RNS Number:9725A
Moydow Mines International Inc
04 April 2006
MOYDOW MINES INTERNATIONAL INC.
Annual Information Form
For the year ended December 31, 2005
Moydow Mines International Inc.
Suite 1220, 20 Toronto Street
Toronto, Ontario M5C 2B8
TABLE OF CONTENTS
Item 1. Cover Page Cover
Item 2. Table of Contents 2
Item 3. Corporate Structure 3
3.1. Name and Incorporation 3
3.2. Intercorporate Relationships 3
Item 4 General Development of the Business 4
History of the Moydow Group 6
Item 5. Description of the Business 10
General 10
Hwidiem 10
Okumpreko 15
Kanyankaw 27
Port Loko 38
Dala 46
True Grit 57
Other properties 62
Risk Factors 62
Item 6. Dividends 65
Item 7. Description of Capital Structure 65
Item 8. Market for Securities 66
Item 9. Escrowed Securities 66
Item 10. Directors and Officers 66
Item 11. Promoters 68
Item 12. Legal Proceedings 68
Item 13. Interest of Management and Others in Material Transactions 68
Item 14. Transfer Agent and Registrar 68
Item 15. Material Contracts 69
Item 16. Interest of Experts 69
Item 17. Audit Committee 69
Item 18. Additional Information 70
ITEM 3: CORPORATE STRUCTURE
3.1 Name and Incorporation
Moydow Mines International Inc. (the "Company") was incorporated under the laws
of the province of Alberta, Canada, by certificate of incorporation issued
December 12, 1972, continued under the laws of the province of British Columbia
on January 16, 1981 by certificate of incorporation and continued under the laws
of the province of Ontario by articles of continuance effective on December 9,
1998. The Company's registered and head office is located at 20 Toronto Street,
12th Floor, Toronto, Ontario, M5C 2B8. The Company also has offices in Dublin,
Ireland, in Accra, Ghana, in Freetown, Sierra Leone and in Gander, Newfoundland.
The Company's outstanding common shares are listed on both the Toronto Stock
Exchange and the Alternative Investment Market ("AIM") of the London Stock
Exchange under the symbol "MOY". Further information on the Company can be
found on the Company's website at www.moydow.com or on the public filings on
SEDAR at www.sedar.com.
3.2 Intercorporate Relationships
The following diagram sets forth the relationship of the Company including its
material subsidiaries and associated companies (the Company together with such
subsidiaries and associated companies is collectively referred to herein as the
"Moydow Group"), including their jurisdictions of incorporation, and the
percentage interests of the Moydow Group in its current material mineral
properties:
Notes:
1. Shankill Limited (Isle of Man) ("Shankill (Isle of Man")) was incorporated
under the laws of the Isle of Man on April 5, 2003. Shankill (Isle of Man)'s
subsidiaries were created as follows:
* Shankill Limited (Ghana) ("Shankill (Ghana)"): incorporated on August 7,
2003;
2. Haddington Limited (Isle of Man) was incorporated under the laws of the Isle
of Man on May 7, 2003.
3. The Company holds a joint venture interest in the Kanyankaw gold property
with Antubia Resources Limited ("Antubia"), a subsidiary of Glencar Mining plc
("Glencar"). See "Description of Properties - Kanyankaw Property".
4. In 2004, Moydow signed an agreement with PW Limited to earn a majority
interest in the Nyaduom and Kushea mining leases, known as the Okumpreko gold
project. In early 2005, Moydow and its partner, Concord Minerals LLC entered
into an agreement with Endiama, the Angolan state diamond mining company and
Cimader, an Angolan company, to explore for alluvial diamonds on the Dala
concession in Angola. Moydow can earn a 16.5% interest in the concession by
spending $2.5 million by October 2007.
5. On December 9, 1998 the Company completed the acquisition (the "RTO
Transaction") of all of the outstanding shares and warrants of Moydow (Isle of
Man) in consideration for shares and warrants of the Company and commenced its
current business activities. In accordance with the terms of the RTO
Transaction, the name of the Company was changed from Westley Mines
International Inc. to its present name, the management of Moydow (Isle of Man)
took over management of the Company and the outstanding common shares of the
Company were consolidated on a 12 for 1 basis. The RTO Transaction resulted in
the former shareholders of Moydow (Isle of Man) owning, immediately following
the completion of such transaction, over 90% of the outstanding shares of the
Company. Moydow (Isle of Man), which was incorporated under the laws of the
Isle of Man on January 27, 1992, holds an interest in a gold mine and several
exploration and development properties in Ghana.
ITEM 4: GENERAL DEVELOPMENT OF THE BUSINESS
Overview
The Company is engaged primarily in the acquisition, exploration and development
of mineral properties. The Company has focused its exploration efforts in
Africa and, in particular, the historical gold producing regions of Ghana
(formerly the Gold Coast), Angola and Sierra Leonne. The property portfolio
currently includes interests in properties in Ghana - Kanyankaw, Hwidiem and
Okumpreko, properties in Sierra Leone, Angola and Newfoundland.
On March 1, 2006 Moydow announced that Moydow and Diamond Fields International
Ltd. (TSX: DFI) ("Diamond Fields") have reached an agreement effective February
28, 2006 (the "Agreement") pursuant to which Moydow security holders will
exchange their Moydow securities for securities of Diamond Fields (the "
Acquisition"). The Acquisition is conditional on, among other things, the
approval of the shareholders of Moydow. Diamond Fields is engaged in mineral
exploration and development worldwide. The information that follows concerning
Diamond Fields is based upon information provided by Diamond Fields.
Diamond Fields' principal assets consist of its Namibian marine diamond mining
project, and its exploration portfolio of diamond and gold properties. Diamond
Fields' 71,600 hectare concessions offshore Namibia have been worked since the
summer of 2005 by Diamond Fields' own marine diamond mining vessel, the DF
Discoverer. To date, 11,310 carats of diamonds have been recovered by the DF
Discoverer, and 9,494 carats have been sold, generating proceeds of
US$1,704,119, and the ship is currently working in the Diaz Reef, an area known
to host diamonds of larger average stone size than those recovered to date.
In Liberia, Diamond Fields is moving forward aggressively with its diamond and
gold exploration programs on its 1,813 square kilometre Grand Cape and Grand
Gedeh licenses. Earlier this month Diamond Fields announced the discovery of
kimberlite at Grand Cape in an area forming a swampy depression suggesting the
structure of a pipe of about 3 kilometres in size, along with initial results of
its extensive grid sampling work including the Henry Town and Barteajam gold
prospects.
As a condition to the Acquisition, Moydow is required to complete a private
equity placement ("the Placing") to raise net proceeds of at least US$1.8
million. More details of the intended financing will follow. Upon completion
of the Placing and the satisfaction of all conditions and regulatory
requirements, Moydow shareholders will exchange all of their Moydow shares
including shares to be issued as part of the Placing for a total of 75,412,208
Diamond Fields shares, with warrants and options of Moydow being exchanged for
warrants and options of Diamond Fields in proportion to the share exchange.
Diamond Fields will acquire all of the issued shares of Moydow and the shares to
be issued pursuant to the Placing. Diamond Fields currently has 113,118,312
outstanding common shares. Upon completion of the proposed Acquisition Diamond
Fields will have 188,530,520 shares in issue of which Moydow shareholders
(including the shareholders pursuant to the Placing) will own 40%.
The Acquisition is subject to, among other things, receipt of all necessary
regulatory, court and stock exchange approvals, Moydow shareholder approval, a
valuation and/or fairness opinion by each company and lock-up agreements
executed by Noel and Brian Kiernan under which they will have agreed to vote in
favour of the merger and entry of the parties into a definitive agreement. In
the event that the merger is not completed under certain circumstances, the
party who terminates the agreement will be required to pay to the other a break
fee of US$250,000.
Diamond Fields and Moydow have agreed that following completion of the
Acquisition, Diamond Fields' board will consist of three directors from Diamond
Fields' current board, three directors from Moydow's current board, and one
director agreed upon by directors of both companies. It is the intention of the
parties that the President and Chief Executive Officer of Diamond Fields on
conclusion of the transaction will be Brian Kiernan, the current Chief Executive
Officer of Moydow.
4.1 History of the Moydow Group
The Chairman of the Board of the Company, Noel Kiernan, has over 20 years of
experience in West Africa and is the Ghanaian Honourary Consul to Ireland. Mr
Kiernan was the original applicant for the property now known as the Teberebie
gold mine located in Ghana and, as managing director of the project, brought the
mine through feasibility and into production. The Teberebie gold mine has
produced over one million ounces of gold since it commenced production in the
early 1990's and is now owned and operated by Ashanti Goldfields Co. Ltd. Noel
Kiernan is also the Chairman of Pontil Minerex Limited, a drilling company which
is active in West Africa and from time to time provides drilling and other
services to the Moydow Group.
In March 1989, Noel Kiernan formed Moydow (Ghana) to acquire the Kanyankaw
property, which was subsequently the subject of an agreement with Glencar.
Brian Kiernan joined the management of the Moydow Group in 1993, as Chief
Executivr Officer of Moydow (Isle of Man), and Joseph Breen joined as Chief
Operating Officer of Moydow (Isle of Man) in 1996 after three years of
consulting for Moydow (Isle of Man).
Moydow (Isle of Man) began operations in June 1994 with the acquisition of a 42%
interest in Wassa Holdings, which held a 90% interest in Satellite, which held a
100% interest in the Wassa Property. Over the next three years, Moydow (Isle of
Man)'s interest in Wassa Holdings was diluted to 34%; the remaining 66% of Wassa
Holdings is held by Antubia, a subsidiary of Glencar. Satellite holds a 30-year
gold mining lease for the Wassa Property, which expires in the year 2022.
Moydow (Isle of Man)'s interest in the Ntotoroso Property was obtained in
September 1996 with the acquisition of Moydow (Ghana) from Noel Kiernan, then
Chairman of the Company. Moydow (Ghana) held the property indirectly through
its 60% ownership of Rank. Pursuant to an October 1997 agreement, Normandy
LaSource, a subdiary of Normandy Mining Limited, held 40% through their
commitment to fund $2.5 million of exploration expenditures by June 30, 1999,
which was achieved. Normandy LaSource increased its ownership through its $4
million funding of further exploration expenditures and holds a 50% beneficial
interest in Rank. In early 2002, Newmont Mining Corporation acquired Normandy
Mining Limited.
Moydow (Isle of Man)'s interest in the Kanyankaw prospecting licence was
obtained in September 1996 with the acquisition of Moydow (Ghana) from Noel
Kiernan, a related party. Moydow (Ghana) held the licence as a joint venture
with Antubia. Currently, the partners have agreed to split the property into
two parcels and application for the property split was approved by the Ghanaian
Minerals Commission.
West Africa has a long history of mineral production that dates back to the 10th
century A.D. and possibly as early as the 5th century B.C. A significant gold
trade began with overland transportation to North Africa and the middle east in
the 12th and 13th centuries. As European economies grew and the great marine
explorers of the 15th century took to the seas, French, Dutch, English and
Portuguese merchants launched aggressive trading activities between Europe and
West Africa. Gold was the most valuable commodity in this lucrative trade.
In the 18th and 19th centuries, the region was colonized and the "Gold Coast"
was carved into dependencies of Portugal, England, and France. France colonized
most of the region covering Senegal, Guinea, Cote d'Ivoire, Mali, Dahomey and
Niger. England became the protector of Sierra Leone, Ghana, Upper Volta and
Nigeria. The early history of Ghana and Mali is somewhat entwined because the
tribes of this region were nomadic. Ghana appears to have been the principal
source of West African gold and Mali a subsidiary source and main route for gold
that found its way to North America, Europe and the Middle East in the 13th and
14th centuries. The first record of gold from the region is connected with an
account that Emperor Cainca Moussa brought four tons of gold to Mecca on a
pilgrimage in 1433.
Mineral Rights in Ghana
Under the constitution and the mining laws of Ghana, all minerals in Ghana in
their natural state are the property of the state and title to them is vested in
the President on behalf of and in trust for the people of Ghana, with rights of
prospecting, recovery and associated land usage granted by the state under
licences or leases. Three types of tenure are granted as a company progresses
through the reconnaissance, exploration, development and production phases: a
reconnaissance licence, a prospecting licence and a mining lease. In addition,
a licence is required for the export or disposal of minerals and the government
has a pre-emptive right over all minerals produced. Activities such as the
diversion of water require separate licences or consents. A rental fee is
payable to the government in respect of licences and leases.
A reconnaissance licence permits the holder to carry out geophysical,
geochemical and photo-geological surveys, but not drilling, excavation or
subsurface activities. They are granted for a period of up to twelve months and
may be renewed, provided the renewal application is made at least three months
prior to the expiration of the licence and the government determines that the
renewal is in the public interest. While a reconnaissance licence is not
necessary in order to secure a prospecting licence, it does grant the holder
with the exclusive right to obtain a prospecting licence in respect of the lands
/minerals.
A prospecting licence permits the holder to carry out both reconnaissance work
and surface excavation and drilling work, including trenching. Prospecting
licences are granted for a period of up to three years and may be renewed for
additional periods of two years, provided the renewal application is made at
least three months prior to the expiration of the licence and the government
determines that the renewal is in the public interest. Upon the renewal of a
prospecting licence, the area covered by the initial licence may be reduced by
one-half of the area covered by the previous licence. The licence holder is
able to select the areas to be eliminated upon renewal. If a licence holder
fails to expend any monies that the holder designated in its program for
exploration under the prospecting licence, then such non-expended monies will
become a debt due to the Republic of Ghana.
A mining lease grants rights to take all reasonable measures on or under the
surface to mine the mineral to which the mining lease relates, to erect
necessary equipment, plant and buildings, to prospect within the mining area and
to stack or dump mineral waste in an approved manner. A mining lease may only
be obtained by the holder of a prospecting licence who has given notice to the
government that a mineral covered by the terms of the licence exists in
commercial quantities, provided the proposed development plan ensures that
mining operations will be carried on in an efficient and environmentally safe
manner. The application for the mining lease must be made within three months
of such notice. A mining lease may also be obtained on request by persons who
do not hold a relevant prospecting licence over an area, but such grants are
discretionary.
A mining lease normally is valid for 30 years although the Ghanaian Government
may, where it considers that it is in the national interest to exceed this time
limit, direct that the grant of a mining lease exceed 30 years. A mining lease
may be renewed for an additional period of 30 years provided that the renewal
application is made no later than one year before expiry of the initial lease.
Persons proposing to undertake the mining and processing of minerals are
required to register the undertaking with the Environmental Protection Agency
(the "EPA") and obtain an environmental permit prior to commencing this
undertaking. Additionally, no person may commence activities in respect of the
undertaking which, in the opinion of the EPA, has, or is likely to have an
adverse effect on the environment or public health unless, prior to the
commencement, the undertaking has been registered with the EPA and an
environmental permit has been issued by the EPA in respect of the undertaking.
An environmental impact assessment ("EIA") is required to be submitted to the
EPA prior to issuance by the EPA of any environmental permit where the
undertaking is the mining and processing of minerals in areas where the mining
lease covers a total area in excess of 10 hectares. The grant of a mining lease
takes place upon approval of the EIA. A holder of a mining lease is obliged to
commence commercial production on the date specified in a program which it has
submitted to the government and to develop/mine the mineral in accordance with
such programs.
The EPA is required to hold a public hearing in respect of an application for an
environmental permit where there is material adverse public reaction to the
commencement of the proposed undertaking, where the undertaking will involve
dislocation, relocation or resettlement of communities, or where the undertaking
could have extensive and far reaching effects on the environment. Where an EIA
is ultimately found to be acceptable to the EPA, the environmental permit will
be required to be issued to the applicant. The permit is valid for 18 months
from the date of issuance. Failure to commence operations of the undertaking
within that time renders the permit invalid and the applicant is required to
resubmit an application to the EPA and provide reasons for the new application.
After commencement of mining operations, the applicant is required to apply for
an environmental certificate that may be issued subject to terms and conditions.
A certificate may not be issued by the EPA until the person responsible for
the certificate application has submitted to the EPA evidence or confirmation of
actual commencement of operations, acquisition of other permits and approvals
where required and compliance with mitigation commitments indicated in the EIA
or preliminary environmental report.
A mineral right or interest may not be transferred, assigned or otherwise dealt
with in any other manner without the Minister of Energy and Mines' prior written
approval. Also, a company holding, directly or indirectly, a mining lease in
Ghana must obtain the written consent of the Minister of Energy and Mines before
it undertakes any action which would result in a change of control of such
holder. The Ghanaian government must be advised of all changes in "significant
shareholders" of such a company, as well, which refers to shareholders holding
5% or more of the voting rights thereof.
The Minister of Energy and Mines has the power to negotiate, grant, revoke,
suspend or renew any mineral right, subject to a power of disallowance
exercisable within 30 days of such grant, revocation, suspension or renewal by
the cabinet. The powers of the Ministry of Energy and Mines are to be exercised
on the advice of the Minerals Commission, which is responsible for regulating
and managing the utilization of mineral material and coordinating policies
relating to them. The grant of a mining lease by the Ministry of Energy and
Mines is subject to parliamentary ratification.
