Gold resource upgrade for Sams Creek Monday, 25 June 2012Brooke...

Gold resource upgrade for Sams Creek
Monday, 25 June 2012
Brooke Showers

EXPLORER MOD Resources has increased its gold mineral resource estimate by 33% at New Zealand’s biggest undeveloped gold project, Sams Creek based on the South Island, by cracking the million ounce mark.

Sams Creek has a new JORC compliant inferred resource estimate of 1.02 million ounces, based on 18.65 million tonnes at 1.71 grams per tonne, at a 0.7gpt cut-off.

This result marked a 33% increase from the previous inferred resource of 13.5Mt at 1.78gpt for 770,000oz, using the same 0.7gpt cut-off grade, which was recorded in 2004.

The new resource estimate was completed by Golder Associates and based on the results of the stage one drilling program at Sams Creek, which MOD completed in March.

This program involved drilling nine diamond holes within the main zone prospect, which remained open at depth, for a total of 2.3km.

The resource is all contained within an 800m strike length of the main zone prospect, which MOD said represented less than 15% of the known 6km strike length of the Sams Creek dyke.

MOD chairman Miles Kennedy said increasing the resource to more than 1Moz underlined his confidence that Sams Creek had the potential to host a multi-million ounce gold resource.

“Sams Creek is an intrusive-related gold deposit and there are many examples around the world where these types of gold deposits are very large, including Fort Knox and Donlin Creek in Alaska, Vasilkovskoe in Kazakhstan and Kidston in Australia,” Kennedy said.

“It is also significant that limited exploration has been completed on the remaining 85% of the known strike length contained within the Sams Creek permit, which proves significant scope for us to expand the existing 1Moz resource.”

Kennedy said the resource increase had been achieved at a discovery cost of $A7.50 per ounce and the gold price in New Zealand was around $NZ2000/oz ($A1570/oz).

MOD is earning up to 80% of Sams Creek from OceanaGold Corporation which owns the permit, by sole-funding staged exploration program through an agreement reached between the two companies in October.

Under the agreement MOD would spend $1.9 million on the first stage of exploration which included diamond drilling, an aeromagnetic survey and a light detection and ranging high-resolution topographic survey.

New Zealand Petroleum and Minerals had agreed to extend the Sams Creek exploration permit to five years to March 2017 following the successful completion of the stage one drilling program.

Through the program, MOD was aiming to achieve a 60% and then 40% interest stake in the Sams Creek permit.

Completing the preliminary drilling program was a prerequisite for MOD to earn its initial 40% interest in Sams Creek from OceanaGold and the companies have submitted documentation to the NZ authorities for the permit to be transferred.

Once the permit is transferred MOD will issue OceanaGold 17 million ordinary fully-paid shares as a total consideration.

In March, MOD Resources received encouraging results from the initial 2000m diamond drilling program at Sams Creek.

Results included 29m at 2.23 grams per tonne gold from 123m including 10m at 4.27gpt gold from 142m.

MOD currently has three diamond rigs in operation at Sams Creek, including a man portable rig, working on the second stage drilling program.

It is also drilling for copper and silver at its Botswana copper project and intends to prepare a maiden resource estimate for the Corner K discovery, once assays are received.