Herald updates Indonesian activities
Wednesday, January 28 2009 - 05:55 AM WIB
OVERVIEW
Development activities at the Dairi zinc/lead project continued throughout the quarter.
The Dairi Feasibility Study (?DFS?) is based solely on a 1 Mtpa development of the high-grade Anjing Hitam deposit (diluted Reserves 6.5Mt @ 14% Zn, 9% Pb) for an initial mine life of 7 years, although substantial other Resources also exist within the project area, e.g. Lae Jehe, where ongoing drilling has thus far delineated Resources of 11 .3Mt @ 10% Zn, 6% Pb.
FORESTRY APPROVAL PROCESS
The Company has previously advised that it is awaiting forestry approval in order to proceed to full development of the Dairi Project.
Due to the protracted delay in obtaining the forestry approval, the Company has decided to cease port and road construction activities associated with the project.
DEVELOPMENT UDPATE
Steady progress was achieved for all project activities throughout the quarter. However, as mentioned above road and port construction activities have ceased.
The Kuala Tanjung construction contract has been terminated. The site office has been closed and the contractor has been demobilised and the site and has been secured. Equipment already delivered has been stored and placed on care and maintenance.
In addition construction activities at the mine site have also ceased. Road contracts have been terminated. The camp construction contract has been completed. However, the camp has now been closed and placed on care and maintenance.
The EPCM contractor has closed their site office in Parongil and demobilised its workforce. A dedicated team has been retained to implement a care and maintenance strategy for all the project assets in North Sumatra.
The Forestry Approval delay has directly affected the access for the underground mine development, and as a consequence the mining contract has also been terminated.
The PT Dairi Prima (PTDPM) project team remain in place and the PTDPM offices in Jakarta, Sidikalang and Parongil have not been impacted by the changes above.
EXPLORATION
Anjing Hitam
Approximately 890kg massive sulphide ore was sampled from the Anjing Hitam deposit from diamond drill hole S0P299D.
In January 2009 test work for metallurgical variability analysis will be dispatched.
Lae Jehe
Introduction
The Lae Jehe prospect is located about 1.5km north of the main Anjing Hitam orebody and 800m north of the planned concentrator site. Lae Jehe is the most advanced target to provide future mill feed following the initial 7 year mine life at Anjing Hitam.
The mineral resource at Lae Jehe has not been updated this quarter and remains as reported during the July quarter.
Drilling continued through this quarter with one drill rig in operation. One hole was completed and intersected 5 thin bands of massive sulphide of the lower Julu horizon.
Mineral Resources
As reported in the July quarter, the Combined Indicated and Inferred Resources at Lae Jehe total 11.3 Mt at 10.5% Zn, 5.7% Pb and 5g/t silver, which equates to I .83Mt of combined metal.
The deeper portion of the M2 horizon, which contains 75% of the overall resources, has now yielded 1 million tonnes per 100m interval of strike and remains open along about 300m of potential strike length to the south towards Basecamp and 600m of potential strike length to the north, towards Bongkaras.
The resources also remain open at depth and there is thus very good potential for increasing the Lae Jehe resources with ongoing drilling during 2009 and beyond.
Drilling
One drill hole was completed during this quarter at the southern end of the Lae Jehe prospect.
SOP295D commenced drilling in the September quarter to test the M2 horizon down-dip from SOP256D, and intersected five thin, relatively low grade horizons, which returned a best intercept of 2.0m @ 3.1% zinc and 2.0% lead (September quarterly report).
Drilling continued into the December quarter and intersected 5 thin (0.5 - 2.0m) bands of
massive sulphide in the lower Julu, immediately above the contact with the Jehe Carbonate. The lower half of the sequence returned aggregated assay results greater than 5% combined Zn + Pb: 5.38m (ETW*=3.23m) @ 3.8% Zn, 2.5% Pb, 7 ppm Ag.
Silver values of the lower Julu horizon suphides are typically higher than those of the main sulphide horizons of the middle to upper Julu Shale.
Lae Jehe Pre-Feasibility Program
AMC Consultants Pty. Ltd. completed the Lae Jehe mining schedule in the June quarter, but the Combined Resource has increased significantly since the study was initiated.
The mining study will be reviewed later when the resource is more clearly defined. Basecamp Resource
Early exploration drilling identified a lower grade resource of 800,000 tonnes @ 7.2% Zn and 4.3% Pb at the Basecamp sector, between Anjing Hitam and Lae Jehe.
Drilling of SOP297D commenced at Basecamp late in the September quarter to test the Julu mineralized horizon down dip of SOP06D. In this quarter SOP297D intersected several thin sulfides horizons within an unusually thin (22.2m) sequence of the Julu Shale Subunit.