The Ghanaian government holds, as of right and without payment of any
compensation, a 10% interest in all mineral rights in Ghana. The government has
the option to acquire a further 20% interest where any mineral is discovered in
commercial quantities on terms agreed between the government and the holder of
the mining lease or, failing such agreement, on terms established through
arbitration. The government normally secures its 10% interest upon the grant of
a mining lease through a special class of shares in the company holding the
lease, which are typically non-assessable shares entitling the holder to 10% of
any dividends distributed by the holder. The Ghanaian government is also
entitled to a royalty of 3% to 12% of mineral sales after direct expenses.
Companies are required to make a payment on account of every quarter based on a
3% rate. At the end of each year, companies are required to compute the actual
royalty due on the basis of the profitability of the mine and to make any
further payment that may arise from the computation. The specific royalty rate
is determined by discussion with the Minister of Mines at the time of
commencement of feasibility studies and commencement of production.
Furthermore, the government may, if it so desires, acquire a "special share" in
a company holding, directly or indirectly, a mining lease in Ghana, which would
result in such company having to obtain the government's approval for: any
amendment to the regulations of the company that would have the effect of making
a person control of the company; the voluntary liquidation of the company; or
the disposal of any mining lease or the whole or a material part of the
company's assets. Control is considered a person who either directly or
indirectly directs the affairs of the mining company or controls at least 20% of
the voting power of the company, either alone or with an associate or
associates. The issuance of a "special share" may, at the government's option,
be for no consideration or at such consideration as the government and the
mining company may agree.
ITEM 5: DESCRIPTION OF THE BUSINESS
5.1 General
Moydow Minerals International Inc. (Moydow or the Company) is a natural resource
company engaged in the acquisition, exploration, and development of mineral
properties. The company is currently involved in fthree gold projects, one
bauxite project, and one diamond project.
Material Properties
Hwidiem Property
1. Project Description and Location
Project area
The Hwidiem Property is located 280 km northwest of Accra, the capital of Ghana,
Western Africa. The property consists of one prospecting license (the License)
of 22.52km2 in the Asutifi District, Brong Ahafo Region.
Title and Obligations
Moydow Limited, a company incorporated under the laws of Ghana and 100% owned
indirect subsidiary of the Company, applied for a two-year prospecting license
on 1 October 1997 at the Minerals Commission of Ghana. Following publication of
the application, the Asutifi District Assembly certified that no objections had
been raised. The Minister for Energy and Mines granted the prospecting license
13425/2000 a year later on 18 August 2000 for a period of two years.
The corner coordinates of the Hwidiem prospecting licence are:
Coordinates of the Pillars
Pillar No. Latitude Longitude
1 7degrees 00' 00" 2degrees 20' 00"
2 6degrees 55' 00" 2degrees 20' 00"
2A 6degrees 54' 30" 2degrees 20' 30"
3 6degrees 54' 30" 2degrees 22' 31"
4 6degrees 56' 20" 2degrees 22' 31"
5 5degrees 56' 20" 2degrees 20' 56"
6 6degrees 58' 28" 2degrees 20' 56"
7 6degrees 58' 28" 2degrees 20' 06"
8 7degrees 00' 00" 2degrees 20' 06"
Moydow Limited transferred the License to Shankill Resources Limited (Shankill)
on 2 October 2003. Shankill is a 100% owned indirect subsidiary of Moydow Mines
International Inc.
On October 3, 2005, the Company was granted a two-year extension to its
prospecting licence with respect to the Hwidem property, by the Minister for
Lands, Forestry and Mines in Ghana. The licence area covers 24.7 square
kilometres and it adjoins the Kenyase-Ntotoroso area currently under lease to
Rank Mining Company Limited, a subsidiary of Newmont. The Company incurred
exploration expenditures on this property of $0.06 million during 2005. The
minimum exploration expenditures required to maintain the licence are $0.52
million of which $0.34 million had been spent as at December 31, 2005. If gold
mineralization does not exist in sufficient quantities in the area to warrant
completion of the work program, the Company is not liable for any shortfall on
the minimum exploration expenditures.
Environmental liabilities and Permits
The Company is not aware of any environmental issues, which - without proper
care - could create a liability for the Company. The Company has no reason to
believe that necessary permits, once applied for, will not been granted.
The Minister of Energy and Mines directed on 25 April 2000 that reconnaissance
and prospecting undertakings have to be registered with the Environmental
Protection Agency (EPA) and that a permit by the Agency has to be given before
any activity or operation commences.
The Company applied for such a permit. This has not been issued yet. It was
assured that there is no reason for not issuing the permit other than that the
EPA handles the application in conjunction with the application for an
environmental permit for the Kanyankaw Property, which was submitted by the
Company at the same time.
No other permits are required.
2. Accessibility, Climate, Local Resources, Infrastructure and Physiography
Accessibility and Infrastructure
Kotoka Airport at Accra has scheduled international flights. The Company
maintains a house in Accra that functions as guesthouse and office.
From Accra, vehicular access to Hwidiem is on paved roads via Kumasi and Bekyem.
The road from Bekyem to Goaso crosses the licence area. The road distance
from Accra is approximately 350 km.
The village of Hwidiem is within the license area. Some dirt roads provide
access to various parts of the license area.
Rank Mining Company (Rank) had an exploration camp near Ntotoroso, about 15 km
north of Hwidiem. Presently, Newmont Mining Corporation (Newmont) is developing
a gold mine at Ntotoroso. The Nttooroso concession borders the Hwidiem licence
on the west.
Local Resources
Villages abound in the area surrounding the licence. The closest town for basic
supplies is Sunyani about 50 km north of Hwidiem.
Surface water is abundant in the Tano River that cuts the southwesterly corner
of the licence.
Competent and experienced personnel and contractors for exploration and drilling
can be found in Ghana. Skilled and unskilled labourers are readily available
from towns or from nearby villages.
Climate
The licence area falls within the wet semi-equatorial zone in Ghana. It is
characterised by an annual double maxima rainfall pattern occurring in the
months May to July and September to October. The mean annual rainfall for the
license area is 1350-1400 mm. The major rainy season typically extends from
late March to the end of July. Typically, minimal rainfall is from December to
the end of February, with January the driest month.
Mean monthly temperatures range from 24 to 28degreesC. In general, March is the
hottest month of the year and August the coolest. The mean humidity ranges from
80 to 98% at 6 a.m. and from 34 to 73% at 3 p.m.
Work can be done year-round, although certain activities have to be curtailed
during heavy rains.
Physiography
The licence area is characterised by gently undulating topography with
elevations ranging from approximately 175m at the Tano River to 225m at what
appears to be remnants of an older valley floor. This valley is about 15 km
wide at Hwidiem and widens to the north. The northern part, representing about
30% of the licence area is a flat and swampy area. Drainage is by creeks that
flow southeasterly towards the Tano River. The meandering Tano River flows
southerly along the eastern edge and through the southwestern corner of the
licence
The primary vegetation of the license area is heavily degraded due to
agricultural and logging activities. Presently, vegetation in the area is
dominated by farming, principally cocoa. Areas are covered by cane grass and
secondary forest can be found along the Tano River. Little wildlife still
inhabits the area.
3. History
When Rank, which was a 50/50 joint venture between Moydow and Normandy Mining
Limited, was successful with the exploration of the Ntotoroso Concession, it
applied for prospecting licences for areas nearby. This was to follow up on
potential continuations of the gold mineralization at Ntotoroso. The Company
acquired the Yamfo SW and the Hwidiem Licenses. The Yamfo Licence was dropped
because of unfavourable geochemical survey results; the Hwidiem Licence was
retained. The Company is not aware of any previous exploration on the Hwidiem
licence.
4. Geological Setting
Regional Geology
The Dixcove granite complex - a series of granodiorites and diorites - dominates
the license area. Small areas occur with Birimian basalt in the northern part
of the License and gabbro just north of Hwidiem village.
Local Geology
Bedrock is poorly exposed in the license area. Most of twenty-five outcrops
consist of hornblende granitoids (diorite and diorite-gabbro in the northern
part and quartz diorite and granodiorite in the centre and southern parts of the
License); a few consist of amphibolite (eastern and southern parts). Fields of
quartz fragments and float are common.
5. Exploration
Exploration work
The Company started surveying and cutting a 10.4km baseline at the end of
February 2000. Subsequently, cross lines at 400m spacing were cut covering the
entire license. Line cutting was finished early April; execution of a
geochemical soil sampling program took the rest of April 2000. On these lines,
1219 samples were collected at 50m intervals. In May 2000, in a 1.6 by 1.6 km
area in the south-western part of the License, lines were cut in between
existing lines to a spacing of 100m and another 968 samples were collected on
these lines and in between previous sampling points to a spacing of 25 metres.
All soil samples were collected from a depth of 50cm and each weighed
approximately 500g. Samples were sent to SGS in Tarkwa for analysis. Analysis
was done - after drying, crushing, pulverizing, and splitting - on 50g samples
that were fluxed and fused in a furnace for one hour. The lead button is
cupelled and the prill digested in aqua regia for determination of gold with
atomic absorption. The detection limit is 10ppb. Infill samples were analysed
to a lower detection level of 2ppb (using DIBK and AAS).
A site description was made for all soil samples and a theodolite survey of the
grid was done. A regolith map was generated from the recorded data to
facilitate the separation of the soil analyses into discreet populations based
on geomorphology and soil type.
The work was done by and under direction of Moydow geologists Dr. Yuriy
Deriouguine, Victor Litvinov, and John Barry.
Results
Of the 2178 soil samples, only eight returned gold values above 100ppb. The
background (average) level in lateritic/sandy soils was 17ppb and in alluvial
soils 10ppb. If the data represent a single population with a normal
distribution then minimum low-level anomalous thresholds of 113ppb and 25ppb
would be expected in the respective soil types, based on one standard deviation
above the mean.
Statistically it is not possible to pick out significant anomalies. There are a
few contours with grades in soil slightly above the background and a few
scattered point anomalies.
6. Mineralization
No bedrock information exists at this time to describe gold mineralization.
However, it is expected that gold mineralization on the Hwidiem License - if
there is any - is similar to that found on the Ntotoroso property that has been
explored by Moydow and where Newmont is in the process of developing a gold
mine.
7. Drilling
The Company has done no drilling on the leases yet. Drilling is planned in the
second quarter of 2006.
8. Sampling and Analysis
The geochemical soil sampling program was done following standard procedures.
See section 5 for details.
9. Security of Samples
The geologists Dr. Yuriy Deriouguine, Victor Litvinov, and John Barry supervised
the handling of all samples.
10. Mineral Resource and Mineral Reserve Estimates
No resource estimates have been made yet.
11. Mining Operations
No hard rock mining operations have been done or are planned yet.
12. Explorations and Development
Okumpreko Property
1. Project Description and Location
Project area
The Okumpreko Property is located approximately 150 km west of Accra, the
capital of Ghana in Western Africa. The property consists of two adjoining
mining leases that combined cover approximately 93 km2 in the Asahanti and
Central Region of Ghana.
Title and Obligations
The rights to mine both leases were by the Government of the Republic of Ghana
conferred to the Okumpreko Mining Company Limited on 1 June 1990. The leases
have a duration lasting thirty years. Therefore, the leases will terminate in
May 2020. The concessions have Land Registry Nos. 1184/1990 and 1185/1990.
Boundary of the Nyaduom Mining Lease (Land Registry No. 1184/1990).
Starting at the easternmost corner, common with the northernmost corner of the
Kushea Mining Lease.
Corner Numbers Distance Bearing
From To (feet) (meter)
1 2 8250 2514.60 224-30
2 3 8800 2682.24 308-00
3 4 7300 2225.04 257-30
4 5 8600 2621.28 257-30
5 6 7300 2225.04 295-30
6 7 7300 2225.04 270-00
7 8 8100 2468.88 270-00
8 9 10700 3261.36 249-00
9 10 2800 853.44 347-00
10 11 5750 1752.60 17-00
11 12 3850 1173.48 57-00
12 13 10750 3276.60 88-00
13 14 13000 3962.40 88-00
14 15 13000 3962.40 88-00
15 16 2800 853.44 360-00
16 17 14500 4419.60 97-00
17 1 8500 2590.80 143-00
Boundary of the Kushea Mining Lease (Land Registry No. 1185/1990)
Starting at the northernmost corner, common with the easternmost corner of the
Nyaduom Mining Lease.
Corner Numbers Distance Bearing
From To (feet) (meter)
1 2 14750 4495.80 148-00
2 3 14000 4267.20 96-00
3 4 9500 2895.60 190-00
4 5 5250 1600.20 244-00
5 6 7000 2133.60 268-00
6 7 11000 3352.80 307-30
7 8 9800 2987.04 267-00
8 9 13600 4145.28 194-30
9 10 4500 1371.60 280-00
10 11 14000 4267.20 16-30
11 12 5100 1554.48 352-30
12 13 7700 2346.96 64-00
13 14 6200 1889.76 43-00
14 15 2250 685.80 308-00
15 1 8250 2514.60 44-00
Environmental liabilities
Paragraph 9(b) of the Mining Lease: "The company shall adopt all necessary and
practical precautionary measures to prevent undue pollution of rivers and other
potable water and to ensure harm or destruction to human or animal life or fresh
water fish or vegetation."
Mineralization
Artisan mining of alluvial gold has been done along the rivers and is presently
being done along the Ofin River upstream from the Ofin and Pra confluence.
Moydow, however, focuses on the hard rock gold potential. For a detailed
description, see sections 6 and 10 below.
Permits
No other permits then the Mining Leases are required. Nevertheless, local
chiefs are informed of impending activities on land under their control and any
adverse effects and possible remedies are discussed.
2. Accessibility, Climate, Local Resources, Infrastructure and Physiography
Accessibility and Infrastructure
Kotoka Airport at Accra has scheduled international flights. The Company
maintains a house in Accra that functions as guesthouse and office.
The leases straddle the Ofin and Pra Rivers. The Company maintains the
Kumananta exploration camp at the southwest side of the Pra and Ofin confluence.
From Accra, vehicular access to the exploration camp is from the coastal Accra -
Takoradi road, either from the west via Dunkwa on the road to Kumasi, or from
the east via Twifo Praso or Foso. The road distance from Accra is approximately
250 km.
Access from the exploration camp to the north side of the rivers is by bridges
at Dunkwa or at Assin Praso (north of Foso) or is by canoe. Apart from the
sparse network of gravel roads, access is by walking tracks.
Infrastructure
The Pra and Ofin Rivers form the boundary between the Asahanti and Central
Region. The Ashanti portion of the leases belongs to the governing districts of
Adansi East and Adansi West (capitals New Edubia and Obuasi respectively). The
Central Region portion of the leases belongs to the governing districts of Upper
Denkyere, Lower Denkyere, and Assin (capitals Dunkwa, Jukwa and Foso
respectively).
Three tribal groups inhabit the lease area. Ashantis inhabit the areas north of
the rivers. Denkyeres inhabit all but the eastern quarter if the Nyaduom lease
and the Assins inhabit the balance of the area. The indigenous people engage in
subsidence and cash crop farming, artisan small-scale mining when the river
flood stage is low, and timber extraction.
Local Resources
Villages abound in the area. The closest town for basic supplies is Dunkwa
about 20km from the camp. Kumasi approximately 100km to the north is a major
town.
Surface water is abundant in the rivers. Power is generated on site with a 50
KVA diesel generator.
Competent and experienced personnel and contractors for exploration and drilling
can be found in Ghana. Skilled and unskilled labourers are readily available
from towns or from nearby villages.
Climate
The climate as in most of southwestern Ghana is characterized by wet tropical
rain forests. Daily temperatures range annually from a maximum of 24 to 32
degreesC to a minimum of 19 to 28degreesC. Annual precipitation averages 150 cm
and is distributed over two wet and two dry periods. The main wet period occurs
between March and July. Rain events during the wet period are frequent and of
long duration. The main wet period is followed by a short dry season in August
and early September. The minor wet period begins mid September and peaks late
October or early November. The major dry period from November to late February/
early March results from the dry Hamattan wind blowing south from the Sahara.
Work can be done year-round, although certain activities have to be curtailed
during heavy rains.
Physiography
The Concession has a moderately steep rolling hill type topography. The terrain
has typically a relief of approximately twenty meters. A prominent 400m hill
just north of the leases at Nyaduom is the only local feature rising above the
rolling terrain. The current Ofin and Pra River beds are ninety meters above
mean sea level and these rivers have cut steep side channels averaging twelve to
fifteen meters deep into the rolling terrain.
Drainage is dominated by the easterly draining Ofin River on the west side of
the property, mostly in the Nyaduom lease. This section of the Ofin River
resembles a young peneplain with the river meandering within a narrow regional
channel feature. This feature is a major gap in the range of hills associated
with the Ashanti Belt (a.k.a. the Konongo-Axim geologic trend). The Ofin
meanders are locally controlled by basement structures.
The Pra River drains most of the Kushea lease. Upstream from the confluence
with the Ofin, the drainage of the westerly flowing Pra River is a moderately
developed peneplain with deep channel boundaries less distinctive. The drainage
of the southerly flowing Pra River below the confluence is a mixture of the Ofin
and Pra drainage features.
