in the eastern portion of the Bayan uul depression. The local topography is comprised of undulating hills ranging in elevation from 1530 meters to 1580 meters.

2. Location

Ikh Sala is located approximately 180 kilometers south-west of the capital Ulaanbaatar in the Tuv province. The unpaved main road between Ulaanbaatar and Dalanzagad crosses the property and the journey from Ulaanbaatar is 4 to 5 hours by car. We hold and manage 10 nearly contiguous licensed areas totaling 237,798 hectares. These licences have been held by the company since 2002 and are granted by the Mineral Resource Agency of Mongolia.

3. Tectonic Setting

The tectonic situation of Ikli Sala has a very complicated character. The area is located on a hanging wall of a deep-seated fault zone which separated the Khangai and Khenti blocks of Devonian-Carboniferous Khangai-Khenti turbite basin.

From Permian to late Triassic times when the Mongol-Okhotsc Ocean was closing step-by-step by step in a north-easterly the Khenti block was subducting to the Khangai block.

Simultaneously a marginal zone of Khangai-Khenti basin subducted to the north-west and south-east.

The result of this subduction is a Permian-Triassic volcanic-plutonic belt. This deep faulted zone was active beginning from the low Paleozoic to Cretaceous period. Relating to this are many locations of magmatic type rocks representing this period.

4. Geology

Triassic andesite-basaltic lavas and Permian sandstone and carbonaceous siltstone underlie the Ikh Sala area. In the middle of the andesite flow five separate volcanic pipe structures are mapped. Monzo-granite, monzogranodiorite, quartz diorite and quartz porphyries intruded into the Triassic andesites and are outcropped along the NNW-SSE trend. These sequences are intruded by young diorite porphyry and quartz porphyry at the central part of the Jkh Sala alteration zone.

Major porphyry-Cu mineralisation is associated with these porphyry intrusions. Minor dikes of several meters thickness postdate the mineralisation.

The porphyry system at Ikh Sala has an apparent chimney-like irregular shaped stock several hundred meters thick. The central part of the stock is geographically depressed and there are no outcrops above the central part at present. The southern part of the porphyry system is rounded by hydrothermal breccias.

5. Sulfide and alteration zoning

Sulfide minerals exhibit a zonal structure fringing the central part of the porphyry system. The inner zone is seen to be characterized by chalcopyrite-pyrite-molybdenite zone outcrops along the ore controlling the north-west rending fault in a very limited area.

Two other assemblages have very widespread distribution (approximately 1000 to 1500 meters thick) and are mainly overprinted on the andesite.

Alteration zoning is complicated due to 1 ater overprints on t he primary a Iteration. At t he mineralisation level the alteration changes from potassic (biotite, K-feldspar) to propylitic (chlorite, epidote) outwards and illite alteration covers and overprints on the potassic and propylitic alteration. The illite alteration contains pyrophillite near the surface. Near the hydrothermal breccias along the intense fractured zone are out cops of advanced argillic alteration that includes pyrophillite, alunite and albite. Later super gene kaolinite alteration overprints mainly illite alteration zone.

6. Style of mineralisation

The mineralisation of the Ikh Sala area is characterized by stock working veins. The veins are less than several centimeters in width and mostly less than one centimeter. These quartz veinlet stock works are outcropping along the ore controlling fault work zone. The size of these outcrops is less than 15 meters by 10 meters and is characterized by the dominant presence of biotite. The veinlets stock work generally exhibits an irregular shape, sometimes contains K-feldspar.

7. Geophysical characters of ore mineralized areas

The Ikh Sala area consists of many local anomalies on the air born magnetic/radio-metric survey and petrographic analysis define extensive exposures of rock as little porphyry intrusions rounded by large scale hydrothermal alteration zones.

Hydrothermal a Iterations according to the results of detailed geophysical investigation a re characterized by high anomalies of chargeability and sometimes by magnetic. The combined characterizations of geophysical anomalies are mostly similar to the typical geophysical models of porphyry deposits.

