strike paydirt

trade winds

Prospectors strike paydirt

THE islands of the West ern Pacific are experien cing a gold rush on a scale unprecedented in this century: Fiji, New Zealand, Vanuatu, the Solomon Islands, Papua New Guinea, and even tiny Palau, are being beset by modem prospectors and, most excitingly, all are yielding new discoveries of gold.

The rush developed in Papua New Guinea, fired by the spectacular discoveries at Porgera and Lihir, and has spread in the last year to the other island nations.

These modern prospectors are not the lone adventurers of previous times, but organised exploration groups using ex perienced geologists with sophisticated technologies and are backed by substantial finan cial resources.

This activity has arisen from a world wide resurgence of in terest in gold exploration, but is largely Australian based and financed from Australian sources.

It is an extension of the current gold boom in Australia which has seen the deve lopment of a host of small mines and several large ones, including the highly profitable and much publicised Kidston mine in Queensland.

The rush has attracted both established companies and groups looking to raise capital through the Australian stock markets; for these the Pacific Islands have become a fashion able “address”. This boom has

As the Pacific gold rush gathers momentum, consultant W.A. McGEE surveys the scene with particular focus on the prospectors, their dis coveries and their dreams.

the potential to bring great benefits to the people of the islands, but there are risks, and it requires careful management by the governments involved.

The prospectors are hoping to find another gold deposit like that discovered on the small island of Lihir in Papua New Guinea, by Kennecott Ex plorations (Australia) Ltd., the local arm of the giant American copper company, though a somewhat lesser discovery would be acceptable.

In early December, informa tion on the size of this deposit was at last released, effectively quelling the speculation that had been rampant.

The reserves announced are 137 million tonnes with an average grade of 2.7 grams per tonne of gold, implying that the deposit contains some 360 ton nes of gold metal. On present prices this amount of gold has a value of about SUS4,OOO mil lion.

The figures describe the de posit as it is in the ground, and do not report the quantities that can actually be extracted, although at least 90 per cent of this gold is likely to be econo mically recoverable. Kennecott and their junior Australian part ner in this project, Niugini Mining Ltd., have reason to feel satisfied with their explora tion team.

Interestingly though, after the announcement, the price of shares in Niugini Mining fell on Australian markets as investors shaved off the over-expecta tions of the deposit.

They apparently preferred not to speculate on extensions to it, even though the

Panning for gold in a Vanuatu stream.

announcement included a com ment that limits to the miner alisation had not been fully established.

In another twist, it is strongly rumoured that Kennecott, which has recently embarked on substantial new investment in its large United States copper mines, is seeking a new partner to whom to sell some of its equity in the Lihir project.

This would give the opportunity for a newcomer to have an easy, if perhaps expen sive, entry to the Western Paci fic gold province. Kennecott have acquired over a long period the reputation of failing to retain their discoveries (for example PNG’s Ok Tedi mine) so this development should not, perhaps, have been unex pected.

Who is likely to take up the equity, if indeed they do divest, is arousing some curiosity.

Vanuatu provides an interes ting focus for the new Pacific Islands rush.

Whereas previously the country had only meagre association with the mining in dustry, almost all of it is now covered by exploration conces-

sions which have been taken up within the last year.

A substantial manganese mine had operated on the island of Efate for about 20 years but it became uncompeti tive during the seventies and was closed.

Since the discovery of the immense copper deposit on Bougainville in the mid-sixties, several companies have recon noitred the islands of Vanuatu for large copper and other base metal deposits, but without

making a discovery.

The only known gold occurr ence had been a minor alluvial showing in central Espiritu San to, a discovery of the 1930’s gold boom. This was inspected by a mining company about four years ago, but failed to stimulate any continuing in terest.

Despite the production of a series of excellent maps and reports by government geolog ists describing the geology of the islands and clearly indicat ing that much is highly prospec tive for gold deposits, the coun try had not been systematically prospected for gold before the present rush.

By late 1984, as the Papua New Guinea discoveries be came generally known, the prospects of Vanuatu began to attract the attention of explora tion companies.

In 1985 three groups, City and Suburban Properties Ltd., Dominion Gold Mines N.L. and the Canyon Resources Pty. Ltd. consortium, im plemented major field prog rams. It is these who currently have the largest holdings of ground in the country.

All operate from Sydney, though interests from elsewhere in Australia and the United States are represented in their consortia.

City, who operate in Vanuatu through their subsidiary United Resources (Vanuatu) Ltd., have small gold mines in Aus tralia and have a very large exploration program in Papua New Guinea (PIM, April page 33).

To make an initial assess ment City brought in a ship equipped with a helicopter to

move their geologists around the islands. This technique was developed by Conzinc Riotin to Australia Ltd. in the sixties to prospect the Pacific Islands for copper.

The helicopter permitted rapid and efficient deployment of the geologists, although the island people in remote areas were sometimes surprised by their precipitate arrival. The ship, the M.V. United Venturer, has been retained in Vanuatu to serve as a base for the con tinuing operations.

A 25 metre steel-hulled cata maran, it is equipped with a laboratory and advanced com munications equipment, as well as its helicopter. As a base, it offers City’s geologists comforts seldom available on a field project.

City has announced dis coveries of gold on both Espir itu Santo and Malekula. As yet there has been only preliminary evaluation by surface methods of any of the prospects, but drilling to test for mineralisation at depth on one of them is planned to commence shortly.

In the southern part of Espir itu Santo, City has found three areas of gold mineralisation and these have been named the Upper Tufwakar, the Tafuse and the Webe Creek Prospects.

Surface samples carying as much as 20 grams per tonne of gold have been found and, just as importantly at this early stage, large areas have been recognised in which the rocks have been affected by heated, and possible mineralising, waters.