Vegetation in the area is a mixture of forest and farming. Occasional stands of
secondary forest do exist north of the Ofin and Pra Rivers where access is more
restricted. South and west of the rivers almost all mature trees have been
harvested. The nearest forest reserve is the Nkrabia Forest Reserve north of
Nyaduom. The leases do not have any forest reserve access problems.
Farmers practice a mixture of subsidence and cash crop farming. Subsidence
farms grow rice, plantain, maize, and cassava. Cash crops include cocoa, oil
palm, and sunflowers, with cocoa farming dominating.
Little wildlife still inhabits the area. Some residents regularly fish the
rivers with nets.
3. History
The Okumpreko Mining Company Limited ("Okumpreko") and its antecedents have
explored the Kushea and Nyaduom leases since at least 1936. Until recently
virtually all exploration activities were directed towards developing known
alluvial deposits adjacent to the Ofin River. Gold Coast performed the first
recorded and most thorough alluvial exploration work in 1936 and 1937. SGMC
updated the Gold Coast feasibility evaluation in 1974 and 1975 after the gold
price started to rise. SGMC did not upgrade its evaluation. Both the Gold
Coast study and the SGMC study assumed dredge type alluvial mining. In 1988 and
1989, Dana Exploration Plc (Dana), a part of Europa Minerals Group Plc, explored
the alluvial mining potential along the Ofin River. Dana's exploration campaign
assumed a dry type or shore based mining scheme. Dana secured the current
mining lease as a result of their exploration work.
Little effort was devoted to explore for alternative gold sources until P.W.
Ltd. became the operator. The search for hard rock gold deposits began in 1997
when Robertson Research Limited (Robertson) conducted a geochemical soil
sampling program near Okumpreko's camp at Kumananta. Robertson conducted a
follow-up program, Phase II; and geologists from the University of Science and
Technology School of Mines conducted Phase III. Robertson also conducted a
Phase IV program. The work identified a geochemical anomaly - the Kumananta
anomaly. The anomaly appeared to be weak and subsequent work did not produce
encouraging results.
In late 1998, a new area was explored across the river from the Kumananta camp.
This geochemical soil sampling program was conducted by a successor group of
Robinson, known as GeoCoS. The program identified two isolated groupings of
anomalous values. These anomalies were not as strong as the Kumananta anomaly.
Follow-up investigations were foregone in favour of exploring other areas of the
concession. As 1998 closed, 20% of the leases were explored with disappointing
or questionable targets.
The 1999 Okumpreko exploration program was done in the remaining 80% of the
mining lease. This effort also tested the economic potential of terrace
alluvium at two likely areas because of the apparent intense historical activity
by artisinal miners. Two easily accessible areas with numerous "Ashanti" pits
were located and tested - one near Kumananta and one near Foso
Bedrock Exploration
Bedrock exploration performed on the combined Kushea-Nyaduom leases includes
amassing the available information about the area, collecting soil samples,
collecting MMI samples, and trenching to expose anomalies for closer inspection.
Existing information was secured from Resource Service Group (RSG), High-Sense
Geophysics Ltd. (High-Sense), and Watson Geophysics Ltd. (Watson). RSG had
amassed most of the available public information and coordinated that
information into a coherent format. High-Sense, owns airborne geophysical data
for the western part of Ghana, including the Nyaduom lease. Relevant data was
purchased from High-Sense and processed by Watson. These geophysical data and
maps confirmed and enhanced the information acquired from RSG. Soil sampling is
a preliminary exploration technique which when combined with other information
like geophysics allows rapid elimination of unprospective ground. MMI refines
the focus of anomalies identified by traditional soil sampling. Trenching
provides an inexpensive means of confirming soil anomalies.
Geochemical Soil Sampling
Geochemical sampling has proven an effective exploration tool for sorting
through large areas to target gold deposits. Important elements of a
geochemical survey are the sampling procedure, the analysis technique, and the
sampling density. Each survey group used similar sampling procedure but each
procedure merits a brief description. Robertson and GeoCoS employed SGS
Laboratories Limited (SGS) to analyse geochemical samples. The 1999 Okumpreko
campaign employed ITS Bondar Clegg (Ghana) Limited, Performance Laboratories
(Ghana) Limited (Performance), and Transworld Laboratories Ghana Limited
(Transworld) to analyse samples. Several sampling densities have been utilised.
Regional surveying by Robertson sampled at twenty-five meter intervals on
lines spaced at two hundred fifty meter intervals. This represents a sample
density of one sample for every 0.625 hectares. GeoCoS sampled at two hundred
meter intervals on lines spaced two hundred meters apart. This represents a
sample density of one sample for every four hectares. The 1999 Okumpreko
campaign sampled along selected baselines at eighty meter intervals. This
approach represents approximately a sample density of one sample for every five
hectares. However, these samples have more significance because their position
tested significant geologic features. Follow-up samples were collected along
lines at forty meter spacing with line spaced one hundred sixty meters apart.
Follow-up samples had a sample density of 0.64 hectares.
Regional geochemical sampling identified three anomalies worthy of further
investigation. Follow-up geochemical sampling addressed all these anomalies.
The first anomaly was found near the Kumananta field camp. Robertson prepared
three reports about this anomaly. The Kumananta anomaly was eventually trenched
with lack lustre results. Another anomaly, called the Kwaduo-Nkrabia, lies
between the Dunkwa-on Ofin road and the Ofin River east of Nyaduom. Follow-up
geochemical sampling of the Kwaduo-Nkrabia anomaly barely confirmed the previous
anomalous indications. The third anomaly straddles the Ofin River near Foso and
continues into the neighbouring concessions north and south of the Nyaduom
lease. This anomaly is called the Foso and appears related to the Kayeya
Prospect on the concession north of the Nyaduom lease. The Foso anomaly
improved with follow-up sampling. A third phase of geochemical sampling
utilizing a new analytical technique "Mobile Metal Ion" (MMI). It is reputed
that an MMI sampling campaign addressed portions of the Kayeya anomaly with some
success. An MMI anomaly also exists over the Foso anomaly that suggests the
potential an interesting resource within the Nyaduom mining lease.
Robinson Research Minerals Limited
Robertson sampling campaigns were described in reports issued in April 1997,
November 1997, and July 1998. Robertson's used the same sampling, analytical
techniques for all soil sampling work. Robertson collected 811 samples. Only
sample spacing changed between programmes. Regional programmes took samples at
twenty-five meter intervals with the interval between lines at 250 meters.
Follow-up programmes took samples at twenty-five meter intervals as in the
original programme but the line interval decreased to 125 meters. The Robertson
sampling procedure and analysis were as follows. Soil samples were collected at
depth varying from fifty to sixty centimeters. An oil palm axe (soso) dug the
hole and loosened the material for retrieval. Approximately two kilograms of
material was taken as a sample. The following information was recorded for each
sample: traverse number, position on traverse, sample number (for laboratory and
plotting purposes), depth of sample, simple geological description (e.g.
laterite, gravel, soil, colour, etc.), slope at point of sampling, comments, and
observations (e.g. stream valley, outcrop, etc.). Soil samples were collected
in polythene bags. These samples were logged at camp, given a laboratory
number, relabelled and taken in sacks to SGS in Tarkwa for drying and sieving to
minus eighty mesh (80 mesh or 190 microns). Gold and arsenic determinations
were conducted on a pulverized fraction of the minus eighty-mesh material.
Minus seventy-five micron fractions weighing 50 grams were digested with aqua
regia. The results were determined by atomic absorption techniques. The
detection limits for this procedure was two parts per billion (ppb) for gold and
twenty ppb for arsenic.
Arsenic analyses often help segregate alluvial gold from lode gold. Robertson's
work in this area demonstrated little or no correlation between arsenic
concentrations and anomalous gold values. Robertson's work also demonstrated
the threshold limit for anomalous values from normal background values. An
anomalous concentration of gold exceeds 30 ppb and an anomalous concentration of
arsenic exceeds 120 parts per million (ppm). These anomalous thresholds have
not changed significantly since this early work.
GeoCoS
The GeoCoS sampling campaign was described in a report issued in December 1998.
GeoCoS collected 369 samples. A similar procedure was adopted for the recovery
of the samples as that used in the Robertson exploration phases. Two to three
kilogram samples were collected from an approximate depth of sixty centimeters.
Sample spacing for GeoCoS was at first a grid interval of 400 meters by 400
meters. Later the pattern was reduced to 200 meters by 200 meters. Samples
were analysed by SGS at Tarkwa. SGS used the same preparation and analytical
procedure described for Robertson. GeoCoS considered it important to use the
same laboratory to improve continuity and standardization. Both gold and
arsenic were again determined to a detection limit of respectively 2 ppb and 20
ppm.
University of Science & Technology
Jerry Kuma and Jerome Yendaw of the University of Science and Technology, School
of Mines conducted a "soil sampling" survey in the area covered by Robertson's
follow-up survey area. Their sampling campaign was described in a report issued
in January 1998. This "soil survey" differs from all the other surveys both in
techniques and results. Kuma & Yendaw collected 248 samples.
Though unintended, their work validates the sieving utilized by Robertson and
GeoCoS. There is apparently enough residual coarse gold in the soils to cause
sporadic high or anomalous soil readings. This is exactly the reason for
sieving the samples at the lab. Low or background readings do not experience
the coarse gold effect. One third of all the samples were below detection and
so unaffected by coarse. Samples possibly affected by coarse gold did not
repeat when assayed a second time.
The sampling took place in the southwestern part of the Robertson sampling area.
Rectangular pits approximately 150 centimeters by 300 centimeters were dug at
25 meter intervals. The pits were logged and the logs accompany their report.
Samples were taken at thirty-centimeter intervals from the floor of the pit as
digging progressed. The first sample was taken at sixty centimeters and the
last at 90 centimeters. A duplicate sample was taken at each location. If
favourable results were encountered then the duplicate would be forwarded to
SGS. The primary sample weighed ten kilograms while the duplicate weighed two
kilograms. The primary sample was initially panned on site but the results were
disappointing. The procedure was changed and "professional galamseys" washed
the primary samples on site with better results. None of the duplicate samples
were sent to SGS, but fifteen of twenty-nine pits sampled had significant gold
colours in three or more of the samples.
Leo Shield Exploration Ghana Limited
Leo Shield trespassed onto the Nyaduom lease when conducting a geochemical
survey in 1997 and 1998. Mark Calderwood, the local representative of Leo
Shield, freely provided a map of the location of trespassed samples and the
results for those samples. The sampling procedures and analyses were not
provided , however, Mark revealed that salient points of their procedures were
quite similar to those used by all other investigators. It is known that
approximately two-kilogram samples were collected and that the assay procedure
was the same as the Robertson and GeoCoS samples. Leo Shield collected 140
samples.
Leo Shield has cooperated with Okumpreko on several occasions. Their
cooperation has improved the possibilities of future drilling programmes
intersecting mineralised zones.
Okumpreko Mining Company Limited
In the Okumpreko sampling programmes a similar procedure was adopted for the
recovery and recording of samples as that used in the Robertson and GeoCoS
exploration phases. Two to three kilogram samples were collected from an
approximate depth of sixty centimeters. The Okumpreko campaign attempted to
rapidly test all outstanding areas on the leases and focus on the most anomalous
areas. Access problems resulted in the first pass "baselines" being constructed
on either side of the Ofin River which were sampled at eighty meter intervals.
Okumpreko collected 1037 baseline samples. The samples were not sieved as this
step added cost without contributing much information. Sieving only anomalous
values reduces the number of samples needing to be sieved. Only samples where
an interpretation problem might exist would then be sieved for confirmation. As
mentioned above repeat assays accomplish much the same thing. A fifty-gram
portion of the sample is digested by aqua regia and the gold content determined
by atomic adsorption. Follow-up samples were taken, recorded, and assayed the
same way. The follow-up samples collected amounted to 2349 samples.
4. Geological Setting
Regional Geology
The mining leases lie on the eastern flank of the north-northeast trending
Ashanti Belt. This Belt consists of a sequence of lithologies, which are
typically gold producing in southwest Ghana. These lithologies include the
Lower Proterozoic units of the Birimian metavolcanic and metasedimentary rocks
(2.17 to 2.18 billion years); and Tarkwaian epiclastics. The Tarkwaian system
was previously thought to be a late event in the Ashanti Belt development.
Recent work suggests the Tarkwaian to be a coeval epiclastic system developed as
a back-arc facies on top of basinal fine-grained metasedimentary and tuffaceous
rocks that filled an ancient basin now called the Kumasi Basin. The Kumasi
Basin is interpreted as a distal, quiet, deep-water environment that developed
behind a volcanic arc. The trace of this volcanic arc follows a line beginning
at Konongo and passing through Obuasi to Prestea. Continued back-arc subsidence
allowed deposition of the Tarkwaian epiclastic rocks. The presence of these
Tarkwaian rocks thus represents a region of late back-arc subsidence.
Argillaceous units of sandstone, grits and thin pervasive conglomerate units;
the Tarkwaian Banket and Kawere conglomerate dominate the lithologies.
Following the development of the basin, Eburnean tectonics compressed the belt
in a southwest northeast direction (similar to the direction of the basin
development). This compression resulted in strike-slip and thrust faulting and
tight isoclinal folding. This pressure was accompanied by regional
metamorphism, mostly to lower greenschist facies.
Two main granitic intrusive events have been noted, the Dixcove and the Cape
Coast granitoids. These granitoids are reportedly dated at about 2.09 billion
years. The Dixcove granitoids are generally more discrete, sometimes
hornblende-rich, and intra-basinal. They are reported to be sixty-ninety
million years older than the Cape Coast granitoids. The Cape Coast granitoids
are larger, biotite-rich and often form the margins to the belts.
Mafic dykes appear both within and around the belts. These dykes are either
aligned with the belt at north-northeast or north-south. They are generally
narrow and sub vertical.
Local Geology
The Nyaduom lease covers a sequence of mostly fine-grained Tarkwaian meta-
epiclastics. The unit known as the Upper Banket series of arkosic wackes and
conglomerates occupy the middle section of the concession area. Regional maps
show that the Tarkwaian units form an anticline plunging shallowly to the south-
southwest. The underlying Tarkwaian Kawere polymict conglomerate is exposed in
the core of the anticline to the north. The dominant strike in the area is
045 degrees magnetic at the west end of the Nyaduom concession but the strike
swings to almost east west at the eastern end of the license. Thin mafic dykes
(or syn-formational coherent volcanic flows) parallel the regional strike all
across the concession.
Though not observed, regional mapping suggests the regional structure in the
Nyaduom lease passes from northeast trending on the west side to nearly east at
the Kushea lease boundary. Rock types and formations change from Tarkwaian
sandstones and phyllites (Lower Huni Formation) in the west with some mafic and
intermediate volcanics. Fine-grained phyllite, tuffs, and greywackes occupy the
eastern side of the Nyaduom lease. The Kushea lease is underlain by biotite
granodiorite (likely the Cape Coast granitoid). The sediments of the Pra valley
peneplain mask much of the Kushea concession geology. An erosion resistant
granitic hill near the centre of the area, bounded by the confluence, is the
only prominent geologic feature not masked by the Pra peneplain.
Lateritic weathering, as with most of the region, has resulted in deep oxide
profiles and development of duricrust in places.
5. Exploration
Exploration work
Moydow started its exploration program at the end of December 2004. Until the
end of March 2005 the following was done:
Improvement of the Kumananta exploration camp.
Line cutting in three areas in the Nyaduom lease and one in the Kushea lease,
total 39 lines. Lines in each area are spaced at 400 meter. They range from
0.5 to 3.5 km in length, total 69.5 km.
Along the lines soil samples were collected at 50 m spacing. So far, 1032 soil
samples have been collected. Samples were sent to the SGS lab in Tarkwa, Ghana,
to be assayed for gold. Assay results of 995 samples have been received.
Description of 151 outcrop locations and collecting of 15 rock samples. All
rock samples have been analysed for gold at the Tarkwa SGS lab.
A site description was made for all outcrop and soil sample sites and the
coordinates of each of these sites were established with GPS.
The work was done by and under direction of Moydow geologists Dr. Yuriy
Deriouguine and Victor Litvinov.
The line cutting and soil sampling program is in progress and no comprehensive
interpretation of the results has been done yet (i.e. evaluation and integration
with previous data). The results show 57 samples with gold values (3) 120 ppb
mainly in the central part of the Nyaduom lease
During 2005, exploration work continued on the Okumpreko gold property in Ghana
where the Company carried out mapping, geochemical and geophysical studies with
a view to lining up drill targets. Drilling was carried out on the property in
February 2006. The results are presently being correlated. The Company can
earn a 40% interest in this gold project in return for direct expenditures of
$0.25 million incurred within one year of entering into the agreement, which was
signed in September 2004. The Company can increase its interest to 51% by
incurring additional exploration expenditure of $0.25 million within two years
of signing the agreement. Management is currently negotiating an extension to
the terms of the agreement. Cumulative expenditures to December 31, 2005
amounted to $0.24 million of which $0.21 million was incurred during 2005.
6. Mineralization
Quoted from the 1999 Okumpreko report:
Terrace alluvium gold deposits bound both banks of the Ofin and Pra Rivers. The
terraced alluvium occurs at a height of nine or more meters above the Ofin
River's current level and parallels it for most of its length. Four gold
bearing horizons are known to exist. The first lies directly on the flanks of
the active river valley gravels and clays; this bed can be up to ten meters
thick but is rarely observed. The second and third terraces are visible in the
Upper Ofin near Gyagyatreso, and at the Subin dredging area. The upper terrace
is presented as a series of relatively flat plateaus.
