Hillgrove updates Indonesian gold, copper/gold projects
Wednesday, November 30 2011 - 07:51 AM WIB
SUMBA GOLD PROJECT
Hiligrove is an 80% shareholder in PT Fathi Resources Pte Ltd, which holds IUP 322 on the island of Sumba. Hillgrove is responsible for the sole funding and management of all exploration and development activities, up to a decision to mine. The IUP Explorasi (Exploration and Mining Business Licence) covers 999km2 and is valid until December 2016.
The Island of Sumba is covered in recent marine sediments that effectively mask and preserve highly gold prospective underlying volcanic units. Erosion of this sedimentary cover has created windows through to underlying volcanic lithology, where Fathi is focusing its exploration efforts.
Masu Project
The Masu Project is located in the South-Eastern portion of the IUP, where ongoing soil sampling, rock chip sampling, trenching and drilling activities undertaken by PT Fathi have confirmed the presence of epithermal vein-hosted gold mineralisation at several prospects.
Exploration within the Masu Project this Quarter focused on the interpretation of recently flown airborne magnetic data, the completion of an IP ground geophysical survey over the Karipi prospect, trenching, soil sampling, geological mapping and initial scout drilling of the Karipi target
Surface Geochemistry Sampling
A total of 11 trenches were completed this Quarter over the Karipi gold target and surrounding area Trenching encountered significant 9old mineralisation similar to intersections reported last quarter. Highlights included:
? MATR088: 18m @ 1.00 g/t Au
? MATR089: 23m @ 1.66 g/t Au
? MATR093: 18m @ 32.94 g/t Au
? MATR094: 12m @1.88 g/t Au
? MATR095: 4m @ 10.63 g/t Au
? MATR109: 8m @ 16.07 g/t Au.
Trenching and surface sampling have identified anomalous gold mineralisation in association with north-west trending quartz-sulphide veins and associated stockworking over a 2km long zone, open along strike.
In addition to trenching, surface rock chip sampling continues to encounter very high gold grades up to 95 g/t Au. Gold is associated with quartz veins and stockwork zones developed within a North West trending structural corridor (see Appendix). Interpretation of recent airborne magnetic survey data has identified several significant structural features in the Karipi area with associated development of low sulphidation epithermal quartz veins. These structures trend beneath thin covering sediments and constitute high priority exploration targets.
Drilling
A short scout drilling programme of 8 holes for a total of 523.15m was completed this quarter, targeting better gold intersections in trenching over the central Karipi hill area. Drilling encountered broad zones of clay alteration, quartz stockworking and veining within mixed volcanogenic lithology consistent with a high level, low temperature low suiphidation epithermal setting.
Gold mineralisation was encountered in all drill holes, typically in association with broad clay - quartz stockwork zones and a low sulphidation quartz - sulphide epithermal vein developed on the contact between relatively soft volcanic tuff and a lower, hard andesite lava.
Highlight intersections include:
? MADDKP002: 8.5m @ 2.42 g/t Au from 0m
? MADDKP004: 17m @ 3.72 g/t Au from 8m
? MADDKP008: 20.2m @ 1.41 g/t Au from 6.1m.
Geophysics
An Induced Polarisation (IP) geophysical survey was completed over the Karipi prospect area this Quarter. The IP survey was designed to assess the chargeability and resistivity characteristics of known quartz sulphide vein complexes at Karipi and to track these veins along strike and down dip and assess for lookalike signatures beneath adjacent thin sedimentary cover. Processing of this data is underway as a prelude to ranking of drill targets.
Mapping
Mapping activities have continued along the Masu Corridor, principally targeting detailed coverage of the Karipi - Liandinger areas. Mapping is focussing on clearly identifying the structural setting of Karipi together with closer attention to defining the boundaries of various alteration regimes.
Reconnaissance mapping of the Ngonggi - Lewitu target areas in the south of the licence has identified widespread clay - pyrite alteration, interpreted to be a remnant lithocap. No significant mineralisation was identified in the first pass reconnaissance sampling of the area, typical of a barren lithocap geological setting. Our current interpretation is that alteration is associated with a shallow porphyry complex prospective for Cu - Au mineralisation.