On Malekula, a large vein of purple quartz carrying gold has been discovered. The early work indicates it has a width of about 5 metres and occurs over a length of at least 1 kilometre.

In one section a gold tenor of around 3 grams per tonne across the full width was obtained. City’s geologists have optimistically named it the Amethyst Lode, a name shared with a fabulously rich purple vein on the old Creede silver field in Colorado.

It remains to be seen if continuity of the grade can be established before this vein can be considered a resource.

Nearby, a zone of altered rock from which individual rock samples have been found to carry gold, with values up to 34

Many prospectors are now using ship-borne helicopters to cover more ground.

grames per tonne, has been discovered. These encoura gingly early results clearly de monstrate that the province has gold mineralisation of signi ficance and requires further prospecting.

Also on Espiritu Santo, City has recognised gold in alluvial deposits in the Big Bay area and is assessing the potential of the prospect.

This is where Quiros and his Spaniards sojourned during their abortive colonisation attempt during the sixteenth century. It would be an odd twist to their sad adventure if a gold deposit was to be found here.

Minor gold values have been reported from City’s ground in the southern part of Pentecost, but this prospect is considered of less importance than the other discoveries at this stage.

Other groups have been less forthcoming than City on their results. The Dominion Gold and Canyon reconnaissance programs are known to have shown some indications of mineralisation and these are to be followed up.

Canyon, a private company also active in Australia and New Zealand, holds ground in its own name and also manages the programs on ground held by its associated company, Mumbil Mines N.L. Canyon is in the process of transferring its interest in Vanuatu, both direct and through its shareholding in Mumbil Mines to another associated company, Delta Gold N.L.

Finance for the consortium’s operations in Vanuatu is being largely provided by the Perth based Paragon Resources N.L., which is earning equity in the project.

Paragon, formed as part of the restructuring of the Austra lian Selection Trust group in 1985, has substantial assets, including a controlling interest in a gold deposit near Temora in New South Wales.

The Canyon consortium holds ground throughout Vanuatu, some of which is close to the discoveries announced by City. Their Fatmalapa pros pect on Efate has attracted some attention and has been inspected by a number of geologists from other com panies.

The Canyon geologists con

sider the prospect to be a fossil geothermal system with poten tial to host gold mineralisation.

The Dominion program arose from a project originally planned by Anaconda Austra lia Inc,, a division of a large American mining company.

When Anaconda withdrew from operations in this region, the project was carried on by a consortium which included Dominion Mining and Oil N.L. and several of the ex-Anaconda geologists.

Dominion Mining and Oil has income from oil production in the United States and is in volved in oil and mineral ex ploration in Australia.

Dominion Gold Mines N.L., under which the consortium operates in Vanuatu, also holds ground near the City dis coveries as well as promising areas on other islands.

Their early reconnaissance, like the City program, was made with a ship-based helicopter but they have re ported only that encouragingly anomalous values have been discovered. This group is active also in the Solomon Islands.

Other groups active include Jason Mining Ltd, which is sponsored by Sydney interests, Nationwide Resources (Vanuatu) Ltd also from Syd ney, and Kia Ora Gold

Corporation N.L., a Perth group.

Besides its Vanuatu opera tions, Jason is involved in seve ral other gold mining and ex ploration projects in Australia and Indonesia, and has its technical management in the hands of the prominent Sydney consultants, A.C.A. Howe Aus tralia Pty Ltd.

Kia Ora operates a small gold mine in Western Australia and has interests in exploration programs elsewhere in Aus tralia.

Another company operating in Vanuatu is Austpac Re sources N.L.. also from Syd ney. It is managed by the well-known geologist Mike Tur bott, who previously, as ex ploration manager for Kenne cott, was responsible for the program that led to the Lihir discovery.

Several groups are assemb ling portfolios of properties with which they plan to float in Australia.

Vanuatu is a particularly favorable country for such en trepreneurial groups to acquire ground. Situated on the island arcs of the Pacific rim, the “address” is prime.

The country is readily accessible from Australia and is regarded as having a stable government which is sympa-

thetic to Australian investment.

Yet for the speculators who provide the capital it retains an air of tropical adventure.

Exploration tenements offered by the government are small and carry reasonable ex penditure commitments. And discoveries are being made.

The exploration boom in Vanuatu is being encouraged by a pragmatic government atti tude. Previously, or at least over the last twenty years when large mineral deposits have been the specific target, the risk of exploration in the western Pacific Islands has largely been carried by the major mining companies.

Some of these, for instance City, are quite substantial and generally all would seem to have or to be able to obtain sufficient resources to explore for and to develop moderately sized mines.

When large discoveries are made, if Lihir type deposits are indeed lurking in the country, the major companies will appear to provide the organisa tion necessary to exploit them.

In the future, as the explora tion in the Pacific Islands moves from the present reconnaiss ance programs into more de tailed phases, it will fall to the governments to explain to the affected people what the com panies are doing and to establ ish mechanisms to arbitrate any disputes that arise.

For efficient and just exploita tion of mineral resources it is necessary that, whatever the land rights, mineral rights be reserved to the state and this principle is recognised in the legislation of most of the West ern Pacific Island nations.

That the minerals are the property of the government and that the company, by its licence, acts as a government agent must be made clear to landowners by government officers.

A taint of colonialism can arise if the companies are left to make these explanations. The Vanuatu government, with its high level of popular support and its effective system of con tact with the people, is well equipped to meet problems of this nature as they arise.

With the very high chances of establishing a profitable gold mining industry the outlook for this Pacific nation is promising.

Even exploration work can help bring employment.