North of Foso, on the north side of the Ofin River, and north of the Nyaduom
lease boundary is Leo Shield's Kayeya Prospect. The Kayeya Prospect
mineralization occurs in polymictic Tarkwaian. This host rock was originally
thought to be the Kawere Conglomerate but the presence of apparent Tarkwaian
sandstone cobbles suggests the conglomerate is the result of a later sub-graben
inside the Tarkwaian sequence. Such a scenario would testify to the persistent,
deep-seated structures that have been active over a long time. The conglomerate
on the Kayeya Prospect is gold enriched (>0.3 grams Au per tonne) over an area
of larger than 4.0 square kilometers (6 km by 0.8 km). The area is elongated
towards the northeast, parallel with the regional strike.
Drilling on widely spaced lines on the Kayeya Prospect (outside the Lease area)
defined a marginal economic resource of about 200,000 tr. oz. gold. About half
of the resource was economic. The mineralization grade improved towards the
southern end. The marginally economic portion was at the southern end of their
prospect (only a few hundred meters from the Nyaduom lease north boundary).
Drilling results from further south at Kayeya, suggests the mineralization had
either petered-out or been pulled off strike. Soil samples south of the
boundary reveal a scattered or much weaker response than the mineralised zone
north of the boundary.
The Kayeya Prospect, though sub-economic at present, is important because the
global bedrock resource (though low grade) is enormous and it is the only
significant hydrothermal gold mineralization, other than the Abosso Demang
deposit, defined in the Tarkwaian. Leo Shield suggested the mineralization may
be the result of a broader weakly constrained hydrothermal system or that the
portion exposed maybe higher in the system.
An explanation for absence of the Kayeya anomaly south of the boundary is it
being offset along a fault or it being masked by colluvium. Airborne geophysics
indicates a fault that offsets the basement rocks to the east. The straight
section along the Ofin River to the east also suggests major fracturing. These
faults move the southern block eastward by several hundred meters. This throw
distance is enough to place the new location of the anomaly beneath the Ofin
River in some places. The geochemical expression could easily be masked or at
least altered by the river's erosional and depositional phases. Results of the
soil sampling program would appear to support this possibility. Given this
situation, the scattered anomalies on the Nyaduom lease are highly prospective.
Ground magnetic surveys over the Kayeya Prospect should help confirm the shift
in location of the Kayeya mineralization. Marker beds with a definitive
geophysical response may define the faults offset.
7. Drilling
Drilling was carried out on the property in February 2006. The results are
presently being correlated. Location and amount of drilling was decided
following an evaluation of the soil sampling results and of older data.
8. Sampling and Analysis
The geochemical soil sampling program is done following standard procedures. A
similar procedure for the recovery and recording of samples was applied as that
used in the Robertson and GeoCoS exploration phases. See paragraph 3.
9. Security of Samples
Handling of all samples is supervised, by the geologists Dr. Yuriy Deriouguine
and Victor Litvinov.
10. Mineral Resource and Mineral Reserve Estimates
No resource estimates have been made yet.
11. Mining Operations
No hard rock mining operations have been done or are planned yet.
12. Explorations and Development
See Item 5 above.
Kanyankaw Property
1. Project Description and Location
Project area
The Kanyankaw East Property is located in south-central Ghana approximately 50
kilometres north of the important seaport of Takoradi. The property consists of
one prospecting licence (the License) of 47.6 square kilometres in the Western
Region.
Title and Obligations
The Kanyankaw prospecting licence was obtained by Moydow Limited ("Moydow
(Ghana)"), a company incorporated under the laws of Ghana and 100% owned
indirect subsidiary of the Company, and Antubia Resources Ltd. ("Antubia") on
January 16, 1996. The licence was held in a joint venture between Antubia, a
subsidiary of Glencar Mining plc ("Glencar"), and Moydow (Ghana), pursuant to
the terms of an agreement dated November 6, 1992, (the "Kanyankaw 1992 Agreement
") as amended on March 17, 1994 and June 20, 1995. The agreement granted
Glencar (or its nominee) an option to earn a 50% interest in the Kanyankaw
prospecting licence in return for funding U.S.$150,000 of reverse circulation
drilling and then contributing a further U.S. $330,000 in exploration
expenditures before December 31, 1993.
The option was exercised in 1995 after two time extensions were granted to
Glencar in March 1994 and June 1995. The agreement provided for the funding of
work subsequent to the exercising of the option through pro rata contributions
to work plans in accordance with each parties' respective interests in the joint
venture. Should either party fail to participate in such work plans it would
suffer a dilution of its interest based on the total expenditures and deemed
expenditures of each of them. As of the formation of the joint venture, Moydow
(Ghana) and Antubia were both deemed to have advanced U.S.$480,000 to the joint
venture. Each party was entitled to a carried interest through to the
completion of a feasibility study in the event that their interest should be
diluted to a 10% interest. The carried interest, in such circumstances, was
explicitly not assignable.
Glencar, Antubia, Moydow (Ghana) and the Company entered into an additional
agreement in January, 2000, which required the parties to make an application to
the Ghanaian government for a split of the property into two licences along
longitude 2degrees 03' 43" west (the "Kanyankaw 2000 Agreement"). Pursuant to
the Kanyankaw 2000 Agreement, Moydow (Ghana) would hold the licence for the
eastern half which contains the old gold workings at Kanyankaw (the "Kanyankaw
East Property") and Antubia would hold the licence to the western half which
contains the old workings at Asheba (the "Kanyankaw West Property").
Application was made to the Minerals Commission in August 1999 to ratify this
proposal and it became effective in early 2001.
Pursuant to the Kanyankaw 2000 Agreement, each party has the right to back-in
and acquire an interest in the other party's property (40% in the case of the
Kanyankaw East Property and 44% in the case of the Kanyankaw West Property). In
order to exercise a back-in right, a party (A) must have performed a minimum of
5,000 metres of drilling on its own property and must make a payment to the
other party (B) based on the drilling completed by B. The payment is calculated
by multiplying the number of metres of drilling completed by B by a figure
ranging between US$50 and US$100 (depending on the overall number of drill holes
completed by B). The splitting of the licence was designed to facilitate
aggressive exploration of the entire property in 2000.
The corner coordinates of the PL.2/31 prospecting license for the Kanyankaw East
Property are:
Coordinates of the Pillars
Pillar No. Latitude Longitude
1 5degrees 07' 00" 2degrees 03' 56"
2 5degrees 07' 00" 2degrees 00' 55"
3 5degrees 03' 58" 2degrees 00' 55"
4 5degrees 03' 22" 2degrees 01' 43"
5 5degrees 02' 33" 2degrees 01' 43"
6 5degrees 02' 33" 2degrees 00' 58"
7 5degrees 01' 46" 2degrees 00' 58"
8 5degrees 01' 46" 2degrees 01' 43"
9 5degrees 01' 22" 2degrees 01' 43"
10 5degrees 01' 11" 2degrees 02' 03"
11 5degrees 01' 11" 2degrees 03' 01"
12 5degrees 02' 10" 2degrees 03' 01"
13 5degrees 02' 49" 2degrees 03' 56"
The northern 70% of the License falls within the Neung Forest Reserve
("Reserve").
The License was transferred to Shankill Resources Limited (Shankill) on 8
September 2003. Shankill is a 100% owned subsidiary of Moydow Mines
International Inc. The License was renewed for a period of twelve months to
expire on 16 September 2004.
At the end of that period, the Company was required to submit a report and
financial statements, and an Environmental Permit from the Environmental
Protection Agency ("EPA") and a site plan indicating areas to be relinquished.
The Company submitted the required documents and applied for an Environmental
Permit. It did not submit a plan with areas to be relinquished, as the Company
at that time had not made a decision on this issue yet.
On October 3, 2005, the Company was granted a two-year extension to its
prospecting licence with respect to the Kanyankaw property, by the Minister for
Lands, Forestry and Mines in Ghana. The carrying value of the Kanyankaw
property was written off in 2005 in the amount of $0.33 million of which $0.03
million was incurred during 2005, as exploration results are not promising such
that exploration will not be planned for the foreseeable future.
Environmental liabilities and Permits
The Company is not aware of any environmental issues, which - without proper
care - could create a liability for the Company.
The Environmental Permit has not been issued yet as the EPA is waiting for the
Forestry department to give its consent. Recently, it appeared that the
Forestry department was not aware of the License transferral from Moydow (Ghana)
to Shankill, which apparently had delayed their decision.
The Company has no reason to believe that the Environmental Permit and the
extension of the validity of the License will not been granted once the
necessary documentation has been submitted. That the Minerals Commission has
not objected to an extension made it possible to continue work on the License
beyond expiration data.
2. Accessibility, Climate, Local Resources, Infrastructure and Physiography
Accessibility and Infrastructure
Kotoka Airport at Accra has scheduled international flights. The Company
maintains a house in Accra that functions as guesthouse and office.
The Licence can be reached by vehicle from Accra in approximately 6 hours along
hard surface roads to within 3km, and thereafter along a good quality gravel
road to a Post and Telecommunications (P&T) tower located approximately in the
centre of the 'workable' licence area. Access away from this central track is
limited to a few 4WD vehicle tracks pushed through the forest for drill rig
access or timber haulage. There are several small-scale farms, and footpaths
link these. In forest areas, the vegetation is dense to extremely dense, and
access is difficult and slow going on foot.
Local Resources
Villages are common along the Takoradi-Teberebie road. Major towns are Tarkwa
about 30km to the North and Takoradi about 50km to the south.
Competent and experienced personnel and contractors for exploration and drilling
can be found in Ghana. Skilled and unskilled labourers are readily available
from towns or from nearby villages.
Climate
The Licence falls within the wet equatorial zone of Ghana. Rainfall and
temperature records are not available for Kanyankaw or adjacent villages,
however the author understands the rainfall to exceed 2000mm per annum, and the
climate can be classified as seasonally wet humid and tropical. It is
characterised by an annual double maxima rainfall pattern occurring in the
months of May to July and from September to October.
Work can be done year-round, although certain activities have to be curtailed
during heavy rains.
Physiography
The Permit area is characterised by steep hilly terrain, dendritic drainage and
several broad high level plateaus, which represent an ancient land surface,
rising above a low undulating terrain in the south of the licence (over the
granitoids). Elevations range from approximately 75 to 125m in the southern 30%
of the License and to 222m in the Reserve. Drainage channels have incised into
the soft weathering profile, developed beneath the ancient land surface, to
produce both dendritic and radial drainage patterns.
The high plateau ranges in width from 1.5 km down to a few tens of meters.
Close to the plateau edges, blocks of ferruginous duricrust are variably
exposed, as are pisolitic and nodular gravels. Away from the plateau edges
pisolitic gravels are less evident on the surface, but are ubiquitous within a
meter of the surface. Off the plateaus hill slopes are generally steep to very
steep and can exceed 60o. Not all hills have plateau tops. Some have narrow (<
10m) ridge tops. Where the hills have sharp crests and distinct ridgelines,
they probably reflect a particular geological unit or structure.
Within the area, natural equatorial forest is variably preserved, and much of it
has been affected by logging or clearance at some time or other for
agricultural, forest products (saw logs and charcoal, or timber props for
mines). Approximately 60% of the Area has a dense natural or regrowth forest,
15% farming land (cassava, yams, plantain coconut, palm oil, rubber Tree), 5%
mining (bedrock and alluvial) with the remainder (20%) young regrowth forest or
recently cleared for charcoal making or new farms. Thickets of bamboos grow in
some valleys and some areas of the high plateau surface.
3. History
The area has a rich history of gold mining and has been mentioned in the
exploration journals of the Portuguese in the 16th century. In the License
area, underground workings date form the colonial period with the earliest
accounts of Axim Mines in 1904. Artisanal mining has been a continuous
occupation of the local population for well over 100 years and is still very
much in evidence today. Previous small scale mining targeted a number of
high-grade, quartz reefs in the southeast and southwest parts of the current
mining lease area. It has been reported that these companies recovered
approximately 20,000 ounces of gold from an array of stamp mills. The narrow
high- grade reefs are locally continuous over hundreds of metres but up to the
present, they have been found too isolated and sporadic to sustain large-scale
commercial exploitation.
Soil sampling
Between 1987 and 1990 soil geochemical sampling by Ghana Gold of Australia
targeted the potential for (i) more extensive auriferous quartz reef development
associated with the Upper Birimian - a style of mineralization which had been
exploited previously and (ii) Boddington-type mineralization in the laterite
mantled plateau and overlying residual soils. A north-south trending broad
anomalous zone was delineated, extending for about 3.5km along the plateau.
Highest gold concentrations were detected just east and north of the P&T
compound and in the Gogossu area of the plateau about 1km north of the compound.
Soil geochemistry on a 50m x 10m array covered approximately 0.36km2 of a
southeasterly extending tongue of the plateau and about 0.44km2 of the plateau
northeast of the P&T tower. Another salient of the plateau straddling the
Asheba shear zone (ASZ) in the Kanyankaw West Property was sampled on a 100m x
10m array covering an area of about 0.12km2 southwest of the intersection
between the Boundary fault and the ASZ. It is not clear why this latter area
was targeted specifically by Ghana Gold. The only other areas soil sampled were
by Cyprus Amax in the Asheba area (2900 samples) and trail sampling by Glencar /
Antubia in 1999 (1800+) samples. The result is that only 2% of the exploration
area or about 1 km2 has been soil sampled from an area of 47.6km2 representing
the new Moydow sphere of influence.
Drilling - Glencar
In April-June 1992, Glencar drilled 32 RC holes (3,774M) on the plateau west and
northwest of the old workings designed to "investigate the weathered profile in
the vicinity of the anomalies with a view to establishing an open pittable
resource". In addition, four RC holes were drilled in the Gogossu area. The
highlight of the program was the intersection of the north-northeast trending
Tribute Reef in holes RC17, 13, 6, and 2 from north to south over a distance of
500 - 600m. Best intersection was at the northern limit of drilling in RC17
which returned 12m at 7.3g/t. To the south the reef pinches to 2m at 8.3g/t in
RC13 and 2m at 10.9g/t in RC 6 and finally 3m at 4.6g/t in RC2 at the southern
limit of drilling. Glencar drilled six additional holes - RC41 - 43, RC47,
RC49, and RC54. The RC41-43 fence targeted the northerly extension of the
Tribute Reef and RC47 targeted the Reef at depth beneath the RC17 intersection.
Results were disappointing.
Drilling - Cyprus Amax
Pursuant to an option/joint venture agreement (the "Cyprus Agreement") dated
February 6, 1996 among Antubia, Moydow (Ghana) and Cyprus Exploration and
Development Corporation ("Cyprus"), Cyprus commenced a diamond drilling
programme in September 1996 pursuant to which Cyprus drilled 13 holes for a
total of 2,000 metres.
Cyprus Amax drilled eight-holes (1422.5m) in mid-September around the Kanyankaw
workings, supervised and implemented by CME & Company, an international group of
geological consultants. Drilling targets were generated from a new
soil-chemical survey on a north-south oriented 100m x 25m grid with lines from
two to four kilometres long, correlated with a ground magnetic survey over the
same grid and an IP survey on seven east-west lines.
Soil geochemistry delineated a strong north-northeast fabric. The K5-K7
anomaly, about 600m west of the P&T tower, appears to be associated with a
satellite lineament - the Boundary Fault - and also in the case of K6, an IP
target. The K5 - K7 holes were barren and spaced along a 750m stretch of the
anomaly. A south-southwest draining stream may have incised along the Boundary
Fault creating an alluvial gold-in-soil anomaly, which did not reflect
complimentary gold concentrations in the sub-stratum.
Holes K1 and K2 tested a >0.5ppm anomaly with maximum dimensions of 300m
north-south and 200m east west centred about 500m north of the P&T tower. K2 on
the low ground was barren and intersected chloritic schist to 132.5m and
chloritic basalt to the bottom at 165 metres. Pervasive quartz-carbonate-
chlorite alteration occurs from 70 - 165m. K1 was collared on the high ground
and intersected 2m at 11g/t from 32m associated with quartz-limonite-manganese
stockworks or stringer mineralization in saprolitic basalt and 6m at 4.96g/t
from 152m associated with two 0.5m quartz veins with quartz-pyrite flooding in a
structure. Curiously, the Glencar drilling is at the southern end of this blob
and predominantly to the south and west where there is no Cyprus/CME anomaly.
The more interesting area is west and south of the P&T tower where a strong
anomalous zone oriented north-north-east appears to be unaffected by topography,
specifically an east-west salient of the plateau which protrudes into the centre
of the zone. Only two holes were drilled in this area, K3 and K4, both on low
ground, and both intersected mineralization - the former six narrow zones
including 2m at 16.6g/t from 8m and the latter 2m at 4.44g/t from 18m and 2m at
37g/t from 60m. Drillhole K3 is characterised by chlorite-quartz-carbonate
basalt, quartz-carbonate stockworks and fine crackle breccias. Pyrite varies
from 0 to 50% with the latter amount being confined to quartz + pyrite veins of
no more than 8cm in width. Vein and veinlet angles to core axis indicate that
veins are striking N15 degrees - 20 degrees E and dipping 50 degrees to the
northwest. K4 mineralization is associated with "annealed" shear zones
characterised by quartz-carbonate-tourmaline alteration, post mineral movement
and late quartz-pyrite veining (6-8cm) which could be carrying the gold.
