Author: hankinstappan

Company Statement

Carpathian Gold Inc. (TSX:CPN) is a mineral exploration company that is focused on the development and exploration of two advanced gold and gold + copper projects with the goal of becoming a gold producing company in mid 2012. 

Currently, Carpathian has an advanced gold project in the state of Minas Gerais, Brazil and a gold + copper project within the Apuseni Mountains of Central Romania, which combined host +12 million gold equivalent ounces in all resource categories.  

The project in Brazil is referred to as the RDM Gold Project which hosts a NI 43-101 resource of 1.5 million ounces (in all resource categories) of which 1.0 million falls within an open pit.  A completed Preliminary Economic Assessment in August 2009 on the open pit portion of the resource only, indicated the project can be 6,000 t/d, convention CIL operation producing an average of 102,000 ounce per year for an initial mine life of 7.1 years.  At a gold price of $1000 gold the project has an after tax NPV7.5 of US$143.0 million and an after tax IRR of 41%.  Carpathian is in to feasibility and production stage with management expectation of commencing production in mid 2012.

In Romania, Carpathian has discovered a world class size gold-rich, copper porphyry system referred to as the Rovina Valley Project (RVP).  The global mineral resource (NI 43-101 compliant) of this system, based on drilling results from 2006 through 2008, totals 10.7 million gold equivalent ounces (all resource categories) of which 7 million is gold only. The preliminary economic assessment (March 2010) for the RVP Project has been released and is very positive.

Carpathian has extensive exploration and operation teams in both Brazil and Romania working towards the advancement and development of these two projects.

Current Operations

Romania
Romania is particularly well endowed with metallic ore deposits: gold has been mined in Romania since pre-Roman times and the country has been one of the most important producers of precious metals in Europe. Carpathian Gold, through its Romanian subsidiary, holds the Rovina license in the Golden Quadrilateral mining district of Romania.

The richest concentration of gold in Romania has been in the Apuseni Mountains, in this area which has historically produced in excess of 55.0 million ounces of gold from epithermal deposits, and ranks as one of the richest epithermal gold producing regions of equivalent size in the world.

Recent exploration within the Golden Quadrilateral by Gabriel Resources at their Rosia Montana deposit has identified a proven plus possible gold reserve of 16 million ounces. Also within the Golden Quadrilateral, European Goldfields has recently announced a drill-indicated gold resource of 3.5 million ounces on their Certej deposit.

Rovina Valley Au-Cu Project, Romania

• Located in Romania’s Golden Quadrilateral with historic Au production of
  over 55 M oz.
• NI 43-101 Mineral Resource (Colnic, Rovina & Ciresata porphyries) of:
  – Measured + Indicated: 3,070,000 oz Au & 759 million lbs Cu
  – Inferred: 3,890,000 oz Au & 663 million lbs Cu
  – Global Resource*: 10,750,000 oz Au eq***
•  Deposits still open and not yet been fully delineated.
  – Positive Preliminary Economic Assessment
  – 40,000 tpd mining with standard flotation processing
  – Ave. 343,600 Au-eq1ounces/yr over a 19 yr mine life
  – NPV5 $1.130 billion (@ US$1000/oz gold price & US$3.00/lb Cu)
  – IRR, 24% (@ US$1000/oz gold price & US$3.00/lb Cu)
• All infrastructure, including road, power and water, adjacent to the deposit
• Still open in all directions, Drill Hole RGD-17, 716 m at 1.14 g/t Au &0.16% Cu.
• 20,000 metres of drilling started in Dec 2010 on Ciresata deposit and satellite targets on RVP licence
• Exploration license to be converted to Mining license in early 2011

Brazil
The Riacho dos Machados (RDM) Gold Project is in southeastern Brazil approximately 540km north of Belo Horizonte in Minas Gerais State, one of Brazil’s oldest and most important mining states. The project consists of a single 1000 – hectare mining concession and 12 exploration areas totaling 21,000 hectares. The mining concession includes surface rights ownership for 266.6 hectares and has significant mining infrastructure inherited from an open-pit oxide heap leach gold operation (Mina de Ouro Fino) that was operated from 1989-1997 by Companhia Vale do Rio Doce (“Vale”), Brazil’s largest mining company.

