More Blue
Skies over Feni
(An Analysis
of Vangold Resources, VAN:TSX-V)
Paul the Benjaminite
November 20, 2003
The Feni Islands of Papua New Guinea have some of the greatest
blue sky potential of any gold project in the world. In my report
on New Guinea Gold, (NGG-VSX), The Bluest of Blue Sky Potential, I detailed some of
the rather unique aspects of the geology of the Feni Islands
that make them so remarkable. This report will elaborate on that
geology and, with a little bit of detective work, how Vangold
Resources, who are working toward a 75% interest in the properties
on the Feni Islands, is quickly narrowing in on what could turn
out to be one of the largest gold deposits in the world. While
the emphasis of this report is on the Feni Islands, Vangold is
not a "one shot wonder." During the years of
the gold bear market, this company's management was working on
acquiring other important prospects as well. Even without an
ounce of gold from the Feni Islands, based on these other projects,
the shares of this company are still extremely undervalued.
Back in 1998, using a search engine, I came across this remarkable
fact: gold was being deposited in a hot spring on Ambitle Island
(the larger of the two Feni Islands) in concentrations of 1
oz. per ton! Clearly this was something to look into! For
this to occur, there almost certainly has to be substantial
underground deposits of gold. In addition, the Feni Islands
are in the same "gold corridor" as the super world
class Lihir deposit with some 50 million ounces of gold and counting,
and the large Bouganville deposit (15 million ounces) in the
opposite direction from Lihir. And, as discussed in "The Bluest
of Blue Sky Potential," the unusual crossing of an old subduction zone
and a fracture zone result in a combination of uplifting factors
that have undoubtedly been largely responsible for the gold already
discovered there and strongly suggest there is much, much more.
The geology
of the Feni Islands and the Lihir Islands are very similar. In
addition, both sets of islands are volcanic islands with hot
springs and geysers, both on land and in shallow water just offshore.
So, it was perfectly logical to use what was known about the
Lihir Island deposit as a model to guide the explorers to the
gold on Ambitle Island. The Lihir Island deposit lies, for the
most part inside a volcanic cone, or caldera.
The gold found there is a combination of a gold porphyry deposit
enriched by gold laden hydrothermal flows. Gold in porphyry tends
to be relatively low grade, but may be medium grade. But such
porphyry deposits may be very large. On Lihir Island, the gold
in the porphyry system is associated with pyrites. The same is
likely to be true with Ambitle Island. Iron, probably as iron
pyrite, shows up as the intense red area in the aeromagnetic
survey pictured below. A large, medium to low grade gold porphyry
system might be found somewhere in that area:
Hydrothermal
flows will follow the paths of least resistance and so seep through
major faults, cracks in rocks, and porous rock or soil. The more
cracks and pores there are, the more gold that can be deposited.
As one can well imagine, the chemistry of elements and compounds
deep with the earth is very different from that which occurs
under more normal temperature and pressure conditions. Water
boils at 100o C at sea level and this limits the temperature
of water to this maximum level. Deep within the earth under greater
pressure, the boiling point increases just as in a pressure cooker.
Even marginally water soluble compounds become much more soluble
under these high pressure and high heat conditions. Along the
underwater slopes of Lihir and Ambitle Islands, sea water seeps
in, is heated by active volcanism within, and then, it pushes
its way upward carrying, over time, vast amounts of minerals
including gold. Acids are also formed which aid in dissolving
minerals. When it reaches a point where the pressure drops and
nears normal atmospheric pressure, a more or less horizontal
"boiling zone" occurs and less soluble minerals are
deposited.
Those more
soluble compounds including some containing potassium and arsenic,
known to be associated with gold deposits, tend to be carried
further upward and serve as indicators that concentrations of
gold may be present. Both potassic alterations and arsenic anomalies
mark the Lihir deposits.
When New Guinea Gold began drilling, they assumed that the most
likely place to find a major deposit was in the central caldera.
At that time gold was in a bear market. Money was running out
with little chance of obtaining more financing. Diamond drilling
had to be limited to just a few holes. The result was that gold
was indeed found in the central caldera. (One of the
last holes drilled, MAD001, intersected 52m with 2g/t
Au within 188m with 1.2g/t Au. The hole terminated
in plus 1g/t Au at 256m.) But it was not the anticipated major
kind of deposit comparable to Lihir. There are plenty of prospects
left in that central caldera. A major discovery may yet await
us there. But there appears to be a much more prospective target
to the south.
The Mystery Solved?
After the drilling
was done, an induced polarization study was done. This consists
of running an electric current through the ground and picking
up that current with electrodes placed elsewhere. The current
will be modified as it flows through the ground depending upon
the degree of conductivity of the rock, soil and minerals it
passes through. When two substances of dissimilar conductivity
are in the ground, a charge builds up at the border between these
two substances, similar to that which occurs in a capacitor.