Galamsey Activity
Within the licence, there are some areas with very active galamsey mining. The
main area of activity is currently northwest of the P&T Tower off the high
plateau where the miners are concentrated along what appears to be two narrow (<
1m wide) quartz veins along a total strike of some 500 meters.
4. Geological Setting
The license area is underlain chiefly by Lower Proterozoic Upper Birimian
metamorphosed mafic volcanic rocks (greenstones), which are intruded by small
stocks and dykes of hornblende granodiorite. Slicing through the rock pile is a
series of NNE-trending fractures with associated minor splays; interestingly,
all recorded past production has come from the minor splays and only minimal
exploration has been conducted over the major lineaments, which
characteristically occupy the low ground in fault-controlled valleys. Where
these major lineaments cross terrain that is slightly more elevated, their trace
is frequently coincident with a trail of sericitically altered granodiorite
dykes, which show patchy development of gold-bearing, quartz stockworks.
The Kanyankaw prospecting licence is located twenty kilometres south of Tarkwa.
The Tarkwa Goldfields have produced 10 million ounces of gold and which
currently host reserves in excess of 25 million ounces predominantly from the
two major mines at Tarkwa and Teberebie.
5. Exploration
Exploration work
The major part of the licence area away from the colonial workings at Kanyankaw
had never been systematically explored. A limited exploration program in 2000
focused on the prospective north-northeast trending NKFZ lineament/structure and
the potential for open- pittable resources. 1467 soil samples were collected on
a 400m x 50m grid within a 2km-wide corridor straddling the NKFZ. Airborne
magnetic data was reprocessed and interpreted by consultants and
cross-referenced with geology and soil-sampling results.
Eight holes (KR1-8) totalling 717m RC and 43m DD were drilled targeting soil
anomalies southeast of the old Kanyankaw workings. Although gold was recorded,
it was not significant enough to warrant further drilling at the time. The
holes were drilled in two SW-NE fences, 200m apart, in each four holes 50m
apart.
A landform and regolith study completed S.J.S. Bolster of Regolex on the
property in 2001 generated nine new targets, which warranted testing. During
the year, there was a significant increase in the number of illegal artisanal,
or galempsey miners. At one stage, over 6,000 miners were reported to be
working the high-grade quartz reefs on the property, which restricted access.
Following a study of all available data by Moydow geologist Dr. Yuriy
Deriouguine, the Company executed two drilling programs. Phase I from May to
July 2004 and Phase II from September to October 2004. For both phases, Pontil
Minerex Ltd. did the drilling and Blue Cross Ltd. was engaged for organising
workers. Up to thirty workers from the nearest villages and galamseys, worked
as diggers, line-cutters, samplers, guides, and watchmen. All the work was
directed and supervised by Yuriy Deriouguine.
6. Mineralization
Phase I
The main gold mineralization within the studied part of the Kanyankaw License is
connected with gold-bearing quartz veins within metamorphosed mafic volcanic
rock of the Upper unit of the Early Proterozoic Birimian Series. The rocks
hosting gold-bearing veins contain very weak gold mineralization. Earlier data
about the old underground Axim Mine and recent galamsey workings indicate that
the gold-bearing quartz veins form a sub-parallel system striking towards NNE.
The thickness of these veins is still still unknown but it is expected to be
less than 1m. The size of fragments of gold-bearing quartz in galamsey pits
seldom reaches 15-20 cm. Gold-bearing veins consist of light-gray
sugary-grained quartz with numerous caverns filled with limonite and clay,
goethite pseudomorphs after pyrite, relics of pyrite and fine native gold. The
mined quartz contains gold up to 153g/t.
The recent drilling was aimed to cross the whole vein system together with
earlier drilled holes. Potential gold mineralization with this type of veins is
of interest for industrial mining only in case if the system forms a stockwork.
The vein was divided into two intervals: (1) northern part - target # 2 and (2)
southern part - target # 1. Additionally, target # 3 at the galamsey mined
quartz vein near Kanyankaw village was also drilled.
The sub-parallel vein system at two intervals (target # 1 and target #2) was
drilled by 24 45degrees-inclined RC holes total 1732m. The results confirmed a
proposed system of sub-parallel gold-bearing quartz veins, which in sampled
intervals have thickness not more than 4m. Gold values vary from 1.1g/t up to
18.25g/t with the highest gold grade in previous hole KAN 4, 2m at 37g/t.
Quartz veins are not accompanied by gold-bearing alteration, which could
increase mineralized intervals. Quartz veins are situated rather far from one
another and they don't form a stockwork.
Target # 3 is situated close the galamseys mined quartz veins near Kanyankaw
village. There in hole KRC 19 the gold-bearing interval extends up to 22m
depth, which has average gold grade 4.24g/t and hole KRC 19 contains 1.56g/t at
64m. Hole KRC 35 targeted to cross the quartz vein mined now by galamseys
unfortunately at 66-67m and 82-83m cut pits or adits so the real gold grade in
the mined vein wasn't clear. Assay results are probably the best ones in all
holes on the License but the geological structure of gold-bearing body (or
bodies) is still unclear.
A target near the highest soil anomaly (gold up to 58.0g/t) was not drilled
because of the complicated landscape and dense. This anomaly is traced more
than 800 m from the known underground mine towards SWS through the intermediate
wide soil gold anomaly on the previous profile. At its western edge on the
slope and across the stream there are many old galamseys pits.
Phase II
The second phase of drilling aimed T (1) at Target # 3 - to extend previous
drilling on the galamsey mined quartz veins near Kanyankaw village, and (2) at
Target # 4 - to drill the highest soil anomaly on the License.
At Target # 3 saprolite hosts quartz veinlets at intervals contain pseudomorphs
of goethite after pyrite and fragments of pyrolusite. In fresh rock two types
of quartz veins were distinguished: (1) vein hosting disseminated pyrite (up to
5-7%), malachite, limonite in hole KDD 46 looks like strait veins limited at
their contact by cataclasite, (2) cataclastic folded veins associated with
listvenitized (silicification + chloritization + carbonatization + pyritization)
rocks. Both types of veins are gold-bearing.
Gold mineralised intervals within target # 3 join into three zones: A, B, C.
The first two zones were drilled during the first phase of exploration with
drilling extended in the second phase. Zone C was found in the second phase.
Zone A was crossed by hole KRC 35 where from 66m to 68m gold grade is 2.4g/t but
this interval is probably partly mined by galemseys. Zone A has the most
representative intersection in hole KDD 49 with from 156.7 m to 158.1m a light
grey quartz vein, bordered at both contacts by 7-10mm-thick cataclasite. In
hole KDD 49 the gold-mineralised interval from 156m to 159m contains 3.3g/t
gold, the maximum gold grade in sample 5087 is 5.27g/t over 1m. The quartz vein
is associated with weakly mineralised rocks on the both sides of the vein where
gold values vary from 0.1g/t to 0.7g/t.
Zone B was after the first phase of drilling the most interesting. In hole KRC
19 from the surface up to 22m depth the average gold grade is 4.26g/t with
maximum value 16.15g/t over 2m. There, an envelope of weakly mineralized rocks
surrounds strongly mineralized intervals. Gold mineralization in hole KRC 19 is
located within weathered rock represented by saprolite, partly after pyritized
rock hosting quartz veins and veinlets.
More drilling was done in Zone B in the second phase of drilling. In hole KDD
49 Zone B split into four mineralized intervals, which also generally are
jointed by a weakly gold mineralized envelope. From 77 to 83m the average gold
grade is 8.02g/t with maximum value 17.5g/t over 2m. A similar gold grade from
101 metres to 105 metres at 8.21g/t. In hole KDD 46 zone B was intersected only
at interval 254 metres - 256 metres with 11.8g/t gold. In hole KDD 46 Zone B is
almost absent, but there is a possibility that it goes between two holes.
Zone C is a new gold mineralized interval. In hole KDD 46 from 72m to 128m
rocks host gold mineralization which an average grade of 0.48g/t at 56m depth.
It includes the best intersection of 10m at 3.63g/t with maximum value 7.7g/t.
Gold-bearing rocks are represented by saprolite, weathered schist, and weathered
pyritized schist hosting quartz veins.
At the target # 3 assay results show that the gold mineralization belongs to two
different types. The first type in Zone A is associated with pyrite-hosting
quartz veins limited by strait cataclastic contacts. The second type (Zone B,
C) is represented by quartz veinlets hosted by altered (listvenitized) rocks.
Mineralization of the second type forms sub-parallel lenses within wider
envelopes of weakly altered rocks. This type of gold mineralization looks more
prospective because it organizes wide (up to 40m) envelopes of gold-bearing
rocks with higher gold grade.
Gold mineralization at target # 3 was explored only in one profile. The gold
grade and thickness of mineralized intervals are very changeable; numerous pits,
shaft and adits complicate this. The morphology of gold-bearing bodies is still
unknown.
At Target # 4 the drilled ten holes were aimed to cross the soil gold anomaly
with 58.03g/t. Weak gold mineralization less than 1g/t was found in many holes
but only one intersection is over 1g/t. The intersection in hole KRC 38 from
54m to 64m has an average gold grade of 6.93g/t with maximum value of 31.9g/t.
The gold mineralised interval is associated with quartz veins and veinlets
hosted by saprolite where in panned samples numerous particles of dust-like
native gold were seen. A weakly gold-mineralized envelope accompanies rich
quartz veins. Most of weakly gold-bearing intervals at Target # 4 are
associated with rocks hosting quartz veinlets or pyrite mineralization.
7. Drilling
The 2004 Phase I and Phase II programs targeted four areas in a 1.35km by 1.6km
area. The target areas consisted of fences of approximately 150m to 800m in
length and trending WNW-ESE. Drill holes were spaced 50m. Phase I consisted of
the holes KRC9-26 and Phase II of KRC37-44 and 47-48, and KDD46 and 49. The 41
holes totalled 250m DD and 2986m RC. A total of 1876 samples were submitted for
analysis.
Drill hole spotting, drilling, sampling, logging and sampling were done
following standard procedures. The coordinates of the drill holes were
established with GPS with the spacing verified by tape and compass.
For an interpretation of the results, see Item 6.
8. Sampling and Analysis
Sampling
RC and DD sampling intervals at the 2004 drilling programs were 1m. Split
samples were combined to represent 2m intervals unless the mineralogy warranted
1m interval samples. All samples were sent to the SGS laboratory in Tarkwa for
standard gold fire assay.
All sampling and sampling procedures were done following standard procedures and
the Company does not belief that there are factors that adversely impacted the
accuracy or reliability of the results.
Internal control
For internal control 4.4% of the pulp reject samples with gold values covering
the whole range were selected. These samples with changed numbers and sample
bags were sent to SGS, Tarkwa for gold fire assay. Discrepancies were followed
up.
Gold values correlated well (cc 0.96). However, in the control samples gold
values are average 24% higher than in the original samples. SGS explains this
disagreement by the presence of coarser gold in samples, which is then prevalent
near the bottom of the sample bag. The control samples were poured into new
bags where the coarser gold ended up on top. If this is the case, then the
problem exists at SGS where samples were not properly mixed. One sample that
differed more than in nine times would be re-assayed.
External control
External control was done by Transworld Laboratories Ghana Ltd. in Tarkwa. 4.2%
of the samples that had been fire assayed for gold at SGS were selected with the
same methodology as for internal control. Pulp rejects of these samples were
recalled, their bags were changed, and they were sent to Transworld for fire
assay for gold.
Results correlated well (cc 0.97). The Transworld data average 17% lower than
the SGS values. All samples that had more than 1 g Au/t correspond between the
laboratories.
9. Security of Samples
The geologist Dr. Yuriy Deriouguine supervised the handling of all samples. The
RC samples and the DD core is presently stored in a locked building in a village
near the License.
10. Mineral Resource and Mineral Reserve Estimates
No resource estimates have been made yet.
11. Mining Operations
No hard rock mining operations have been done or are planned yet.
12. Explorations and Development
The Company intents to evaluate all available exploration results in 2005. To
facilitate this evaluation, the Company acquired a new computer software
package. The nature and amount of further exploration is subject to the results
of the evaluation.
Port Loko Bauxite Concession
The Port Loko bauxite project in Sierra Leone is the subject of a feasibility,
being done by CAM LLc of Denver, Colorado. Following completion of the study,
Moydow will have a 60% interest in the project.
1. Project Description and Location
Project area
The Port Loko bauxite concession is located 65 km East of Freetown, the capital
of Sierra Leone, Western Africa. The 596km2 (230 square mile) concession forms
a strip of 77km NNW-SSE by 12 km WSW-ENE in the Port Loko District of Sierra
Leone's Northern Province.
Title and Obligations
Gondwana (Investments) S.A. (a private company incorporated in Luxembourg)
obtained in November 2002 the Exploration License No. Expl. 7/02 for a period of
three years to explore for base metals, rutile, zircon, ilmenite, and bauxite
from the Government of Sierra Leone in accordance with an approved program of
exploration operations.
The coordinates of the Property that are specified in EXPL 7/02 are:
Beacon UTM West UTM North Zone
A 739,100 997,000 28P
B 751,600 972,700 28P
C 757,400 953,600 28P
D 773,800 931,500 28P
F 770,500 922,800 28P
G 751,200 950,800 28P
H 733,400 982,400 28P
I 738,000 985,450 28P
J 731,700 992,800 28P
Sierra Leone 1960 datum.
(Note: no E was used).
The licence can be renewed for a further term of one year. Subject to the full
performance according to the licence, the holder of the licence shall be
entitled to the grant of a Mining Lease.
The Company and Shankill Resources Limited (Shankill) signed an option agreement
with Gondwana on 8 September 2004, for Shankill to explore the bauxite deposits
in the Exploration License EXPL 7/02. Shankill is a 100% owned subsidiary of
Moydow Mines International Inc.
In September 2004, the Company entered into an option agreement, with Gondwana
Investments Limited ("Gondwana"), a company incorporated in Luxembourg. The
agreement allows Moydow to acquire up to a 60% interest in the Port Loko bauxite
deposit by incurring exploration expenditure of $1 million and produce and
deliver a feasibility study on or before June 30, 2006. The agreement only
covers bauxite and no other minerals on the property. Cumulative expenditures
to December 31, 2005 amounted to $1.64 million of which $1.37 million was
incurred during 2005.
On October 24, 2005, the Company appointed Chlumsky Armbrust & Meyer ("CAM") to
prepare a Bankable Feasibility Study on the Port Loko Bauxite Deposit in Sierra
Leone, West Africa. CAM estimated the cost for the Bankable Feasibility Study
to be $0.15 million of which $0.02 million was incurred during 2005.
Licence obligations include:
Pay a yearly rent of US$200 for each square mile. Demarcate the licence
boundary.
Employ at least one qualified geologist or mining engineer for the exploration.
Carry out bona fide exploration during the continuance of the License.
Undertake base line studies on the environment in order to provide details of
any significant adverse effect, which the carrying out of exploration program
would have on the environment, the proposals to combat any such effect and the
estimated cost thereof. Employ and train citizens of Sierra Leone.
Backfill or make safe bore holes or excavations made during the course of the
exploration operations.
Environmental liabilities and Permits
The Company is not aware of any environmental issues, which - without proper
care - could create a liability for the Company. The company has no reason to
believe that necessary permits, once applied for, will not been granted.
2. Accessibility, Climate, Local Resources, Infrastructure and Physiography
Accessibility and Infrastructure
Freetown is reached from Lungi Airport by helicopter or ferry by crossing the
Sierra Leone River estuary. Lungi Airport has scheduled flights to and from
Europe and other Western African countries. The Company rents a house in
Freetown that functions as guesthouse and office.
The Company has established an exploration camp in the Concession area just
outside the village of Rogberi. The camp is an abandoned Unamsil camp that has
been renovated. The camp is capable of housing approximately 30 people. Water
for the exploration camp is provided by wells and drinking water is obtained
from Freetown. Power is generated on site with a 27 KVA diesel generator.
Access to the exploration camp from Freetown is by 65 km paved highway to
Masiaka and from there by another 30 km partly paved road (paving is in
progress). The latter road crosses the central portion of the Concession.
Rogberi Junction can also be reached from Lungi Airport via Lungi Lol and Port
Loko by 80 km dirt roads.
The Concession straddles dirt and paved roads that head west and north from
Rogberi to Port Loko and beyond, and south and east to Masiaka and beyond.
Gravel and all-season dirt roads to villages scattered in the area provide good
access to most parts of the Concession. An extensive network of cut lines
provides detailed access in certain areas.
Villages of the Temne are common scattered in and around the Concession area.
Towns nearby are Port Loko and Lunsar, 16 west and 18 km east from Rogberi.
Local Resources
Most supplies have to be brought in from Freetown. Specialized equipment has to
be imported.
The Concession area has abundant sites that can be used for mining facilities.