This permitted brownfield gold project has an historical resource (from Vale) consisting of 560,000 ozs Au with 3.8 million tonnes at 4.6 g/tAu and an upside exploration target potential of 5-15 million tones of 3.0 to 4.5 g/tAu.

Riachos dos Machados Gold Project (RDM)

• Permitted brownfield gold project with an updated NI 43-101 Mineral Resource (July 2010) of:
  – Measured + Indicated: 812.3 koz Au (200% increase)
  – Inferred: 692.9 koz Au
  – Global Resource*: 1,505,200 oz Au
• Robust Preliminary Economic Assessment & Near-term OP
  production (July 2009)
  – An initial open pit operation at 6,000 tpd
  – Avg. 102,000 ounces/yr over initial 7.1 yr mine life
  – NPV7.5 ,143.0 million (after tax @ US$1000/oz gold price)
  – IRR, 41% (after tax @ US$1000/oz gold price)
  – Low start-up capital, attractive “economic grades” with excellent
  cash flow and short payback period.
• Existing infrastructure, roads, power, water & ownership of surface rights.
• Currently in the feasibility stage , expected Q4 2010
• Exploration upside: Deposit open at depth and along strike with identified extension targets along strike (drilling currently in progress).

Geographical Spread

Romania, Brazil

Board of Directors and Key Management

For some time now the Australian government has stuck to a policy of only allowing three mines to produce uranium, , but demand from around the world as the price of uranium has risen may bring about a change of heart. The re-election of the Howard government, which now also has control of the Senate, could be a major factor, but a lot will still depend on State governments which control mining and export licences. South Australia has always been supportive and reaps handsome royalties from the Olympic Dam and Beverley mines and the Northern Territory takes the same attitude towards the Ranger mine operated by Energy Resources of Australia, which is itself 65 per cent owned by Rio Tinto. Western Australia, on the other hand, has been against any expansion of uranium exploration. There is an election in the offing, however, and this stance may change if Labour is thrown out.

In the past there have been more than ample supplies of enriched uranium for nuclear power stations around the world. Above-ground strategic stockpiles of the metal put aside by utilities and for use in nuclear weapons have been unwound and highly-enriched military uranium in decommissioned bomb arsenals diluted and reprocessed. As a result there has been a lack of investment in uranium exploration and mine development over the past 10 years or more. Things are now changing dramatically with higher oil and gas prices increasing the popularity of nuclear power. Above-ground stockpiles are now heavily depleted and rising demand has driven the world spot price for uranium oxide from US$7.10 per pound in late 2000 to US$15.50 at the beginning of this year and it is now above US$20/lb which is a 20-year high

This is no temporary blip as figures for the end of July showed that 30 reactors were in construction, another 32 were on order and 72 more were proposed. Japan, China and Taiwan are planning substantial increases in capability and all three are ideal markets for Australian producers. This puts a focus on Giralia Resources which is the only Australian junior involved in an active drilling programme for uranium as it has a 25 per cent free carried interest in tenements around the Beverley mine which produces around 700 tonnes a year of uranium oxide. Its partner is Heathgate Resources which owns and operates the Beverley mine and is related to the private US utility General Atomics.

The joint venture is exploring the Lake Frome property which covers some 2,000 sq kms around Beverley and is known to contain potential extensions of the mineralised palaeo channels being mined at Beverley. A drilling programme is now underway to assess the uranium potential and the regional/structural geology of areas to the south and east of the Beverley mine. Recent geophysical surveys have traced a well defined structural target called the Poontana fault on the Lake Frome tenements which is related to the regional setting of the Beverley uranium deposit. To date exploration has been a bit laid back as Heathgate was restrained from expanding its uranium operations. The possibility that the Australian government may open the door a bit wider for exports could be of great benefit to Giralia which is free carried up to a decision to mine.

Uranium is only a part of Giralia’s portfolio, however. Leading the rest is the 100 per cent owned Snake Well gold project which runs for 45 kms along strike of an under-explored greenstone belt in the West Murchison region of WA north east of Geraldton. The company has already delineated a gold resource of 2.49 million tonnes at 2 g/t gold for 160,000 contained ounces and drilling is in progress to extend known deposits and test new targets with first pass holes. Promising results have been received from drilling to extend the Mixy lode with an intersection of 12 metres at 5.4 g/t gold and 0.4 metres at 32.1 g/t with conspicuous visible gold. More results are awaited , but it is already clear that the resource will have increased significantly when the next estimate is announced.

