Masara Gold Mine – new acquisition
in the Philippines
| Once the commissioning of
Masara is complete, it will
have the capacity to produce
between 150,000 and
200,000 ounces of gold and
300,000 to 400,000 ounces
of silver annually. |
 |
The Corporation’s principal gold asset in the Philippines is the Masara Gold Mine in southeasstern
Mindanao Island. We acquired this interest in Masara through the acquisition, with
our associated Philippines partner, of approximately 72.87% of Apex Mining Company
Limited (“Apex”), which owns Masara. We are in the process of developing Masara including
constructing new processing facilities. Once the commissioning of Masara is complete, it will
have the capacity to produce between 150,000 and 200,000 ounces of gold, plus 300,000
to 400,000 ounces of silver annually.
The mine was previously operated as a small-scale underground operation and ceased
production in March 2000. It is a gold and copper mineral property and the workings on the
site date from before the Second World War. When Apex ceased regular production, it
leased out various parts of its property to sub-contractors in exchange for royalty and rental
payments. These sub-contractors operated on a small-scale basis on different parts of the
property and operated a plant that has been acquired by the Corporation and refurbished to
provide a 500 tpd capacity until the 2,900 tpd processing plant is fully operational in 2007.
Location and geology
The Masara property lies immediately west of the Philippine Fault System. Numerous
porphyry-copper-gold deposits and epithermal gold vein systems are associated with the
Philippine Fault System throughout the larger part of the archipelago.
The two principal types of mineralization found are porphyry-copper-gold and NW-SEtrending
meso to epithermal gold-silver quartz-carbonate veins. Porphyry-copper-gold quartzsulphide
veinlet network-style mineralization is associated with the Middle Miocene dioritic
intrusions located in the western part of the Masara property. The mineralized veins strike at
approximately 140˚, with moderate to steeply dipping tension gashes developed in a leftlateral
shear stress field associated with the Regional Fault System.
The central vein system at Masara comprises several sub-systems and the vein deposits are
empirically classified as ‘clean ore’ or ‘complex ore’. Clean ore is characterized by low
sulphide content and occurs in generally clean-walled tensional structures. Complex ore
characterizes the veins along the main Masara trend. Pyrite, chalcopyrite, sphalerite and
galena are the predominant sulphide minerals and the mineralization is often associated with
appreciable amounts of manganese both occurring as oxide- and carbonate-facies.
Resources
Prior to its acquisition by the Corporation, due diligence studies showed that the Masara
property did not have an up-to-date, independently verified resource evaluation, with the most
recent one conducted by a Philippines government agency in 2004.
Overview of Operations
Masara Gold Mine – new acquisition in the Philippines
For this reason, the Corporation engaged Snowden to prepare an
independent resource assessment based on the historical data,
including that compiled for the 2004 assessment. Management
believes that Snowden’s technical report satisfies the requirements
of the Canadian regulatory authorities on disclosure in relation to
the Corporation’s acquisition of Apex and is NI 43-101compliant
with regard to the reporting of historical data.
Indicated Resources – Masara Mine
| Vein |
Grade
(g/t Au) |
Tonnage |
Ounces |
Don Calixto |
5.8 |
210,000 |
39,000 |
Don Fernando |
7.2 |
201,000 |
47,000 |
Don Mario |
5.7 |
273,000 |
50,000 |
Don Joaquin |
6.3 |
275,000 |
56,000 |
Maria Inez |
7.5 |
47,000 |
11,000 |
Masara/Maligaya |
8.5 |
29,000 |
8,000 |
| St Francis |
5.4 |
84,000 |
15,000 |
| St Benedict |
8.5 |
136,000 |
37,000 |
| Totals |
6.5 |
1,255,000 |
263,000 |
Global grade reported at a 3.5 g/t Au cut-off, and mineable stope width of 1.4 m.
Inferred Resources – Masara Mine
| Vein |
Grade
(g/t Au) |
Tonnage |
Ounces |
Masarita |
5.1 |
327,000 |
54,000 |
Wagas |
4.2 |
430,000 |
58,000 |
Don Calixto |
5.8 |
222,000 |
41,000 |
Don Fernando |
7.2 |
398,000 |
92,000 |
Don Mario |
5.7 |
757,000 |
139,000 |
Don Joaquin |
6.3 |
1,199,000 |
243,000 |
Maria Inez |
7.5 |
288,000 |
69,000 |
Masara/Maligaya |
8.5 |
233,000 |
64,000 |
Bonanza |
6.3 |
36,000 |
7,000 |
Manganese |
7.0 |
168,000 |
38,000 |
Sandy |
5.4 |
254,000 |
44,000 |
St Vincent |
5.4 |
503,000 |
87,000 |
St Francis |
5.4 |
429,000 |
74,000 |
St Benedict |
8.5 |
494,000 |
135,000 |
| Totals |
6.2 |
5,738,000 |
1,145,000 |
Global grade reported at a 3.5 g/t Au cut-off, and mineable stope width of 1.4 m.
