U.S. company to develop five goldfields in Ukraine (04/20/97)

U.S. company to develop five goldfields in Ukraine

by Marco Levytsky
Special to The Ukrainian Weekly

EDMONTON - The state-owned joint stock company Ukrzoloto and Baltimore-based Ashurst Resources International Ltd. announced on March 25 the completion of agreements that define their mutual cooperation in developing five advanced gold projects and three additional exploration prospects.

"This is a major deal for us," stated Steven Meldrum, vice-president of marketing and investor relations for Ashurst.

"Initially we're developing these five deposits. But there are also opportunities for other projects," he added.

The rights for these properties were assigned to Ukrzoloto by a decree of the Cabinet of Ministers of Ukraine.

Just five days before this announcement, Serhii Hoshovskyi, head of Derzhkomheolohiya (State Committee of Ukraine on Geology and the Use of Deposits), complained that Ukrzoloto lacked the financial resources to develop these five fields.

"Indications of gold have been found in hundreds of places in almost all of the country's oblasts," he added during a press conference reported by the InfoBank news agency.

In accordance with a proposal submitted by Ashurst, Ukrzoloto will assign the rights to exploit the properties to the Ukrainian company Resursy Ukrainy, (Resources of Ukraine), which shall be 100 percent owned by an international company, Ukraine Gold International Ltd (UGI).

Initially, UGI will be owned 100 percent by Ukrzoloto. It is to be organized in accordance with internationally accepted standards of accounting, financial controls and governance. Its board of directors will comprise Ukrainian and Western business experts and it will be co-chaired by Serhii Chukmassov, chairman and CEO of Ukrzoloto, and Benton H. Wilcoxon, chairman and CEO of Ashurst Technology Ltd.

Ashurst, as consultant to Ukrzoloto, shall perform the task of project manager on behalf of and in conjunction with Ukrzoloto, in return for a 5 percent equity interest in UGI. Additionally, Ashurst is to provide between $20 million and $30 million (U.S.) in financing to complete feasibility studies for the five projects in return for an additional 20 percent equity interest in UGI. It is anticipated the UGI will seek financing on international capital markets.

Two of the advanced projects, Serhiivske and Balka Zolota, are situated in the Dnipropetrovsk Oblast. Another project, Balka Shyroka, located further south in the oblast, is completing a production shaft currently at 120 meters. The other advanced projects, Klintsivske and Yuriivske are situated in the Kirovohrad Oblast. Klintsivske is currently prepared for underground bulk sampling, having completed a shaft and horizontal development.

According to Ukrzoloto and Derzhkomheolohiya geologists, and based upon several years of detailed drilling, the five projects have an aggregate indicated and inferred resource of between 500 to 600 tons of gold, (16 million to 19 million ounces), with an average grade of 6 to 8 g/t gold. Additional exploration prospects available to the companies are in the Surska Structure (500 square kilometers), Chertomlyska Structure (512 square kilometers), and Kirovohrad Ore Field (1240 square kilometers) which have potential resources of more than 1,000 tons of gold (32 million ounces), states Ashurst's company release.

Gold is hosted by quartz, quartz-carbonate and quartz-sulphide veins averaging 1.5 to 2 meters in width. The five advanced projects are all located in Precambrian crystalline rocks covered by 30 to 40 meters of loam. The rock types include metamorphosed volcanic, sub-volcanic, acid and mafic igneous and metasedimentary rocks, similar to the Canadian Shield.

Preliminary metallurgical tests indicate that about 70 percent of the gold can be extracted using gravity methods. An additional 20 to 25 percent of the gold is extractable from a sulphide concentrate using conventional methods.

The new mining company will have its main offices in Kyiv with project management team consisting of Western and Ukrainian mine managers, geologists, mining engineers and hydro-metallurgists. Regional offices will be established to support the teams in the advanced projects as well as exploration for new prospects. Pre-feasibility programs are under way for each of the projects.

Ashurst, which has been involved with Ukraine since 1991, contracted with MineTech International Ltd. in Halifax, Nova Scotia, to review preliminary data and visit the five project sites in late January. In February, MineTech issued a preliminary evaluation report. At this time, Ukrzoloto and Ashurst staff are compiling data on the five projects from over 1,000 drill holes averaging 300 meters in depth, and more than 30,000 fire assays, which showed over 700 interceptions of ore zones, of which approximately one-quarter contained visible gold. On the three exploration prospects over 300 drill holes have been completed between 200-300 meters in depth.

"The new gold project is an important addition to our Ukrainian operations and will draw upon ATL's experience in mining and processing of metals at its Zhovti Vody mining operations in Ukraine," said Mr. Wilcoxon.

Marco Levytsky is editor of Ukrainian News, Edmonton.

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