Three main rivers, the Rokel, the Bankasoka, and the Little Scarcies, all of
which have bridges crossing them, intersect the concession. Any of these rivers
would provide ample sources of water for the bauxite washing plant and other
mining related requirements.
At Lungi Lol (33 km west of Port Loko), a road branches to Pepel Port on the
Sierra Leone River estuary (13 km from Lungi Lol). The road from Rogberi
Junction via Lungi Lol to Pepel Port largely parallels the mineral railway from
the Marampa iron mine (east of Rogberi) that operated from the early 1930's to
1985. A rail yard, rolling stock, housing, storage, and ship loading facilities
exist at Pepel Port. The railway, which crosses the bauxite deposits, and the
harbour facilities (65km by rail from Rogberi) can - after rehabilitation - be
used for transport and shipping of bauxite ore.
Certain competent and experienced contractors for exploration, drilling and
mining have to come from abroad. However, there is a pool of local people that
has experience with bauxite exploration and mining. Skilled and unskilled
labourers are readily available from Freetown and from local villages.
Climate
Sierra Leone lies within the West African rain forest belt. The alternation of
monsoon rains and northeast dry winds divides the year into distinct wet and dry
seasons. Most of the rain falls from May to October (200-250 cm) and much less
from November to April (12-25 cm). Average temperatures range from 25 to 28
degreesC with the highest temperatures in March and November.
Work can be done year-round, although certain activities have to be curtailed in
the afternoons during the rainy season. Surface water is abundant in rivers and
creeks in the rainy season. Smaller streams gradually dry up in the dry season.
Physiography
The Concession topography is characterized by flat to gently rolling savannah.
Mabing Hill with 156 m is the highest point north of the Rokel River. Most
hills, however, are between 30 and 60 m high; they are considered remnants of an
erosion surface.
Primary forest has been cleared from the area. Most of the area is now covered
with tall cane grass. These areas merge in open secondary forests, which occupy
small portions of the low hills and valleys.
Village agriculture is focussed on growing cassava using traditional
slash-and-burn clearing methods. Large areas - especially those underlain by
bauxite - are not used for agriculture although they are seasonally burned.
3. History
The occurrence of low-grade bauxite in Sierra Leone was first recorded in
1920-1921 in the northeastern corner of the Northern Province. Other bauxite
occurrences were found in the Southern Province (Mokanji bauxite deposits) and
in the wide valleys of the Freetown Peninsular in the Western Area.
The Port Loko bauxite deposits were discovered in the early 1950's by road
construction workers. During reconnaissance exploration work in 1959 by
government geologists along the motor roads from the Rokel River Bridge to Port
Loko and Marampa, interesting bauxite zones developed on feldspathic gneisses of
the Kasila Group. This tended to constitute the extension of the Mokanji
deposits.
The Sierra Leone Ore + Metal Co. (Sieromco), then a subsidiary of Swiss
Aluminium Ltd. (Alusuisse) obtained a prospecting license (No. SEPL 2087) and
carried out an exploration campaign north and south of the Rokel River from 1963
to 1965. Sieromco stopped work because the company's emphasis at that time was
on bauxite deposits with alumina content greater than fifty percent.
In July 1972, Sieromco obtained a Special Exclusive Prospecting License (SEPL
2182) covering an area of about 620 km2 between the Rokel River and the Little
Scarcies for a period of four years. Sieromco developed and executed a
comprehensive exploration programme that assessed and evaluated the license
area. Extensive and detailed exploration was carried out by drilling (3,500
hand and 11,000 mechanical drilled holes, total 126,000 m) and pitting (425
pits).
Sieromco defined 28 mining blocks in four areas which largely parallel the
geological trend: Yenkisa (1-13), Lungi (1-6), Tekeya (1-12) and Kambia
(Mange-Gbonkomakent and Mamaliki).
Following a corporate management policy change not to expand its raw materials
supply base, Alusuisse surrendered its mineral holding of its property to the
Government of Sierra Leone.
In 1987, Austromineral, an Austrian owned company (then in the process of
rehabilitating the Marampa iron ore mine which was 23 km east of Rogberi
Junction), conducted a pre-feasibility study on the Port Loko bauxite deposit on
the basis of the results of the Sieromco exploration work. Austromineral
confirmed that it could be a viable venture of low-grade bauxite that should be
investigated for commercial exploration.
In 1992, Jupiter Export and Import (Jupiter) acquired the property (No. EXPL 4/
92) but its work was limited in scope during the escalation of the rebel war.
In 1996, Jupiter renewed its exploration license (No. EXPL 4/96) and proceeded
to undertake additional prospecting/exploration and due diligence on the
Sieromco work that led to a feasibility study by Watts, Griffis and McOuat (WGM)
of Toronto, Canada, and a feasibility report by WGM (October 31, 1997).
Jupiter filed an "Application for the Leasing of the Pepel Port and Railway
Installations and the Rail Tract" on 11 March 1996 with the Government of Sierra
Leone. The application contained a summary of work to be done and a cost
estimate for the rehabilitation of port and rail facilities.
Renewed rebel activity forced a suspension of operations in 1998 under
conditions of force majeure, and subsequent cancellation of the license in 1999
by the Government when Jupiter failed to demonstrate its ability to continue.
Following the cessation of the rebel activities, the Government of Sierra Leone
granted exploration rights to Gondwana for the Port Loko bauxite concession
under Exploration Licence No. EXPL 7/02 in November 2002, (see paragraph 1).
Railway, Harbour and Iron Ore Mine
During 1930, construction commenced on a 52 miles 3ft 6in gauge line from Pepel
to the Marampa haematite iron ore mine, 23 km east of Rogberi. The line was
constructed by the Sierra Leone Development Company (Delco). Trains were
organised to haul thirty bogie wagons with each wagon capable of carrying thirty
tons of ore. When the line opened in 1933 two 151 Beyer-Garratt steam
locomotives handled the ore trains, two more were received, one in 1935, the
other in 1936.
These locomotives were in 1955 replaced by five diesel locomotives from the
Birmingham Railway Carriage & Wagon Co Ltd. (BRCW). Two diesels were operated
back to back in multiple trains of forty double bogie ore wagons of thirty tons
carrying capacity. With the line limited to a top speed of 28mph, a round trip
would take about five hours to complete, not including any time taken at the
termini. During the mid 1960's, improvements to the track allowed the axle
loading to increase and the maximum speed to increase to 35mph. New roller
bearing equipped wagons had an increased capacity of fifty tons.
The BRCW locomotives were replaced by American Locomotive Company (Alco) diesel
locomotives. The first one to arrive in 1964 was numbered 201. Three more
arrived during 1970 numbered 202 - 204, now built by the Montreal Locomotive
Works. Presently, the condition of the 202-204 locomotives is reportedly such
that they can be made serviceable.
At Pepel Port, ore dumping, storage and three generations of ship loading
installations exist. The last one ("C plant") is reportedly capable of loading
4000 ton/hour. One of the two loading facilities of the C-plant has reportedly
been operated recently.
Delco exploited the Marampa iron ores from 1930 until 1976. The mine was
reopened in 1981 but closed again in 1985. All mining installations at Marampa
have reportedly been destroyed during the 1990's and the present assessment is
that the Marampa ore reserves do not warrant the construction of new mining
installations.
4. Geological Setting
Most of the Sierra Leone is underlain by rocks of Precambrian age (Achaean and
Proterozoic) with a coastal strip about 50 km in width comprising marine and
estuarine sediments of Tertiary and Quaternary to Recent age. The Precambrian
outcrops cover 75% of the country and typically comprises granite-greenstone
terrain. It represents parts of an ancient continental nucleus located on the
edge of the West African Craton. The Achaean basement can be subdivided into
infracrustal rocks (gneisses and granitoids), supracrustal rocks (containing
greenstone belts) and basic and ultra-basic igneous intrusions.
The infracrustal gneisses and granitoids were formed and reworked during two
major orogenic cycles, an older Leonean episode (-2,950-3,200 Ma) and a younger
Liberian episode (-2700 Ma).
Greenstone belts of the Kambui Supergroup have been deposited upon a
post-Leonean basement and are accompanied by basic to ultrabasic intrusives.
The Marampa Group, bounded on its eastern margin by a tectonic contact, is
important for its iron-ore deposits and forms the upper part of the Kambui
Supergroup.
The Rokel-Kasila Zone bounds the main part of the West African Craton on its
west and southwestern margin in Sierra Leone, and appears to form part of a
north-south orogenic belt. Within this belt, the Marampa Group appears to
represent some of the oldest rocks. The Kasila Group, also considered part of
the Kambui Supergroup, comprises a high-grade series of granulites, consisting
of garnet, hypersthene and hornblende gneisses, quartzites and associated
migmatites. Where eroded, significant secondary deposition of titanium minerals
has formed from this unit.
A late Precambrian to Cambrian sedimentary and volcanic assemblage, the Rokel
River Group, was deposited unconformably on a basement complex. The Rokel River
Group and the Kasila Group to the west were deformed during the Rokelide
orogenic episode (550 Ma).
Tertiary and more recent weathering has led to lateritisation across a large
part of Sierra Leone, affecting mainly the greenstone belts and the extensive
dolerite intrusions. The bauxite deposits that formed within the Kasila Group
are a result of this weathering process.
The Concession area is underlain by the Kasila Group where it consists of
anorthosite, feldspathic gneiss, and amphibolite. The best quality of bauxite
is formed by weathering of anorthosite. The Port Loko bauxite consists mainly
of gibbsite.
5. Exploration
Moydow started an exploration project at the Port Loko bauxite deposit at the
end of November 2004. The extensive work to date on the project is covered in
the Report on Exploration October 2004 to November 2005, prepared as a separate
document.
The following work has been done:
Input of Sieromco and Jupiter data into a digital database (in progress).
About half of the Sieromco and Jupiter drilling and pitting results still
exists in summary format on detailed maps (thickness overburden and
bauxite, and % Al2O3 and SiO2). Details of about 10% of the drill holes
exist on logs. The rest of the original data is lost.
Setting up of a base in Freetown and renovation of the Unamsil camp at
Rogberi Junction for use as an exploration camp. The camp includes staff
quarters, office, storage building, cooking facilities, and a sample
storage and sample processing building. Hiring and employing local people.
Re-cutting of the Sieromco and Jupiter lines, (in progress).
Cleaning and re-sampling of Sieromco and Jupiter pits, (in progress).
Acquisition, shipping, and installation of sample processing equipment and
of a custom build 4" hollow-stem-auger (HSA) for bauxite exploration.
Survey with differential GPS of Sieromco and Jupiter drill holes and pits,
(in progress).
Block Y3 - Surveyed Sites
Site Description Total Number
Drill Holes 161
Pits 22
Line Data 189
Trenches 1
Block Y3 - Surveyed Lines:
Tie Lines
TL 100, TL 150, TL 200, TL225, TL250
Cross lines
3180, 3175, 3170, 3165, 3160, 3155, 3150, 3145, 3140, 3135, 3130, 3125, 3120,
3115, 3110, 3105, 3100, 3095, 3090, 3085, 3080, 3075, 3070, 3065, 3060, 3055,
3050, 3045, 3040, 3035, 3030, 3025, 3020
Block Y4 - Surveyed Sites
Site Description Total Number
Drill Holes 84
Pits 113
Line Data 87
Trenches Nil
Block Y4 - Surveyed Lines:
Tie Lines
TL100, TL150, TL200, TL225, TL250
Cross Lines
3010, 3000, 2995, 29775, 2980, 2970, 2965, 2960, 2955, 2950, 2945, 2935, 2925,
2915, 2910, 2905, 2895, 2885, 2865, 2860, 2855, 2850
The current work is aimed at completing a feasibility study on the project,
which under the terms of the agreement with Gondwana is to be done by mid 2006.
See Item 1 above.
6. Mineralization
The Port Loko bauxite deposits occur as lenses within a series of bands. The
deposit consists of essentially one band in the southern (Mamaliki) area of the
Concession. In the central Port Loko portion of the Concession, the deposit
widens to form three distinct north-northwest to south-southeast trending bands.
North of Port Loko, it narrows again toward Kambia.
The bauxite showings are extremely heterogeneous in term of areal extent, depth
and quality. Within the Port Loko South area, individual deposits vary from 400
to 2,000 meter in length and 50 to 500 meter in width.
Sieromco pit and drill hole data provide the following general deposit profile:
Thickness Average
Top soil 0 to 0.3 m 0.3 m
Lateritic gravel and bauxite pebbles 0.3 to 3.0 m 0.8 m
Massive bauxite 2.0 to 12.0 m 6.8 m
Bedrock is partly weathered along cracks and fractures.
7. Drilling
A total of 426 holes were drilled by Pontil-Minerex of Accra, Ghana.
8. Sampling and Analysis
Sampling and sample processing started in early April 2005. The program is
set-up and is supervised by a qualified person, Don Hains, P.Geo. of Hains
Technology Associates, Toronto, Ontario.
Individual drill samples are one meter in length. Pit samples are combined for
each meter from the four sides of the pit. The samples are to be coned and
quartered, split, washed, screened, crushed and pulverized. Final samples
(eight for each meter depth in pits and one for each meter drilled) are to be
sent to the SGS laboratory in Perth, Australia, for analysis of eleven oxides
including Al2O3 and reactive quartz.
For quality control, a certain amount of duplicate samples will be send to the
same SGS laboratory and to one or more other laboratories.
9. Security of Samples
Handling of all samples is supervised, either by Don Hains, P. Geo., by Dr.
Yuriy Deriouguine (geologist), or by Ebo Bakker, P.Geol. (Alberta).
Splits of all samples are stored in a separate section of the sample storage and
processing building at the exploration camp at Rogberi.
10. Mineral Resource and Mineral Reserve Estimates
Evaluation of Sieromco and Jupiter data is in progress. Moydow has not yet
obtained new data.
Sieromco's 1970's exploration led to the definition of 104 million tons of ore
of medium grade in 26 mining blocks along three trends from the Rokel River to
just north of Rogberi (see paragraph 3): Lungi in the west, Tekeya central and
Yenkisa in the east. Sieromco defined "proven" 77.4, "indicated" 16.8 and "
inferred" 10.0 million tonnes of washed bauxite with expected grades of 47%
Al2O3 and 4.5-5% SiO2. It is not known how Sieromco interpreted the terms "
proven", "indicated" and "inferred".
Evaluation of the Sieromco data by Watts, Griffis and McOuat using the 1996
version of the "Australasian Code for Reporting of Identified Mineral Resources
and Ore Reserves" and the "National Policy 2-A", resulted in a resource
estimated for the Port Loko bauxite concession of 104 million tonnes washed
bauxite as follows:
Probable Reserves 46 million tonnes
Indicated Resource 31 million tonnes
Inferred Resources 27 million tonnes
and that "It is anticipated that much of the material currently designated in
the Indicated Resource category can be converted to reserves once the
appropriate test work and economic projections have been completed."
11. Mining Operations
No mining of the Port Loko bauxite property has been done, and Moydow has done
no mine planning yet. Visits were made to the Rogberi Junction - Pepel section
of the railway and to the harbour facilities to get a general idea of their
condition.
Sieromco developed preliminary mine plans. The plans describe a pumping station
at the Rokel River, a six km pipeline to the Yama Creek that was to be dammed
near Yenkisa village, from there a 1.2 km pipe line to a washing plant near the
railway just west of Rogberi Junction. Transport was planned using the Marampa
- Pepel mineral railway and the existing Pepel Port loading facilities were to
be used for off shore shipping.
12. Explorations and Development
Work completed in 2005 encompassed:
Cleaning and sampling of at least 85 of the Sieromco and Jupiter pits.
Drilling of about 320 HSA holes to a total of 4000 meter.
Sample processing and analysing of at least 680 pit samples and 4000 drill
samples.
Differential GPS survey of drill holes, pits, lines, and topographical
features.
Analysis of the Sieromco and Jupiter data for certain areas in order to
validate as much of their data with the results of the 2005 Moydow
exploration program.
Inspection by a subcontractor of the railway from Rogberi Junction to Pepel
and of the housing, storage and loading facilities at Pepel Port.
Preparation of a scoping study or of a pre-feasibility report.
Dala Property
1. Project Description and Location
Project area
The Dala diamond concession covers an area of 3,000 km(2), situated in the Lunda
Sul province of Angola, between the Luachimo and Luangue rivers. The provincial
capital Saurimo is situated close to the northern boundary of the concession.
The village of Mona Quimbundo is situated near the southwestern boundary. The
following geographic coordinates delimit the concession area:
9degrees 39' S 19degrees 58' E
9degrees 39' S 20degrees 38' E
10degrees 01' S 20degrees 38' E
10degrees 02' S 19degrees 58' E
The "Contract for Prospecting of Diamond Secondary Deposits" referring to the
Dala Project was published on December 7, 2004 in the Angolan Diario da
Republica, (Decreto n.o 143/04). All legal conditions to start exploration on
the concession were in place from that date.
Title and Obligations
Cimader Lda is a private Angolan mineral exploration and mining company, which
was established specifically to obtain and hold the Dala prospecting permit. In
January 2005, negotiations were conducted between Cimader and Endiama to
establish the terms under which the diamond potential of this concession area
might be developed in joint venture. The agreement came into effect after
ratification by the Council of Ministers (i.e. the national Cabinet).