A total mineral resource inventory of 1.4 million ounces was reported
by Snowden. A conversion of mineral resources to reserve
classification is likely to require a combination of underground drifting
and sampling on structures, supplemented by further drilling.
The table on the left summarizes the compilation from the historical
data:
Notes:
| (1) |
The table showing resources has been extracted from the
resource estimate compiled from historic data in accordance
with the Canadian National Instrument 43-101 and reported to
the 2004 CIM Definition Standards (Mineral Resources and
Mineral Reserves) by the independent consulting group,
Snowden Mining Industry Consultants Ltd. The estimate has
been verified by Dr Simon Dominy (CEng, CGeol, CPGeo), the
‘Qualified Person’ as defined by NI 43-101. Dr Dominy is
Principal Mining Geologist in the Snowden London office. |
| (2) |
Payable tonnages have been rounded to the nearest 1,000
tonnes to reflect the uncertainty in the estimate. Tonnage has
been estimated using a conservative bulk density of 2.35 t/m3
and diluted to a ‘mineable’ stope-width of 1.4 meters. |
| (3) |
Resources are reported at a cut-off grade of 3.5 g/t Au.
Contained ounces are reported to the nearest 1,000 ounces to
reflect resource uncertainty. |
Since acquisition, an extensive drilling program has been
conducted in preparation for operations, and more than 20,000 m
of diamond drilling has been completed. This drilling has focused
on three selected target vein systems and aims at establishing new,
independently verifiable information of the resource potential as
well as guidance for the ongoing underground development.
In addition to the initial resource and production-related drilling, a
general exploration campaign (including geophysical surveys) was
initiated on the property, with the intention of increasing the resource
base and re-evaluating the large porphyry-copper potential on the
property. The Corporation has organized all available existing survey and geological maps and sections and compiled these into a digital
format for detailed structural evaluation.
| We are working closely with the government of
the Philippines to ensure that all appropriate
environmental permits and operating permits are
in place prior to commencement of operations. |
 |
Mining
The mining methodology of the vertical vein systems chosen to
redevelop the property is mechanized and non-mechanized sub-level
open stoping.
The upper levels of the mine left by historical mining between the
surface and 200 m below are largely inaccessible and mined out.
It appears that there are resources which may occur immediately
below the historic workings and a further down dip that can be
accessed. The sub-level system provides for vein drives at 15 m
vertical intervals with major footwall drives and haulages at 60 m
vertical intervals. Ramp systems to access the horizontal drives will
be provided approximately every 500 m along the strike of the
vein systems.
The ore will initially be sourced from the development of the veins in
the four areas, and stoping will commence early in 2007. Additional
mining areas are also being developed that will allow for flexibility
and possible changes in production due to exploration and sampling
results.
The production ramp up, however, will be largely dependent on the
availability of mining equipment, the rate of underground
development, and the granting of necessary operational permits.
Ore processing
During the year, the Corporation commenced the refurbishment of the
existing processing plant (Phase 1 – 500 tpd) and the design and
preliminary construction work for an additional 2,400 tpd processing
plant (Phase 2), which together will provide a total plant capacity of
2,900 tpd. Commissioning of the refurbished plant is anticipated in
the fall of 2006 and for the new plant in the second calendar quarter
of 2007. Once fully commissioned, the Masara operation is
anticipated to have the capacity to process 2,900 tpd ore which is
expected to produce between 180,000 and 200,000 ounces of gold and 300,000 to 400,000 ounces of silver annually. The
amount of silver will depend on the percentages of treated ore from
the various vein systems as the content of silver varies dramatically.
The Company does not expect to fully utilize the capacity of the plant
in calendar 2007 as underground development will progressively
ramp up toward the end of calendar 2007/early 2008.
Ore will be crushed and screened through a rotating trammel and
then fed to the grinding circuit. The processing plant at Masara will
be a conventional circuit comprising grinding with gravity recovery
of free gold, flotation recovery of fine gold associated with
sulphides to a concentrate, and leach recovery of fine gold in a
carbon-in-leach circuit. Doré bullion will be smelted on site. Process
tailings will be treated through a cyanide destruction circuit prior to
pumping to a tailings storage facility.
Protection of the environment
We are working closely with the local government agencies to
ensure that all appropriate environmental permits and operating
permits are in place prior to commencement of operations. Water
sampling by the local government agencies continues to record any
contamination of the rivers by local small-scale miners. The
construction of the new tailings storage facility will meet all
permitting and environmental control requirements.
Socio-economic development
Local residents in the mine portal areas and within the tailings pond
area have been and are being relocated to a new developed area
for safety reasons. As part of the relocation, a new elementary
school has been built by the Corporation in the Masara area to
provide better facilities and to protect the children from the mining
area.
Tree planting is being conducted and several community
development projects are being carried out to provide safer rights
of way and local transportation routes for school children. An
alliance with a service provider has ensured telecommunications to
mine staff and local residents.