Giralia is also earning into Haoma Mining’s Daltons nickel project in the Pilbara. At the moment diamond drilling is in progress to test conductor targets where previous high grade nickel-copper-sulphide intersections have been reported. The company is involved in a couple of other gold and nickel jvs and the only other wholly owned project is the Blue Rose copper – gold project in South Australia. Drill targets are being defined by ground gravity geophysical surveys with the focus on primary porphyry skarn and IOCG mineralization under extensive near-surface secondary copper intersections. Last, but not least ,the company has broken out of Australia and also owns the Ann Mason copper project in Nevada. Back in the 70s a porphyry copper resource of 495 million tonnes at 0.4% copper was estimated, but work since then has indicated a high grade core and data is currently being integrated. For the moment, however, it will be uranium that drives the share price.

Analyst John Meyer has produced an interesting paper which claims that collapse of the US dollar effectively renders China more competitive, driving growth BUT will not force Chinese re-valuation. The State Council and Communist Party State Central Committee will meet over the next few weeks at the central economic work conference in China to decide on general policy in the coming year.

At the forefront of the agenda will be the objective of maintaining stable economic growth and political and social stability. China , after all, does not have to concern itself with elections which cause swings in economic policy in the West. The huge investment in dollar bonds will also come under scrutiny as there has recently been growing evidence of a preference for Euros rather than US dollars for the country’s currency reserves. The point has already been made by the deputy governor of the Bank of China that there is no intention to devaluing the currency despite pressure from the Bush government and international markets.

The brokers are of the view that China has set its own internal targets at a rate of around 7 per cent -9 per cent in terms of growth in gross domestic product, and that it will stick to this come what may. This could allow 10 per cent -20 per cent metals demand growth within China, much of which will need to be sourced internationally.

There is bound to be some scare mongering from metals traders in Asia over potential Chinese re-valuation and over Chinese consumption levels. But it is Numis’s view that China will continue to consume substantial and increasing quantities of raw materials, particularly copper and steel related raw materials such as iron ore, nickel, manganese and chromite ores. These commodities are effectively forming the foundations of China’s new economic era and development and China is unlikely to consider the demands of the rest of the world in its drive to develop its infrastructure and economy.

While China is happy to trade with the rest of the world, its stated policy is to manage a relatively small trade surplus/deficit and to remain as independent as possible from the rest of the world. Fortunately for western mining companies China is relatively short of a number of key raw materials which it continues to import. Chinese mining concerns have been slow to discover new prospects and their safety record has not been good, so much so that the authorities were reported to be closing many small coal mines.

Mining may be one of the world’s oldest professions, but China appears to have lagged the west in the development of large-scale mining and exploration organisations. This may be due to the unusual expertise required to discover and develop efficient mining projects. Alternatively it may also be due to the difficulty in discovering prospects in a geology where there is a lack of rock outcrop and where overlying sand cover effectively masks underlying prospects from many geophysical techniques.

There is little doubt that Chinese miners, who traditionally worked in mines in Cornwall, the US and Australia in the 18th and 19th centuries, may now discover more in their back yard but the prevailing geology of China may continue to retain its riches and new discoveries may take some years to bring to fruition.

John Meyer concludes that the Chinese may therefore remain a net importer of many key raw materials for some years and that Western mining concerns should continue to benefit from a continuing high level of demand within the region. Bulk shipping companies and recycling businesses should also continue to fare well from a continuing increase in this trade as will miners which are able to operate in US-dollar based currency zones where they benefit from its weakness..

By The Tail At Eagle Eye And A Possible Gold Mine At Miyab

What with an extended rainy season, lack of drills and a queue a mile long at the assay lab it is not surprising that news from AIM listed African Eagle has been a bit sparse over the last few months. The share price suffered as impatient investors tried to make a fortune elsewhere, but they will probably now be wishing that they had stayed put as the company has released very encouraging news from both its Miyabi gold project in Tanzania and the Eagle Eye copper and gold project in Zambia. In the event the company wrong footed one or two commentators as the biggest expectations had been built up for Eagle Eye, but it is Miyabi which now shows every indication of becoming a mine. As a result African Eagle has swiftly made the flight from pure explorer to developer and the share price has been trying to catch up.