SOP298D then tested the gap between SOP05D and SOP06D and intersected 1.3m of massive sulfide from 132.6m, underlain by base metal veined shale. Both SOP297D and SOP298D were completed in the Jehe Dolostone which hosts low grade galena-sphalerite mineralisation.
Sinar Pagi
The Sinar Pagi prospect is located approximately 20 kilometers north of Sopokomil. Previous drilling had intersected significant widths of lead-silver-zinc oxide mineralisation.
The 2008-2009 drilling programme commenced late in the September quarter, with nine drill holes planned for a total of 2,900 meters of diamond drilling.
The first drill hole SPA019D, on section 19800E, 100m west of the previous limit of drilling, intersected low grade lead oxide mineralisation at 118.10 - 133.10m, underlain by higher grade lead oxide mineralisation at 141.8 - 146.00m, including a best result of 2.80m (ETW2.14m) @ 27.9% Pb and 0.15% Zn.
The style of the mineralisation and alteration of SPA-19 D is similar to that intersected by previous drilling and confirms the strike continuity of the oxide mineralisation.
A deeper massive carbonate unit hosts a mineralized quartz breccia at 182.75-191.30m which carries up to 3% galena and traces of oxide copper minerals.
All new mineralized drill intersections and assay results received in the quarter are shown in the table below:
Sinar Pagi Drill Intersections
The second hole of the programme SPA020D (section 20000E) tested the 200m gap between the significant oxide mineralisation of drill hole SPA09D and the thin, primary mineralisation intersected at depth by SPA18D.
SPA20D intersected a mineralized quartz breccia interval at 272.35-301.6m, which contains galena veins and lenses up to 30cm thick. Assay results are awaited.
An AD500 rig drilled hole SPA21D on section 20100E to test the eastern limits of the mineralisation but failed to intersect significant mineralisation. SPA21D intersected a large fault zone and it is suspected that the mineralisation is terminated or off-set by faulting. Drill hole SPA22D will test for off-set mineralisation next quarter.
Buluh, Laga
The Buluh Laga prospect is located 21km northeast of Sopokomil in the Juhar sector of the Dairi CoW. Galena-sphalerite mineralisation occurs within breccia exposed by a shallow open pit or trench, which was excavated in past decades. Exploration by PT. Dairi Prima Mineral identified high grade lead-zinc-silver values in rock and soil samples within an extensive alteration zone.
Preparations for a 3 hole scout drilling programme commenced this quarter, including liaison with the local community and government, construction of a drilling camp and clearing of the drill pads and access tracks. Drilling is planned to commence in first quarter 2009.
Regional Exploration
Exploration activity during the December quarter focused on drilling at the Lae Jehe, Anjing Hitam and Sinar Pagi prospects, and preparation for drilling at Buluhlaga.
No regional exploration was undertaken.
SARKEA BASE METALS PROJECT (Herald 100%)
This area is centered about 10km south of the Dairi Project?s Anjing Hitam deposit. It was held under two successive SIPP prospecting permits covering 9,606ha. No more than 2 SIPPs are permitted by law, and Herald Resources Limited has been advised that no further exploration permits will be granted pending the ratification of the new Indonesian mining law, which was passed by the national parliament on 16 December 2008 and is expected to come into effect before the end of January 2009.
Under the terms of the new mining law, the exploration permit must take the form of an IUP Eksplorasi (Mining Business Permit for Exploration), which is a fundamentally different form of license compared to the previous Contract of Work system.
No field work was undertaken during this quarter.
MELUAK GOLD PROJECT Aceh Province
Herald 22% via unlisted Corona Gold Ltd
Previous exploration at Meluak was undertaken within a 2,760ha SIPP prospecting permit issued by the Gayo Lues Regency to Jag Mining Corp. Ltd. (?Jag?), a 100% owned subsidiary of Corona Gold Ltd. incorporated in Malaysia.
Agreement was reached in late 2007 with the Regency authorities and the Mines Branch in Aceh about converting the SIPP to a Contract of Work, which is deemed desirable prior to resuming drilling, and the Contract of Work application was submitted on 28th January 2008. This CoW application was submitted by Jag (95%) and the local Gayo Lues government company GLM (5%).
Jag and the Gayo Lues government formalized an MOU during the September quarter which provided for GLM to apply for a new SIPP to conduct exploration until the CoW or exploration permit is issued to a new PMA company, to be owned 95% by Jag and 5% by GLM.
A survey team from the Forest Zone Establishment Body (BPKH) completed a survey during the December quarter in conjunction with the local civic authorities and police, which defined the national park boundary adjacent to the Meluak prospect. The results of this survey were appended to the CoW application, in order to allow processing of the application to proceed.
Under the terms of the new mining law, the exploration permit must take the form of an IUP Eksplorasi (Mining Business Permit for Exploration). (end of edited excerpt)