In early 2005, Cimader entered into a joint venture with Moydow Mines
International ("Moydow"), for the development of the diamond potential of the
Dala concession area. In terms of this agreement, Moydow will act as operator
of the project, reporting to a management committee comprising representatives
of Moydow International, Cimader and Endiama. In its role as operator, Moydow
International is required to prepare work programmes and budgets for
consideration by the management committee.
The Company is party to two separate exploration projects with the same partners
on the Dala property in Angola, relating to the exploration for alluvial and
kimberlite diamonds.
Alluvial diamonds
On October 1, 2004, the company signed an agreement with Empressa Nacional De
Diamantes De Angola (Endiama), the Angolan state diamond mining company and
Cimader-Comercio Geral Limitada (Cimader), a local Angolan company, to explore
for alluvial diamonds on the Dala concession, located near the town of Saurimo,
in north-east Angola. The concession comprises 3,000 square kilometres. To
obtain a 33% interest, the Company will have to incur expenditures of not less
than $5 million on or before October 1, 2007. Cimader and Endiama have a free
carried interest in the project.
The Company entered into a separate agreement with Concord Minerals LLC
(Concord), a private Nevada company, whereby Concord has the right to earn up to
50% of Moydow's interest in the concession by funding exploration expenditures
under Moydow's agreement with Endiama and Cimader. The Company's cumulative
expenditures to December 31, 2005 amounted to $1,838,615 of which $1,466,775 was
incurred during 2005. Concord's cumulative expenditures to December 31, 2005
amounted to $688,797.
Kimberlite diamonds
On December 16, 2005, the Company signed another agreement with Endiama and
Cimader to explore for kimberlite (primary) diamonds on the Dala concession.
Under the terms of the agreement, the Company can earn 40% interest in the
concession with the remaining percentages held by Endiama and Cimader. To
obtain its interest, the Company will have to incur expenditures of not less
than $10 million on or before January 14, 2009. Cimader and Endiama have a free
carried interest in the project. The granting of the licence is subject to the
receipt of Angolan regulatory approval.
The Company also has an agreement with Concord, whereby Concord has the right to
earn up to 50% of Moydow's interest in the kimberlite concession, by funding
exploration expenditures under Moydow's agreement with Endiama and Cimader. No
amounts had been expended by Moydow or Concord to December 31, 2005.
During the third quarter of 2005, the Company completed an aeromagnetic and
topographic survey on the Dala diamond concession. The survey identified 70
targets on the property, which warrant follow up work.
On January 14, 2006, pursuant to the agreement with Endiama signed on December
16, 2005, the Company paid $1 million to the Angolan state diamond mining
Company. In order for the deposit to be refunded the Company must incur
expenditures of $1 million within six months of making the deposit.
Environmental liabilities and Permits
The Company is not aware of any environmental issues, which - without proper
care - could create a liability for the Company. The Company has no reason to
believe that necessary permits, once applied for, will not been granted.
Mineralization, etc.
For a detailed description, see paragraphs 6 and 10 below.
2. Accessibility, Climate, Local Resources, Infrastructure and Physiography
Accessibility, Infrastructure and Local Resources
As the provincial capital lies within the Dala concession, the area is
relatively well endowed with general services (by Angolan standards). There are
virtually no social services or commercial activity in the outlying areas, where
the only industry is subsistence farming and illicit diamond mining.
Saurimo boasts the second longest all-weather landing strip in Angola, capable
of handling the largest cargo aircraft in current use in this region (Ilyushin
IL-76). The city is linked to Luanda and other regional capitals by tarred
roads: three such roads traverse the project area.
While equipment and general supplies are transported into the region by road,
movement of personnel and perishable goods from Luanda and abroad is normally
done by air. The principal roads within the concession area are in relatively
good condition, but poor maintenance and excessive use by heavy vehicles have
led to the disintegration of the principal supply route through Mona Quimbundo
to Luanda. Although most of the major bridges in the region were demolished
during the course of the civil war, temporary repair work has been affected.
The movement of traffic is much slower in the rainy season (October to April)
when the 950km trip to Luanda can take up to 4 days.
There is no electrical grid in the region. All projects and settlements have to
rely on diesel-generated power.
Drinking water is readily available from natural springs throughout the region.
Larger volume water requirements (for irrigation, diamond recovery plants etc.)
can easily and freely be satisfied from any of the larger rivers.
All telecommunications in this region (public and private) are via satellite.
Tropical diseases such as malaria and typhoid are endemic in the region. While
basic medical services (public and private) are available in Saurimo, any
serious health problems would require evacuation by air.
Primary and secondary schooling is provided by the State in Saurimo, but there
are effectively no education facilities available outside of the provincial
capital.
Competent and experienced personnel and contractors for exploration and drilling
can be found in Angola. Skilled and unskilled labourers are readily available
from towns or from nearby villages.
Climate
The only information obtainable for this region are historic records obtained
from the weather station at Dundo (270km north of the project area), for the
period 1952-1957. Those records may be summarized as follows:
Annual rainfall: 1662mm (max 1928mm in 1952, min 1373mm in 1955).
Wet season: October to April, the heaviest rainfall occurring in November,
December, March and April. January and February are relatively dry.
Dry season: May to September, July, and August being the driest months.
Average annual temperature: 24-25degreesC (max daily average 33degreesC, min
daily average 13degreesC).
Daily temperature fluctuation: 14.5degreesC January-April; 20.0degreesC
May-August; 13.0degreesC October-December.
While the climatic pattern is identical, there is a significant difference in
elevation between Dundo (780m), and Saurimo (1080m). The rainfall figures are
similar, but the prevailing temperatures are 2-3degrees C cooler on average in
Saurimo.
Field conditions are good during the dry season (April to October), but
deteriorate rapidly with the onset of the rains. It is, however, generally
possible to conduct fieldwork throughout the year, accepting seasonal
fluctuations in productivity.
Physiography
There are two distinct geomorphological regimes in the project area: the
Tertiary land surface and the Quaternary land surface. The former comprises a
flat, smooth plateau that is gently inclined towards the north (regional slope
approximately 0.1-0.2degrees from the horizontal). This plateau covers most of
the interfluvial areas between the larger rivers (Chicapa, Luele and Luachimo),
with elevations in the range 1150 metres above sea level (in the south of the
concession area) to 1100 metres (in the north).
The Quaternary surface is restricted to the active river valleys and is
consequently narrow and sinuous in form. Elevations range between 1020m in the
south, and 1000m in the north.
Hydrographically, the concession area is dominated by the perennial Chicapa,
Luachimo, and Luele rivers, which flow from south to north. The tributary
drainage pattern is dendritic, with headwater areas exhibiting the form of
steep-sided amphitheatres. The influence of bedrock structure is evident in the
regional drainage pattern.
3. History
Diamang Alluvial Exploration Programme, 1969-73
The Dala project area covers the southern portion of the catchment of the
Chicapa and Luachimo rivers, which were among the most prolific sources of
alluvial diamonds in Angola. During the late 1960's, the Angolan diamond mining
monopoly Diamang (later renamed Endiama) targeted these drainages as focal
points of its exploration programme aimed at proving up mineable reserves ahead
of its then current mining activities.
The reconnaissance exploration procedure was to excavate rows of pits manually
at 600m intervals along the banks of the main rivers. Pits were usually 2-3 m
(2) in surface area, and penetrated to bedrock where possible. All gravel
intersected would be washed and the heavy mineral fraction examined for diamonds
and kimberlitic indicator minerals. Sample volumes would usually have been in
the order of 1-3 m(3). Diamond content was reported in carats/m(3). Bedrock
lithology was reported where recognized.
Anomalous areas discovered in the course of reconnaissance work were followed up
by infill pitting, starting at 200m spacing. Pitting at 40m intervals finally
proved reserves up. Operating within the comfort zone of a total monopoly (and
also for reasons of industrial security), Diamang was seldom if ever under any
pressure to follow up or evaluate positive areas identified in the
reconnaissance phase. (The sudden advent of independence from Portugal in 1974
appears to have caused a change in the hitherto relaxed attitude of Diamang in
this regard. See Condiama 1975 below).
In what is now the Dala exploration area, the reconnaissance sampling programme
was planned to cover the entire catchment of the Chicapa and Luachimo rivers, to
approximately latitude 11 degrees. However, it appears that sampling had not
advanced much to the south of Saurimo when regional exploration work was
suspended.
Condiama Exploration Programme, 1971-74
Condiama was a consortium managed by De Beers (but funded equally by De Beers
and Diamang), set up in 1970 to conduct a nationwide sampling programme aimed at
locating all of the kimberlite provinces in Angola, in anticipation of the
possible termination of Diamang's monopoly on diamond exploration. In the
course of four years, blanket loam- and stream sampling coverage was achieved
over most of the country (except for the eastern and south-eastern theatres of
the war). Approximately 2 million samples were collected, and several hundred
kimberlite pipes were identified, located in a dozen or more kimberlite
provinces.
During the course of the work programme, Condiama sampled the greater part of
the Dala project area. The results of the regional reconnaissance sampling
completed in 1970-71 revealed several kimberlitic indicator mineral anomalies in
and around the Dala concession area.
Condiama Exploration Programme, 1975
During the period immediately following the departure of the Portuguese colonial
administration, there was a change of focus in the activities of Condiama in the
Lunda region. Whereas their work had hitherto been directed specifically
towards the search for kimberlites, reports from mid-1974 to mid-1975 refer to
extensive sampling for alluvial diamonds. Nothing is known of the reason for
the sudden change of strategy. It is, however, evident that sampling coverage
was directed specifically at areas with strong alluvial potential that had been
left unsampled by Diamang. It is inferred from this that Condiama was working
in cooperation with (or perhaps under contract to) Diamang.
The rate of progress achieved by Condiama was phenomenally quick by comparison
with that of Diamang, and it must be concluded that their work was probably less
thorough than that of Diamang. No record could be found describing the sample
spacing, or of the sampling procedure adopted by Condiama. It is, however, very
likely that Condiama would have adhered to the operational principles previously
established by Diamang.
4. Geological Setting
Geology of the Dala project
The upper Luachimo- and Chicapa hydrographic basins are covered in large part by
unlithified Tertiary sand cover of the Kalahari Supergroup. Older rocks are
only encountered in the more deeply incised river valleys. The latter valleys
are partially filled with Quaternary sediments.
As systematic ground checking was rarely conducted, the reliability of the
published geological map is questionable (particularly in the case of correct
identification of supracrustal terrestrial strata).
The stratigraphic column of the Lunda region is as follows:
Precambrian units
Gabbro-Norite-Charnockite
The oldest rocks in the region are mafic and intermediate products of high grade
metamorphism of the older granitoid rocks. The age of the older granitoids is
thought to be 3100-3400 Ma. The charnockitization occurred during the Musefu
episode, 2820 Ma.
These rocks are usually intensely weathered and decomposed in the surface
environment. Outcrop is generally very poor, and is usually confined to the
most deeply incised valleys.
Undifferentiated granite gneiss
These banded rocks are migmatitic in character, and range in composition from
granodiorite to tonalite. They are normally leucocratic, and fine to medium
grained. The gneissic fabric is most predominantly orientated E-W. They are
commonly characterized by pervasive quartz veining.
Younger intrusives
Boulders of doleritic composition are encountered in the Quaternary gravels.
Their provenance is uncertain. These are similar in appearance and composition
to the Cretaceous pigeonitic dolerites encountered in the Luo diamond field
100km to the north.
Karoo Supergroup
Sedimentary rocks of Permian age belonging to the Lutoe group are known to occur
in the region. These rocks are friable, arenaceous to argillaceous red beds.
The distribution of Karoo strata in the concession area is shown in figure 6.
It should be noted that terrestrial red beds are often incorrectly identified in
the published 1:1,000,000 geological map. Where exposure is poor confusion may
exist between Karoo, Calonda, Kalahari -- and sometimes kimberlitic crater-fill.
Calonda Formation
The Calonda Formation is known to be present within the project area. The
Calonda consists of rudaceous continental red beds of late Cretaceous age. The
thickness of the formation varies considerably: in the Luaco mine it attains a
thickness of 30 m, but in areas such as Chitotolo it occurs as pockets of
sediment preserved from erosion in basement depressions. The Calonda succession
usually consists of a poorly sorted basal gravel unit (0.3m to 4.0m thick),
overlain by gritty, cross-bedded sandstone.
The Calonda Formation is essentially a continental redbed sequence of
feldspathic sandstone (arkose) and basal conglomerates, with argillites
appearing in the upper part of the sequence. The sediments accumulated as fan
deposits and braided stream washes of alluvial affinity, in SW-NE trending
graben-like valleys. The prevailing climatic regime at the time of deposition
was arid.
The sediments vary in colour from brown-red to light purple due to the presence
of iron and manganese oxides. Clasts found in the Calonda Formation basal
conglomerate include quartzite, agate, chalcedony, vein quartz, granite gneiss,
and schist. The size of the clasts and composition of the basal conglomerate
varies greatly. At Luaco mine, agates and Luana quartzite clasts often reach
cobble size. In the Chitotolo and Nzargi areas, fragments of decomposed granite
gneiss and schists are predominant. At Nzargi and Luarica, the conglomerate
consists of readily-weathered granitic clasts which tend to break down in the
pre-treatment plant and only about 25% of product is sent to the DMS plant.
At a number of other localities in the Lunda region, the basal gravels of the
Calonda are known to be diamondiferous and may constitute viable ore bodies.
Kalahari Supergroup
The Kalahari in the Lunda region is divided into an Upper and a Lower unit, the
maximum combined thickness reported from drilling records being in the order of
180 metres.
The Lower unit is commonly intensely silicified, exhibiting the following
characteristics:
- Cream- to yellow coloured conglomerate , the pebbles consist of quartz,
chert, and siltstone, and tend to be well-rounded. The matrix is gritty
sand and is frequently indurated by secondary silica.
- White to yellow sandstone
- Amorphous chalcedonic silica, white to yellow in colour. This material
commonly takes the form of large angular boulders (up to 1 metre in
diameter), and is designated ''Gres Polymorph''.
The upper Kalahari forms the Tertiary peneplain. The sedimentary units are red
to brown in colour, and sand- to silt-stone in composition.
Recent (Quaternary) deposits
The Quaternary sediments of the Lunda region have been intensively studied over
several decades by Diamang geologists. The sediments vary in character
according to the environment of deposition and economic potential. Some of the
more important distinctions made by the Diamang geologists are listed below.
Diamondiferous deposits of Quaternary age include the so called " hillslope"
deposits and the terraces of the major rivers; the flood plain and fluvial
deposits are classified here as Recent, as they are being formed and transformed
at the present time.
Hillslope deposits.
As their name suggests, these gravel deposits are located on the flanks of the
valleys of the major rivers. The gravels may outcrop or may be covered by
several metres of brown silt/clay overburden.
The gravels consist of well-rounded quartz pebbles and locally derived angular
fragments of vein quartz and quartzites in a dark brown clay/sand matrix.
Blocks of gres polymorph, agates and nodules of laterite are commonly present.
The diamonds these gravels contain are derived by erosion from primary
(kimberlite) or secondary (Calonda and Tertiary) sources in the vicinity of the
deposit.
Terrace deposits.
The main terrace deposits are found along the outer margins of the floodplains
of the major rivers. In the valleys of the large rivers of the Lunda, several
terrace levels are known to exist. They represent former floodplains, recently
incised, and correspond to the successive stages of deepening of the valley.
Due to their similar origin, they resemble current floodplain gravels in many
respects. However, overburden and gravel are often partially consolidated and
lateritised. The gravels consist of rounded quartz pebbles and angular
granite-derived quartz grit. Blocks of gres polymorph, agates, and laterite
nodules are often present, in a brown silt or sand matrix.
The gravels may outcrop or may be covered by up to 6m of brown silt or sand
overburden. The higher and older terraces of the major rivers are often heavily
lateritised. This, in conjunction with their similar composition, makes them
difficult to distinguish from hillslope gravels. In some areas, the terrace
deposits are so heavily lateritised that they form duricrusts, and crushing is
needed to release the diamonds. Where sampled (e.g. at Luo), these indurated
gravels have often been found to be well mineralised: it would be advisable to
install a small crusher at any processing facility where alluvial terrace gravel
is to be treated.
Terraces of the minor rivers are more limited in extent and are usually
lateritised to a lesser degree compared to the older terraces of the major
rivers.
Alluvial flat gravels.
These gravels occur at the base of the present floodplains of the major and
minor rivers. The floodplains of the major rivers in the Lunda region are not
usually very broad. The riverbanks are periodically flooded during the wet
season and are underlain by gravel. The gravels are unconsolidated and consist
of medium to coarse, rounded quartz pebbles in a loose sandy matrix. Overburden
may reach 4 to 5 m and comprises loose sand and clay, with a high content of
vegetable matter. Diamond grades in these gravels are frequently good and the
flat deposits of the major and minor rivers were some of the first diamond
deposits exploited in the Lunda region.
River channel gravels.
The distribution of these deposits which occur on the beds of the present day
rivers is controlled by structural and compositional variations in the bedrock,
which may in turn produce extreme variations in gravel thickness and diamond
content.