The drilling that has taken place at Miyabi has been concentrating on the Faida area in the south east of the Miyabi mineralised corridor. The object was to gain an accurate view of the stratigraphy and occurrence and nature of the gold mineralisation for input into a new resource calculation. The results speak for themselves. One hole intersected 58.3 metres grading 4.03 g/t gold, including a higher grade zone of 22.5 metres at 7.11 g/t which itself included an even higher grade intersection of 12.8 metres at 11.54 g/t. Another hole to the north ntersected 60.7 metres at 1.57g/t, including a central zone of 32.0 metres at 2.09 g/t and a third to the to the northeast intersected 61.2 metres grading 1.63 g/t, including 28.8 metres at 2.22 g/t.

The conclusions reached by the African Eagle team is that the holes drilled so far show that the gold mineralised zone has a true thickness of between 27 and 60 metres, a strike length of at least 300 metres and extends to a vertical depth of at least 120 metres. Geophysical surveys and soil geochemistry suggest that the mineralisation extends over at least 500 metres. Mark Parker, managing director, points to the results from the first hole as being significant as they appear to reveal a higher grade ‘ore shoot’ within the Faida gold zone. He goes on to point out that shoots of this type can add greatly to the total resource ounces of gold in a project but they may be only 100 to 200 metres long and 20 to 50 metres thick, which makes them difficult to find except by sustained and systematic drilling

Early in 2005 the company will complete the new resource estimate and it will obviously be whole lot bigger than the 140,000 ozs presently ascribed to Miyabi as it includes nothing from Faida. This is only the beginning, however, as Mark Parker believes that the gold-bearing corridor at Miyabi, which is 7kms in length and 2 kms wide, has the potential to host other important gold structures of the Faida type. A comprehensive database of geophysical, geological and geochemical data has been built up which will now be used to identify and target other possible gold structures for drilling. More work will also be carried out at Faida which is open at depth and to the east and may also be open to the west. These latest results also suggest that the gold mineralisation increases with depth and may plunge to the east.

The announcement about progress at the Eagle Eye project in Zambia actually contains the words ‘Iron Oxide Copper Gold deposits’ and the eyes of analysts will have been drawn to this very swiftly. The basic news is that the continuing geochemical, geophysical and other surveys show that zones of copper mineralisation and geochemically anomalous soils are considerably more extensive than previously considered. Newly defined zones identified from recent geochemical analysis of soils correspond to a major fold structure seen on the aeromagnetics and in the geological mapping. This fold structure is believed to be a favourable trap-site for potential mineralisation and the hinge of the fold is defined by a magnetic high on the airborne imagery suggesting a large zone of iron alteration characteristic of Iron Oxide Copper Gold Deposits.

Such deposits tend to be big and there are only about half a dozen in the world; Australia has two of them and Africa none. Olympic Dam has a resource of around 1 billion tonnes of copper and gold and Ernest Henry 170 million tonnes. People close to African Eagle see geological similarities with Ernest Henry which is a dipping breccia style deposit. To give an idea of scale it extracts 10 million tonnes/year of ore from an open pit operation and produces around 360,000 tonnes of concentrate containing 100,000 tonnes of copper and 125,000 ounces of gold a year..

Investors should not get over-excited as it is still early days. Eagle Eye has yet to determine priority targets over the fold hinge for drilling in 2005, but it is encouraging that first pass trenching along the northern limb of the fold structure near the hinge zone has returned 1.07% copper over 6 metres. As to size, well the new zones of copper mineralisation and anomalous soil geochemistry define the entire fold structure, which extends for some 13kms from the Eagle Eye/Mweze prospects on the north-western portion of the fold limb to the historic Sasare Gold Mine on the margin of the south-eastern limb. Chris Davies, operations director, reckons that the copper mineralisation in the soils extends for 25 kms. Time and Dr Drill will tell, but Eagle Eye has now moved up a league..