Tanah Daro Project - Pelitalira Prospect
The Pelitalira prospect is located in Central Sumba within the Tanah Daro Project area. Pelitalira is easily accessed from the main sealed highway connecting the regional centres of Waingapu and Waikabubak.
Exploration this Quarter focused on extending trenching in the Pelitalira North area, where sheeted quartz veining within a porphyritic diorite was discovered. Reconnaissance of targets identified in the recent airborne magnetic survey was also undertaken.
Trenching in Pelitalira North encountered broad, low grade gold mineralisation with elevated molybdenum. Gold is associated with sheeted quartz veining and attendant alteration consistent with an upper or near porphyry environment.
Trench TDTR023 intersected a - 75m wide zone of gold anomalism that included:
? 17m @ 0.90g/t Au
? 4m @ 0.76 g/t Au
? 20m @ 0.93 g/t Au.
Trench TDTR024, located ? l00m north west of trench TDTR023 encountered 10m @ 1.50 g/t Au within a - 35m wide zone of gold anomalism, again in association with sheeted quartz veining within an altered porphyritic diorite. Opportunity exists to define a large tonnage, low grade occurrence of gold mineralisation at this location.
Petrological analysis of selected drill core from Pelitalira has identified a complex alteration history of the prospect area. Initial hot, acidic advanced argillic alteration associated with the interpreted emplacement of multiple porphyritic dykes is overprinted by later stage, cooler low suiphidation epithermal veins and associated illite alteration. Based on findings of this study, exploration upside remains at depth, where earlier drilling encountered strongly altered breccia complexes with low grade gold and copper mineralisation thought to have formed proximal to a buried porphyry.
Sumba - Summary & Next Steps
Disruption to drilling activities at Karipi due to protests from villages located outside the IUP licence area has now ceased, with socialisation activities in these villages concentrating on allaying concerns and providing clear and accurate information to the community about the exploration process as a balance to misinformation about modern mining and exploration that has been disseminated by so-called NGOs operating on Sumba. This socialisation work is ongoing but to date has resulted in the peaceful resumption of field activities and good levels of cooperation between all parties.
Karipi is the highest priority target area on Sumba and current planning involves resumption of drill testing of the multiple vein systems identified to date. Surface sampling and mapping will extend coverage to the North, South, East and West of Karipi assessing for possible extensions to gold mineralisation.
Reconnaissance exploration along the South coast of the IUP (Ngonggi - Lewitu areas) will continue next Quarter, as manpower permits.
Trenching at North Pelitalira, assessing the sheeted vein complexes within the intrusive diorite complex will continue in the coming Quarter.
A resumption in drilling activities may lead to the completion of two deeper drill holes at hold Pelitalira to assess the potential of a near surface porphyry target beneath earlier shallow drilling. Initial scout drilling of the sheeted vein complexes at North Pelitalira will likely be undertaken at the same time.
BIRD?S HEAD COPPER/GOLD PROJECT, WEST PAPUA
Hiligrove is an 80% beneficial shareholder in PT Akram Resources Pte Ltd which holds IUP40/2010 in the Bird?s Head region of West Papua. Hillgrove is responsible for the sole funding and management of all exploration and development activities up to a decision to mine. The IUP covers 992.3km2 and is valid until March 2017.
Security of Tenure
Hiligrove has an 80% beneficial interest in PT Akram Resources through an executed JV Agreement (JVA). Before Hillgrove can own shares in PT Akram, PT Akram must be converted to ?PMA? status, in order to allow direct foreign ownership of PT Akram. The application for conversion requires Governor of West Papua signature support, but this has been delayed for most of 2011, pending the outcome of disputed West Papuan elections.