In the Cuango River where greater compositional and structural variations occur,
many deep pools and scour channels are formed in which high concentrations of
diamonds may occur. The north flowing rivers of the N.E.Lunda (Chicapa, Luembe,
Luachimo) flow for the most part over decomposed granite and schist bedrock.
Bedrock compositional differences here are few and the gravels are more evenly
spread over the riverbeds, but some diamond-enriched pools do exist.
The gravels are "free wash" gravels and are deficient in clays. Resistant,
rounded quartz pebbles make up the major part of the gravels. The gravels may
reach a thickness of several metres in pools and scour channels where high
diamond concentrations may exist at the gravel/bedrock contact. The upper part
of the gravel is usually also mineralised though of lower grade.
Detailed evaluation of river channel gravels prior to mining is difficult. The
major rivers are 4m or more in depth and are often fast flowing
Penetration deposits.
These consist of decomposed bedrock which is not genetically related to diamonds
but into which appreciable quantities of alluvial diamonds have penetrated to a
depth of a few tens of centimetres. In places, penetration of decomposed
bedrock by alluvial diamonds has been observed to depths of 60cm.
In standard evaluation and mining procedures, 20 to 30 cm of decomposed bedrock
is included in the mining depth. In terrace and hillslope deposits, diamonds
are often recovered from the lateritised and broken material below the gravel
layer which represents the former bedrock of the deposit.
Diamonds occurring in bedrock in these circumstances are normally treated as
part of the overlying gravel deposit.
Geological Structure
Due to the paucity of outcrop (and of technical expertise), little is known of
the geological structure of the basement rocks in the vicinity of Saurimo.
The gneissic fabric of the migmatites has a general E-W trend.
Broad structural analysis performed by De Beers in the 1960's led to the
conclusion that the Lunda province was subjected to tectonic tension during the
late Cretaceous period, in sympathy with the Atlantic rifting. This tensional
regime resulted in a series of SW-NE trending grabens and half-grabens.
The distribution of kimberlite occurrences across the Angolan craton reflects
this structural trend. The same trend is also believed to control the principal
zones of accumulation and preservation of the Calonda sediments.
A system of N-S trending faults beneath the Kalahari cover is thought to govern
the orientation of many of the major rivers in the region.
5. Exploration
A 17,000 line-kilometre, aeromagnetic survey was flown in late 2005 (by the
Council for Geoscience (formerly the Geological Survey of South Africa)) which
identified several anomalies coincident with the concentrations of kimberlite
indicators and initial examination of these sites has prompted the company to
commission a gravity - ground magnetic survey to better define drilling targets
for the oncoming dry season. A program to test three targets, designated as
high priority areas, is scheduled to begin in April.
Moydow geologists are working with a team of diamond exploration specialists to
coordinate the drilling program and integrate it with an intensive ground
follow-up of the most promising aeromagnetic targets identified from the
airborne surveys.
7. Drilling
The Company has done no drilling on the leases yet. See Item 5.
8. Sampling and Analysis
Detailed geological and sampling is currently underway. See Item 5.
Diamonds were recovered from a number of sampling pits in this target area
during the course of an extensive sampling programme conducted during the 1970s
by Diamang, the Portuguese state mining company. Recent soil and stream
sediment sampling revealed significant concentrations of kimberlitic indicator
minerals with little evidence of abrasion, suggesting a nearby primary source.
As the region is blanketed by Tertiary sand, geophysical methods are required to
map the bedrock geology. A ground gravity survey was selected as this method
has proved to be very effective in locating kimberlite pipes in Angola, where
thick crater-fill and deep weathering produce strong anomalies.
Gravity measurements on 100 x 100 metre grid spacing produced a discrete
anomaly. The dimensions, shape and intensity of the anomaly - of about 8
hectares - are similar to those expected from kimberlite pipes in this region.
Moydow will investigate the gravity anomaly by diamond drilling in the next few
weeks.
9. Security of Samples
The geologists Laz Fleming and Carl Slade will supervise the handling of all
samples.
10. Mineral Resource and Mineral Reserve Estimates
No resource estimates have been made yet.
11. Mining Operations
No alluvial or hard rock mining operations have been done or are planned yet.
12. Explorations and Development
The exploration strategy of the Cimader/Moydow joint venture has four general
objectives:
1. The search for kimberlites in the established target areas
2. The evaluation of the identified alluvial terrace targets in the Chicapa
and Luachimo basins
3. The evaluation of the "fluvial" diamond potential of the larger rivers
4. The assessment of kimberlite potential of the remainder of the concession
area.
Moydow has established a small office and residence in Luanda, through which the
logistical requirements of the project are to be obtained. The services of the
Angolan contracting firm Ridge Solutions will be used in order to assist with
the start-up phase of the project.
A central field depot and transit house in Saurimo is shared between Dala and
other projects managed by Ridge Solutions in this region, on a proportional
usage basis. Where possible, other facilities within the operational area are
also shared between the Dala and other projects managed by Ridge Solutions.
These include a Differential GPS system and geophysical equipment.
A small, pioneer field crew is deployed from Luanda to select a campsite and to
establish the base camp. The ideal timing of this deployment would be during
the latter half of April.
The first phase of exploration involved an aeromagnetic survey with digital
terrain modelling over the entire concession area, to define drilling targets
and to assist with measurement and correlation of alluvial terraces.
Magnetic targets are followed up by grid soil sampling and gravimetry.
Alluvial exploration work commenced with analysis of the digital terrain model
to determine areas of extensive terrace development. A team of divers will be
deployed to sample the Chicapa and Luachimo riverbeds. Sample reduction would
be by means of technologically-simple, mobile equipment.
Newfoundland - True Grit Property
Moydow has earned a 51% interest in the True Grit claims. Moydow is the
operator of the joint venture. As exploration results are not promising, the
Company decided to write off its investment in the amount of $0.87 million.
Moydow does not intend to do any more work on the property.
1. Project Description
The three True Grit Licenses are located in the Baie d'Espoir area of southern
Newfoundland, Canada. The area covered by the lenses is 111.5km2.
The licences are:
008667M Renewal date 2007/05/09 Map 02D/04 01M/13
009591M Renewal date 2005/10/16 Map 02D/04 01M/13
009630M Renewal date 2008/08/11 Map 02D/04
License 008667M:
Beginning at the northeast corner of the herein described parcel of land and
said corner having U.T.M. coordinates of 5 320 000 N; 604 000 E; of zone 21,
thence south 9000 metres, thence west 11000 metres, thence north 6000 metres,
thence east 2000 metres, thence north 1000 metres, thence east 1000 metres,
thence north 1000 metres, thence east 2000 metres, thence north 1000 metres,
thence east 6000 metres to the point of beginning. Reserving nevertheless out of
the above described area all of the land being part of licence#'s 8334M, 8288M,
7778M, 8379M, 7777M, 7723M, 7718M and 7717M. All bearings are referred to the
U.T.M. grid, Zone 21. NAD 27.
License 009591M:
Beginning at the northeast corner of the herein described parcel of land and
said corner having U.T.M. coordinates of 5 317 000 N; 602 500 E; of zone 21,
thence south 4000 metres, thence west 500 metres, thence south 500 metres,
thence west 2000 metres, thence north 500 metres, thence west 3500 metres,
thence south 500 metres, thence west 500 metres, thence south 500 metres, thence
west 2000 metres, thence north 2500 metres, thence east 1000 metres, thence
north 500 metres, thence east 1500 metres, thence north 1000 metres, thence east
3500 metres, thence north 1000 metres, thence east 2500 metres to the point of
beginning. All bearings are referred to the U.T.M. grid, Zone 21. NAD 27.
License 009630M:
Beginning at the northeast corner of the herein described parcel of land and
said corner having U.T.M. coordinates of 5 326 000 N; 607 000 E; of zone 21,
thence south 2000 metres, thence west 2000 metres, thence south 4000 metres,
thence west 4000 metres, thence north 6000 metres, thence east 1000 metres,
thence south 1500 metres, thence east 3500 metres, thence north 1000 metres,
thence east 500 metres, thence north 500 metres, thence east 1000 metres to the
point of beginning. All bearings are referred to the U.T.M. grid, Zone 21. NAD
27.
Title and Obligations
Moydow is the License Holder for all three True Grit licenses. The company is
currently involved in a joint venture with Cornerstone Capital Resources Inc. ("
Cornerstone") of Mount Pearl Newfoundland and Labrador, Canada. Moydow has the
right to acquire 51% of the property by incurring expenditures of CDN$ 800,000
coupled with various option payments.
Moydow can then elect to proceed on a 51% ownership basis or by incurring
additional expenditures of CDN$1,200,000, can increase its holding to 80%.
Environmental liabilities and Permits
The Company is not aware of any environmental issues, which - without proper
care - could create a liability for the Company. The Company has at all times
obeyed any instructions issued to it by the various statutory authorities in
relation to the environment.
Moydow obtained approval from the Newfoundland Department of Mines and Energy
prior to any trenching or drilling activity. The Company has no reason to
believe that in the future necessary permits, once applied for, will not been
granted.
Mineralization
For a detailed description, see paragraphs 6 and 10 below.
2. Accessibility, Climate, Local Resources, Infrastructure and Physiography
Accessibility and Infrastructure
The property lies next to the Baie d'Espoir highway, a tarred road and an
offshoot from the Transcanada Highway. Access to drill sites is via a good
network of logging tracks and jeep trails.
Local Resources
Goods and services are available in several coastal communities in the Baie
d'Espoir area, situated some 10-15km south of the exploration license area.
Competent and experienced personnel and contractors for exploration and drilling
can be found in Newfoundland. Skilled and unskilled labourers are readily
available from towns or from nearby villages.
Climate
The climate is typical of the eastern coast of Canada, Newfoundland, with long
cold winters, often with heavy snowfall. Summers tend to be short and
temperatures seldom exceed 28degreesC.
Physiography
The license area is characterized by low-lying topography, is heavily forested,
and contains large tracts of boggy ground surrounding small ponds and glacial
lakes.
3. History
The property has had a protracted history of exploration dating from the late
1980's when a lake sediment survey, conducted by the Newfoundland Department of
Mines, revealed anomalous gold concentrations over a considerable stretch of
terrain either side of the Baie d'Espoir highway.
Teck Corporation, on the basis of this information, staked a swathe of ground,
systematically evaluated the lake sediment anomalies and turned up the True Grit
and Golden Grit prospects, which were samples and trenched.
One such trench, containing scattered gold values along its length, was
subsequently investigated by a two-hole drilling program when the property
passed into the hands of local prospector Alex Turpin in 2001.
Cornerstone then acquired the property from Mr. Turpin before optioning it
(early 2003) to Moydow who decided to investigate the property more intensively.
4. Geological Setting
Almost the whole of Newfoundland lies within the northern edge of the
Appalachian orogen with the exclusion of its western part, which belongs to St.
Lawrence and New Brunswick platforms (Pool et al., 1973). Within the
Appalachian belt, formed from Late Precambrian till Late Devonian, three
tectonic zones from west to east are distinguished (Hayes, 1987): Dunnage,
Gander and Avalon. The Dunnage and Gander zones represent a part of the Early
Cambrian - Silurian Notre Dame Trough that in its western eugeosynclinal zone is
composed of volcanic rocks and the eastern zone is represented by sedimentary
rocks (Pool et al., 1973). The explored area is completely situated within the
sedimentary part (Exploit subzone) of the Dunnage zone. The Exploit subzone is
separated from the ophiolitic-volcanic subzone by an extensive fault system
(Williams et. al., 1988).
The Baie d'Espoir area of Newfoundland is underlain by a suite of Lower
Palaeozoic sediments, mostly siliclastics with subordinate calcareous horizons,
intruded by dykes and stocks of a granodiorite -granite composition.
The True Grit license is underlain by metamorphosed rocks of the Baie d'Espoir
Group (Anderson, 1967) of Lower or Middle Ordovician, which is divided into four
formations. The structural complications and similar lithological composition
makes it difficult for their certain stratigraphy. On the 1:50000 geological
maps (Colman-Sadd, 1976, 1980) the whole True Grit license area occupies a small
piece of a large non-divided St. Josephs Cove Formation, which consists of
interbedded calcareous sandstone, siltstone and pelite with a proposed thickness
of at least 5000m. The St. Josephs Cove Formation was greenschist facies
metamorphosed, which in psammitic and pelitic rocks is characterized by
chlorite, biotite and muscovite and in calc-silicate rocks - by clinozoisite and
tremolite-actinolite (Colman-Sadd, 1976, 1980).
The Siluro-Devonian North Baie Granite batholith was mapped outside the explored
area (Pickett, 1990). It is represented by a pink quartz, biotite, feldspar
granodiorite.
The rocks of the Baie D'Espoir Group were affected by two phases of deformation:
D1 - isoclinal folds with a slaty cleavage along bedding,
D2 - open folds postdating the granitoids intrusions.
The predominant structural grain is northeast-southwest and parallel to this
trend are a number of prominent structural dislocations separating terrains of
varying paleo-geographic provenance. Some of these lineaments are accompanied
by zones of intense shearing and fracturing which result in complex patterns of
polyphase folding and cleavage development. Thrust faulting is locally
intensely developed, often with an east-to-west component.
5. Exploration
The Company began exploration on the licence in the summer of 2003 and following
a review of all available geological/exploration data, it was concluded that
only an intense drilling program would succeed in deciphering the complex
mineralogical distribution as reflected in the erratic soil geochemistry.
The Company began exploration on the licence in the summer.
Accordingly, it was decided to initiate drilling in the vicinity of the
prospectors (see History) two drill holes and from this point to probe putative
northeasterly and southwesterly strike extensions.
This first phase of drilling was executed in May and June of 2003 and totaled
1251 meters of diamond drilling. The results, while expanding the known aerial
extent of the mineralization exposed by shallow trenching and encountered in the
prospectors two holes, did not intersect significantly higher grades of gold
mineralization. The best intersection returned a section of 116 meters
averaging 0.7 g gold/ton.
A second phase of drilling executed in August and September 2003 met with
somewhat similar results in a program that totalled 1317 meters of diamond
drilling. The best intersections in this phase were slightly deeper than those
encountered during the first phase and represent down-dip extensions of an
easterly dipping sheet or sheets of gold mineralization up to 50 meters wide.
The Phase 3 drilling program was executed from April to June of 2004 and
totalled 3012 meters and probed conceptual targets outside the known limits off
gold mineralization; in general, no significant mineralised intercepts were
encountered.
The Phase 4 program, executed from October to December 2004, totalled 2196
meters and was designed to test the at-depth extensions of previously identified
mineralization lying between the surface and 100 meters depth. Although the
structural controls of mineralization remained somewhat ambivalent after this
phase, it is considered that while some sheets of gold mineralization do persist
to depths in excess of 200 meters, there is little evidence that grades increase
with depth. Although a few sporadic values in excess of 1 g gold/ton were
intercepted, grades tended to cluster in the 0.4 to 0.6 g gold/ton range.
6. Mineralization
It was found that gold mineralization on the True Grit license is associated
with arsenopyrite needles in rocks at the exo-contacts of quartz-carbonate -
with pyrrhotite and pyrite - folded veinlets that form stockworks. Gold-bearing
arsenopyrite is represented by small (0.1-2mm) needles that have different
orientations but that are mostly spread along the bedding. Rarely, arsenopyrite
needles were found inside quartz-carbonate stringers. In some holes
arsenopyrite needles is had formed in the breccias that are sub-concordant to
the foliation of metamorphosed rocks. The quantity of arsenopyrite varies from
rare needles up to 1-3% at some intervals.
7. Drilling
Gold in rocks with arsenopyrite has a strong positive correlation with As and
Sb, a weak positive correlation with Ag, Pb, Sr and a negative correlation with
the majority of detected elements: Ce, Mg, V, Na, Al, Be, Cu, Ni, La.
Correlation of elements in these rocks in principle differs from non-altered
metamorphosed rock. Gold correlation is linked to the degree of
arsenopyritization.
The average ration As/Au is 1:3000 but varies from 1:1000 to 1:4400. It is
suspected that all gold is finely disseminated in arsenopyrite. Average
calculated gold grade in arsenopyrite is 150g/t, varying from 100 to 450 g/t.
The Company had 94 diamond drill holes drilled in four phases to a total of 7776
meter. Standard procedures were followed during drilling, core logging, and
sampling. The core was cut in half. One half was sent to the assay laboratory
and one half in Baie d'Espoir.
8. Sampling and Analysis
For sampling the whole core was cut. Sample length of the rock hosting numerous
needles of arsenopyrite was one meter. Intervals hosting rare needles of
arsenopyrite samples length was two meter. Visually non-mineralised rocks were
sampled in intervals of three meter. A total of 4317 samples have been
collected which were fire assayed for gold in combination with atomic absorption
in Eastern Analytical Ltd. laboratory based in Springdale, NF. Most samples
were also ICP assayed for 30 elements in the same laboratory. For internal
control, pulp reject samples (5%) were selected. External control was done in
the Activation Laboratories Ltd. in Ancaster, Ontario and in OMAC lab, Ireland.
At Eastern Analytical, samples were dried, then crushed in two stages to
approximately 10 mesh and split using a riffle splitter to approximately 300
gram. The sample is pulverised using a ring mill to approximately 89%
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