When this occurs, as the electric current is picked up by the
electrodes, a delay in the current is detected as long as electric
current switch remains on. Then, when it is switched off, a discharge
of stored current from the ground, similar to the discharge of
a capacitor, is detected. Areas of high conductivity will be
recorded as an "induced polarization anomaly" and add
a very important piece of evidence that gold ore exists in that
location. Look now at the I. P. anomaly that turned up on the
Ambitle Island survey and where it exists in relation to drill
hole MAD001.
The induced
polarization survey did show up the gold deposit already found.
It shows up as the yellow area. So drill hole MAD001 did hit
the anomaly, but not the area of highest intensity which shows
up red on the chart. Just based on the I. P. survey, it looks
like there is a very hot target along line the major fault
that runs through the island in a NE direction. The red area
from its NE tip to its SW tip is about 700 meters long. To add
to the intrigue look at the original potassic alteration map
done by geologist Rod Davies. There is an unmistakable circular
shape to the appearance of the area of high potassium levels
in the southwestern portion of the island. This northeastern
part of that circular area coincides with the high I.P. anomaly.
Now look at
this radar image map. The outline of the rim of the central caldera
is marked in blue. But there is an unmistakable arc-like ridge
to the south of the major potassium anomaly. I have marked the
ridge with a magenta colored line.
If the arc
were extended around to become a complete circle, it would have
the potassium and I.P. anomalies within. The ridge is less evident
to the NW, but I have marked the apparent watershed with green
dots helping to make a circle-like shape more evident. Could
it be an older caldera? It appears to be so. This caldera, like
the model from Lihir, has largely collapsed into the sea. And,
like the Lihir model, it low enough that the collapsing of the
caldera wall on the seaward side may have resulted in the influx
of sea water into the caldera resulting in the rapid cooling
of the hydrothermal area causing deposition of large amounts
of gold. Four major faults traverse across this area. And this
zone is an area of breccias (volcanic cracked rock in a matrix
of smaller particles), just as in the Lihir model. (Recall that
gold can be deposited in porous or broken rock.) Apparently,
this much eroded caldera is more ancient than the central caldera
and was partially damaged by its later eruption.
This is good
news, because the older the caldera, the longer that the deposition
process of minerals within has taken place resulting in greater
gold enrichment. The original size of the caldera must have been
almost 3 kilometers across and covered about 7 square kilometers.
The newer central caldera, however, has "taken a bite"
out of it reducing its NE to SW diameter by about a kilometer.
This older caldera is associated with hot springs which appear
all across the western quadrant of the island. This is important,
because these hot springs are the source of the hydrothermal
gold deposits, just as in the Lihir model. Of course, their outlets
may change locations through time. Note in the map below the
location of the hot springs on Ambitle Island. They are marked
in pink color:
So, it appears
that the Lihir model may apply to Ambitle Island after all. Both
Ambitle Island and Lihir Island are noted for their active hot
springs, some of which are geysers. Although, Lihir may have
the largest gold deposit in the world, Ambitle Island has a few
superlatives of its own. On the western tip of the island is
a tiny inlet called Tutum Bay. Dr.
Thomas Pichler of the University of South Florida wrote concerning it:
The underwater
hot springs in Tutum Bay when compared to other submarine occurrences,
however, are unique in that they have by far the highest liquid
discharge The force of the discharge [of a single vent] is comparable
to that of a firehose which discharges 300 to 400 L/min. Whenever
close to a vent we could hear it roaring The hydrothermal fluids
contain extremely high arsenic concentrations of more than 400
times seawater concentration and discharge approximately 1500
grams of arsenic per day into Tutum Bay. These values are the
highest arsenic concentration found in any marine setting including
black smoker fluids from mid-ocean ridges. Remember that arsenic is one of the
elements generally associated with gold and was an important
marker associated with the Lihir deposit.
There are some important geologic differences between Lihir and
Ambitle. Ambitle Island, arising as it has right out of an old
ocean trench, or subduction zone, has a deeper base than Lihir.
In fact, on its south side, its slope steeply dips to over 3000
meters in depth. This would suggest that water is probably drawn
into the hydrothermal system at deeper levels and could carry
gold up from deeper deposits. This is probably why the hot springs
in Tutum Bay discharge such a high volume of water. Another difference
is that gold was found in a hot spring at
Kapkai
on western Ambitle Island in concentrations of more than 1 oz/t.
As far as I know, no such high concentration of gold was found
in any of the hot springs on Lihir.
Nine out of ten of the hot springs, including Kapkai, are
on or near the faults that traverse the "Old Caldera Zone."