8. Geochemical characters of ore mineralized areas

Rock chip sampling, which was carried out in the covered areas, contain up to 20.0 g/t Au and soil samples contain from 0.05 g/t au to 1.5 g/t Au. This type of sampling has been carried out over approximately 20 kilometres2. Also in this area very widespread (3 x 1.5 kilometers) geochemical anomalies of As, Cu, Mo, Bi, Ag, Au and B were recognized. Lead, zinc and tungsten are minor elements in the geochemical anomalies. Au, Cu, Mo and Bi characterize the inner-zone of the porphyry type mineralised area and As, Ag and Pb characterize the outer zone.

It is believed that Ikh Sala is similar in many respects to Ivanhoe Mines Oyu Tolgoi (Turquoise Hill) project in the Soutli Gobi region of Mongolia. Ivanhoe Mines latest press release estimates, the Oyu Tolgoi project contains "resources worth over US $60 billion of gross metal value at todays prices". A new, independent AMEC estimate calculates that Oyu Tolgoi contains approximately 11.2 billion pounds of copper and 12.4 million ounces of gold indications are that Ikh Sala is probably a larger deposit with equal or better grades of both copper and gold but with the advantage of being closer to the surface and thus able to be mined by less expensive open-pit methods.

For contacts:  GAIA EXPERT Research & Consulting Group FRANCE-CANADA

 

 

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II. Khugirt (Hard rock gold deposit)

Objectives

Phase 1

The company has spent substantial funds to date on geological surveying and surface sample analysis. It seeks to secure additional funds to continue the exploration and development programs at Ikh Sala and Khugirt, in particular:

  • Proving the deposits and their extent through geological surveying and drilling costing the development of the mine and required infrastructure for mining
  • Conferring with potential partners;
  • Maintaining dialogue with the Mongolian and Chinese governments;
  • Maintaining dialogue with current and potential equity sponsors/trade buyers.

Phase 2

1. Ikh Sala - Development of mining operation

Assuming Ikh Sala is of a similar size to Ivanhoe Mines Oyu Tolgoi project, the development cost could be in the region of US $800 million. Ivanhoe have forecast development costs of up to US $1 billion for its Oyu Tolgoi project. It is expected the development cost for Ikh Sala would be less as some of the deposit at Oyu Tolgoi necessitates underground mining which is more expensive as opposed to the Ikh Sala deposit which is close to the surface and can therefore be mined by open pit methods. The deposit is however further from existing infrastructure, particularly electric power and railroad lines, which would add to development costs.

2. Khugirt - Development of mining operation

Cameco Corporation have recently completed development and construction of the Boroo hand rock gold mine located in the northern part of Mongolia, 110 kilometers north west of Ulaanbaatar. Cameco's total development costs were approximately US $80 million. The Boroo gold mine commenced commercial production on 1 March 2004. In contrast with Khugirt, Boroo had access to highway, railroad and electricity. Khugirt is approximately 160 kilometers from the nearest railroad and electricity supply and 240 kilometers from Ulaanbaatar (200 kilometers of (hat being dirt roads). It i s assumed at this point the development costs for Khugirt would be in the region of US $ 100 million.

Additionally we have proven over 200 kilos of alluvial gold at one gram per ton, which is on the Khujirt property, and mining of this would allow us to further study the bedrock structure as well as providing a modest cash flow in the interim. Establishment costs for an alluvial operation would be US$500,000 and we would complete the exercise in two years with a net return of approximately $ 1,000,000. We have made no decision regarding alluvial mining at this point, as we did not wish to be distracted from our main direction.

Proposal

It is estimated that to complete phase 1 the company will need approximately US $10 million. The company intends to raise the money by a stock exchange listing. The current advice is that the preferred stock exchange is the New Zealand/Australia joint listing, which is tailored to suit startup companies, and growing businesses and as a result its rules have been designed to reflect these companies' unique requirements. Such a listing has the following advantages:

  • No minimum shares to be in public hands;
  • No trading record requirement (normally a 3 year trading record is required);
  • No prior shareholder approval for transactions;
  • No minimum market capitalization;

At the same time the company will enjoy the benefits of being quoted on the exchange, respect, an international profile and exposure to liquidity. This will be important as the company moves to phase 2.

We intend to raise this money by inviting a number of individuals along with the existing investors to fund the companies listing.

For contacts:  GAIA EXPERT Research & Consulting Group FRANCE-CANADA

 

 

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