Rose Petroleum plc


Two gold prospects, way south of the border

LONDON ( -- The search for gold deposits crosses all the continents and today we bring you stories of two small exploration companies which, while both at very early stages, may be looking at deposits of considerable interest. Vane Minerals plc is working in Mexico and has three land blocks in Paraguay, while Falkland Gold and Minerals is in the eponymous islands.

Falkland Gold and Minerals;, Jumbos at the airport, but what about underground?

Falkland Gold and Minerals is floating on AIM in December and raising money to exploit its exclusive mineral rights in the Falklands. After the conflict over the islands in the early 1980s, when the UK defended its territory against Argentinean incursion, the infrastructure on the land is way in excess of some other prospective areas and certainly better than one would normally expect for small islands. The airport at Mount Pleasant., for example, can accommodate 747s, while the port facilities at Port Stanley have been heavily upgraded for military use.

The Falkland programme has come about as a result of lateral thinking on the part of senior management, on the basis that the islands originally lay in south central Gondwanaland before it broke up and what are now the islands was a landmass contiguous with the present day Latin America and South Africa. While there are several major differences between the geology and evolution of the islands by comparison with southeast South Africa, nonetheless there are any number of ?hot spots? in situ. Initial stream sampling (originally for diamonds) some five years ago identified gold particles with an average width of 0.8-1.0m, and their varying shapes, some rounded, some sub-angular, suggest a range of types of mineralisation. Subsequent aeromagnetic work (with 32,685 line-km completed to date) has identified numerous anomalies. Twenty-three initial drill targets have been established and here is a rig en route, due for delivery in the first quarter of 2005.

There are nine priority targets to be investigated during the second stage of the programme, involving up to 12,000m of core drilling, along with additional ground magnetics and sampling of the further fourteen targets, which will take a further 12,000m of drilling during Stage three.
One ramification of the hostilities of the early 1980s is that the company is using Chilean facilities rather than Argentinean, but also argues that this, although more costly initially, is probably the better bet as the Chilean mining industry is more firmly established than that of Argentina. Meanwhile the Falkland Government, very keen on promoting inward investment, is co-operating fully with the company?s programme and there is a bill before Parliament at present that will significantly improve the mining code.

This is an early stage operation, but it is to be hoped that Margaret Thatcher is not the only person who feels like saying ?rejoice? at the end of a Falkland Island exercise.

Vane Minerals; capitalising on an historical error ?

Vane Minerals is aiming to be a self-funding exploration company with the intent of finding large deposits, realising the value thereof and then selling them on, rather than joint venturing to production. To this end the company listed on AIM in June in order to raise initial capital for drilling programme, and now has two projects in Mexico, each of which is expected to throw off enough cash to fund the exploration ventures and Vane believes that it may have identified a large-scale epithermal deposit in Mexico. The senior management are experienced geologists from the now defunct Freeport Exploration division and by virtue of their former employment they have negotiated exclusive access to the Freeport Databank.

This Databank was started in 1907 and has over 7,000 files, roughly 6,500 of which relate to the Americas and each of which contains up to ten prospects. Vane has run a preliminary review of 6,500 of these files and is looking to identify deposits that may previously have been overlooked when logged, especially during the war or when the gold price was pegged. One such may have been identified already, as a result of an error made by a government geologist almost sixty years ago.

The Diablito deposit in Nyarit State is the major early cash flow operation. This is a high grade, highly siliceous orebody that outcrops at surface and should be brought on during the first quarter of next year with ore of direct smelting quality; the intent is to sell to Mexican smelters who will pay for the silica (necessary for flux) and the gold and silver credits. The definition is still only at resource level, and while the deposit is open at depth and along strike, has 25,000t of indicated and 65,000t of inferred resource grading 0.39 ounces (12.1g) per tonne gold and 42.4 ounces (1319g) per tone silver; this implies a six month pay back period at full production and a mine life on current resources of six to seven years.

The company also has investigation rights at Mina Charay with an option for a 100% purchase; this is a vein structure that from two existing shafts is indicating values of 9-10g/t gold and 125-150g/t silver at depths of between 60m and 70m from surface; this would need to be milled and a drill programme is planned; the rig is on its way to the property.

The money to be thrown of by either or both of these properties is initially to be aimed at the Guadalcazar deposit in San Luis Potosi state.

Vane Minerals potentially has good cause to be grateful for a mistake made by a member of the US Geological Survey in 1948. While looking for tin as supplies into the country had been ravaged by the war, the USGS geologist logged his findings on Guadalcazar as a 991 million tonne deposits containing gold (328,600 ounces), silver (53.5M ounces), tin and mercury and that the deposit was alluvial. Mercury is virtually unheard-of in alluvial deposits and the Vane minerals senior geologists spotted this and have signed an option for six claims payable in cash and net smelter returns. Far from being a placer deposit, the surface structure and geochemical studies have identified the deposit to be of a hydrothermal nature developed in volcanic tuff; anomalies have been identified along a six-kilometre strike length.

A 4,500m drill programme is planned, to 200m in depth. Vane has a time constraint on this property; there is a land payment due next June. If, by that stage, the company has not uncovered sufficient encouragement to justify the land payment then it will walk away and move onto the next. With Freeport?s databank behind them, the management team believe they have a realistic chance of finding an elephant in Latin America.