The southernmost WNW trending fault points right to Tutum
Bay where underwater hot springs gush forth huge volumes
of water from deep within the base of Ambitle Island. Almost
certainly, this circular area loaded with porous and cracked
rock (breccias) with hydrothermal fluids circulating through
it that are known to contain gold, has been enriched with gold
over long periods of time. The connection between these faults,
the hot springs and the "Old Caldera Zone" are illustrated
below:
Hence, it appears
that the Lihir model is complete with regards to the "Old
Caldera Zone." Personally, I think the best bets
are on this area. But with over 30 prospects on the island, there
could be major gold deposits found elsewhere, perhaps in several
locations.
It appears we will find out quite soon just where the gold really
is. A relatively new technique for finding gold is being
employed and the results should be available within weeks.
Biogeochemical Exploration
for Gold on Ambitle Island to Yield Results Very Soon!
Part of the problem in exploring for gold on Ambitle Island is
that there is a thick layer of volcanic ash (powdery rock, mineral
and volcanic glass fragments) that covers the island. This makes
soil sampling on the surface unreliable. Samples have to be taken
from under the ash, which is time consuming and difficult, and
may produce erroneous results. However, a far more efficient
alternative has been found. As
the article
"Biogeochemical
Exploration for Gold in Tropical Rain Forest Regions of Papua
New Guinea"
reports, "Biogeochemical surveys conducted over the densely
vegetated Ladolam gold deposit on Lihir Island have demonstrated
that analysis of primary rainforest material can be used as a
geochemical exploration tool in tropical regions."
This technique involves taking samples of a particular type of
tree, Astronia palauensis, which grows all across both the Lihir
and Feni Islands in a density of about one tree per 100 square
meters.. The level of gold in the tree tissues corresponds to
the level of gold in the soil. The roots reach down deep enough
into the soil to draw up gold from below the ash level. You can
see the results of this work from Lihir in the picture below:
If the areas
of highest concentrations of gold in the Astronia trees are compared
with the actual areas of gold deposits as shown in the Lihir
Presentation,
p. 28, it becomes apparent that there is a very high co-relationship
between the two. Since the flora and geology on Ambitle are so
similar, this approach can much more rapidly identify the areas
of near surface gold deposits at a much lower cost. Subsequent
deep drilling of the area may then turn up deeper deposits.
As this report is being prepared, Dr. Wayne Takeuchi, a research
biologist at Harvard University, is conducting a biogeochemical
exploration on Ambitle Island. About 12 square kilometers
will be covered using this method. The results are expected
around the end of November. At the same time, a stream sediment
pan concentrated survey is taking place on the island. See the
Vangold News
Release
of October 16th, 2003 for more details. The information from
all of this follow up work will be added to previously collected
data to determine the best sites for deep diamond drilling. A
heavy duty drill rig is expected to be on the island in December
or January. The results of this entire exciting exploration
project will be out within a few months!
Vangold will earn in 75% ownership of the Feni Islands, New Guinea
Gold, will have 25% of Feni, and Macmin Silver, which has 46.1%
of the shares of New Guinea Gold, will effectively own 11.5%
of the deposit. If a major Lihir-like deposit is found, the shares
of all of these companies, especially Vangold's, will soar!
More Property Acquisitions
in Papua New Guinea
There is more good news for Vangold and New Guinea Gold. They
have just announced a new joint venture arrangement in acquiring
all the shares of a private Papua New Guinea exploration company
called Kanon Resources Ltd. This company has five properties
in Papua New Guinea with a total area of 1399 square kilometers.
These are advanced stage gold projects with a considerable amount
of work already done on them. The drill and trenching results
so far are nothing short of outstanding. Here is the summary
taken from the News Release
of 17
November 2003.
I have highlighted the best of these in red.
I will report
more information on these properties as it becomes available.
Fantastic Blue
Sky Potential
Clearly, from all of the foregoing, Vangold Resources has a tremendous
amount going for it. With a rising gold price, ownership of most
of the important gold camp of Rossland and the fabulously extraordinary potential
of the Papua New Guinea properties, especially the Feni Islands,
this company is a tremendous investment. And the Gallagher gold property and
East
Corning
oil and gas properties are more icing on the cake.
My next report will provide more information on the new Papua
New Guinea properties, and, of course, updates on the Feni Islands!
Disclosure:
We own shares of Vangold. I will be compensated by Vangold for
my time in preparing this report, though I have retained my editorial
integrity.
Paul the
Benjaminite
November 20, 2003
Paul the Benjaminite, B.S., A.S., completed seven years of university
studies including such diverse subjects as chemistry and business.
He is a teacher whose professional experience includes eight
years as a secondary school teacher of sciences including chemistry,
physics and basic geology.
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