Hiligrove is extremely comfortable with the JV relationship it has with its local partners, but we are also cognisant of recent concerns/doubts regarding security of tenure for some properties in Indonesia. Accordingly, while waiting for gubernatorial support for PMA status, Hillgrove has sought to remove security of tenure fears and/or perceptions for our shareholders. We have:
? Executed a conditional Sale & Purchase Agreement of our partner?s shares in PT Akram to Hillgrove (condition relates to fulfilment of the PMA status);
? Our partners? shares in PT Akram have been pledged to Hillgrove under an executed Share Pledge Agreement;
? Hillgrove holds a Power of Attorney over the pledged PT Akram shares.
We have done as much as we can to ensure that Hillgrove?s succession to outright ownership of the shares in the licence holding vehicle, PT Akram, is now mechanical, and only awaiting outcome of West Papuan elections, followed by the Governor?s signature on the application of PT Akram for conversion to PMA status.
Activities
In the absence of a drilling permit (under consideration by Forestry in Jakarta since late 2010), exploration activities this quarter have focused on continuing geological mapping, trenching and preparation for planned drilling.
Exploration Results
Geological mapping, surface channel and rock chip sampling continued this quarter within the West Delta prospect area, focusing on extending coverage to the South over the Southern Porphyry target areas.
Mapping and surface sampling has identified numerous areas of strongly anomalous copper mineralisation associated with faulting and fractures, predominantly within monzonite host lithology.
Sampling indicates that although copper mineralisation is widespread at Southern Porphyries, the likely source of copper is from deep seated intrusions. Plotting in rock chip sampling copper values on radiometric imaging shows a very strong correlation between potassium anomalism and elevated copper at the Green Cliffs and Rak Rak target areas, with the Southern Porphyry copper mineralisation showing a much weaker correlation, possibly reflecting a greater depth to buried porphyry systems in that location.
Drilling
The commencement of drilling at West Delta remains in limbo, awaiting grant of the Izin Pinjam Pakai forestry permit to drill within Limited Production Forest.
As background to this issue, state forests in Indonesia fall into three broad categories; Conservation Forest, Protected Forest and Production Forest. Depending on the forestry status, companies can apply for a permit (Izin Pinjam Pakai Explorasi - Permit to Borrow and Use ? Exploration) to undertake low impact exploration activities such as drilling. This permit sets out the terms and conditions under which exploration activities must operate, largely focussed on ensuring minimal impact to forests.
Conservation Forest is off-limits to mining and exploration. Protected Forests allow for low impact exploration and underground mining, but open cut mining is expressly forbidden. Production Forest allows for exploration and both underground and open cut mining.
Should a company discover a resource within Protected or Production forestry areas and wish to advance to production, a separate Izin Pinjam Pakai Exploitasi (Permit to Borrow and Use - Exploitation) is required, under which specific terms and conditions are set out on the forestry management and rehabilitation requirements of the development, amongst other things.
At West Delta, our key drill targets fall within Production Forest (secondary forest) and therefore are eligible for open pit mining exploitation should a viable resource be delineated.
The permit application process, which includes obtaining a technical recommendation from the Department of Mines and Energy, has now taken about 12 months and represents the single largest impediment to further exploration progress at Birds Head. The process has been delayed by the introduction of a Presidential Decree effecting a two year moratorium on grant of forestry permits over designated primary forest areas. Because of our designation as ?Secondary Forest?, this does not affect our application directly but has added enormously to the workload of the Ministry of Forestry, which has slowed the whole process.
It is important to note that we are not alone in this situation; there are literally hundreds of companies seeking Izin Pinjam Pakai for a wide range of projects across the Indonesian archipelago, with the ensuing bottleneck at the Ministry of Forestry resulting in significant delays for all companies. In response, the Minister of Forestry has announced a new policy whereby several internal steps in the application process have been shortened.
We remain uncertain on the timetable to receiving Izin Pinjam Pakai but can state that we have completed all of the required application steps and now await confirmation and sign-off from the Minister of Forestry. Drilling will commence once the Izin Pinjam Pakai is granted.
Bird?s head - Summary & Next Steps
Mapping coverage continues to expand over identified target areas in West Delta. We await Pinjam Pakai to commence drilling. (end of excerpt)