Ashburton updates Halmahera gold project

The following is an edited excerpt from Australian firm Ashburton Mining quarterly report ended September 30, 2011 released on Thursday.

Obi Gold Project, Indonesia (option to acquire up to 85%)
As reported to the market on 30 September 2011, Ashburton withdrew from this project following a review of the initial drilling results from work undertaken by the Company and reported on 9 September 2011.

These results indicate that gold mineralisation within the area of most intense artisanal workings is confined to a near-surface flat-lying zone of quartz veining of 3 m to 9 m in thickness. This vein appears to be the main source of ore for the artisanal miners. Additional veins were not intersected at depth, thus largely precluding the potential for Ashburton to be able to define an economic resource at depth, beyond the artisanal miner operations. Results from the second batch of samples, received subsequently, confirm this interpretation, with drill hole OAD 07 returning a single intercept of 0.8 m @ 2.57 g/t.

Although Ashburton considers the balance of the exploration tenement to be prospective, the initial involvement was based on indications that a substantial gold resource could be delineated in the area of artisanal workings in the near term. The substantial payments to be made under the terms of the Heads of Agreement with the vendor reflected this proposition. To proceed under these terms, Ashburton was to make a payment of US$2 million and issue 30 million shares to the vendor of the tenement.

Based on the results, this proposition is no longer applicable and proceeding with the option was not justified.

Negotiations with the vendor to vary the terms of the Heads of Agreement were unsuccessful and Ashburton accordingly advised the vendor that it will not proceed. This resulted in the automatic termination of the Heads of Agreement, other than Clause 3.1(h) which survives without time limit and under which Ashburton is entitled to 50% of the net profit of the minerals sold by the vendor arising from processing of artisanal ore by non-mercury gravimetric methods. (end of edited excerpt)