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History
The first information on the geological structure and metallogenic properties of the Jugjur Ridge was obtained by N.G.Metlitsky (1881) and K.I.Bogdanovich (1889, 1905) who visited the major river valleys, including those of the Avlayakan and Kirankan rivers. The latter established the presence of gold mineralization.
The news of gold mineralization in the area attracted numerous placer mining companies: Verkhne Amursky Gold Mining Company (1914), Gold Exploration Trust (1935-36), Nelkansk Gold Mining Company of Jugjur Gold Trust (1942-44), Aldan Gold Trust (1943-44); the Yuzhno Okhotsk Exploration Crew of Amur Gold Exploration Company (1949-52) (the "Amur Exploration Crew"). The largest and most productive of the exploration programs was carried out by the Yuzhno Okhotsk Exploration Crew which resulted in the discovery of placer gold in the valleys of the Maymakan, Avlayakan and Kirankan rivers. However, due to remoteness and lack of access to the area, mining of the placer gold deposits was terminated when they proved uneconomical.
In 1957, the geologists of the Far East State Technical University began geologic mapping of the Jugjur Ridge area at a scale of 1:200,000 for the first time this work made it possible to single out and study the mixed-aged stratigraphic sequences, to dissect intrusive formations and to establish the main stages of the geological development of the region.
The next stage of the region's geological exploration began in 1966 with a prospecting and exploration program concentrated on identifying placer gold deposits in the region. This program was conducted by the Udsky Crew of the Far East State Technical University and was continued after 1974 by the Ayan-Maysky Crew of the DalGeology Production and Geophysics Association ("DalGeology"). This work resulted in identification of numerous mineable placer gold deposits in the basins of the Maymakan, Avlayakan and Kirankan rivers. Concurrently with prospecting and exploration for placer gold the Avlayakan hard rock gold occurrence was discovered.
Between 1978 and 1979, the geophysical prospecting crew conducted a five-channel 1:25,000 airborne geophysical survey. Based on this and other geological data, an estimate of the region's prospects for hard rock gold was performed and prospective gold and silver targets were identified.
From 1980 to 1983, a mineral evaluation and prospecting program (trenching, drilling and tunnelling was conducted), which resulted in a positive evaluation of the mineability of the Avlayakan property.
Between 1977 and 1982, concurrently with the exploration program, a geological survey at a scale of 1:500,000 was conducted which resulted in identification of new hard rock gold targets (Kirankan I and II sites).
During the period from 1981 to 1983, a 1:10,000 scale exploration program was performed in the Avlayakan area. During this program, trenches were used to study the flanks of the Avlayakan deposit and a detailed geophysical survey covered a surface area of 1.2 sq km.
From 1984 to 1993, the Nizhne Amursky exploration crew of DalGeology performed exploration and evaluation of the Avlayakan and Kirankan deposits and their flanks. These programs resulted in the preliminary exploration of the Central Zone of the Avlayakan deposit and more detailed exploration of the Basovy and Tock zones of the Kirankan deposit.
Between 1993 and 1996, ZAO Dalplaz Gold Mining Company ("ZAO Dalplaz") took over exploration work at the Avlayakan property. Based on this exploration program an economic scale for the Central Zone of the Avlayakan deposit was defined by the Russians and parameters for a resource estimate were determined. The Russian C1 + C2 resource estimate as of January 1, 1999 for the Avlayakan Kirankan deposits was based on temporary quality requirements approved by 1994 Minutes No 370 of the Far East Territorial Natural Resources Committee.
Between 2000 and 2004, Vostok performed a mineral evaluation program within the Northeastern zone of the Avlayakan deposit and over the area of the Basovy and Tock zones of the Kirankan deposit. This program is described below in some detail, as this work is the basis for the agreement between Vostok and Silver Bear.
The exploration programs conducted by Vostok were primarily focused on the Northeastern zone of the Avlayakan deposit. The previously identified mineralized areas of the Northeastern zone (No. 1 to 4) were diamond drilled to study their vertical extent and to the northwest of the previously identified areas of mineralization, a new area was identified. In addition, diamond drilling was conducted on the Basovy and Tock zones, of the Kirankan deposit, which had previously been studied only at surface.
The exploration programs have demonstrated that the gold mineralization in the targeted areas forms steeply dipping linear deposits and is confined to the fault zones.
Exploration Work Completed on the Avlayakan and Kirankan Deposits between 2000 and 2004
Type of
Exploration Work |
Units of
Measurement |
Volume
of Work |
Machine Trenching |
m3 |
17,919.7 |
Manual Cleanup |
m3 |
555.0 |
Core Drilling |
m |
7,168.0 |
Channel Sampling |
m3 |
1,095.1 |
Core Sampling |
m3 |
2,124.5 |
A Russian T-130 bulldozer was used to trench across strike of the mineralized zones and the permafrost and underlying bedrock was left to self-thaw. Overall, 61 trenches were excavated, including 45 and 16 trenches for the Avlayakan and Kirankan deposits, respectively. A total of 2,863 linear metres of trenching was completed (1,756 m and 1,107 m per deposit respectively). On average the trenches were 1.9 m deep, 3.0-3.5 (3.3 m) m wide; total trenching volume amounted to 17,920 m (11,767 m on the Avlayakan property and 6,153 on the Kirankan property). Some trenches required manual re-driving, which resulted in a 0.6 m wide cleanup and a 0.0-0.8 m cut into the bedrock, depending on their physical condition.
All the trenches were logged in journals along with diagrams depicting the bed of the trench and one of the walls (usually the left-hand wall) along strike, at a 1:50 scale. Descriptions of the rock type and mineral textural structural properties, physical composition, hydrothermal metasomatic alterations, veinlet disseminated mineralization, elements of interstitial tectonics, were recorded within the journals.
Diamond drilling was used to study the vertical extent of the mineral deposits and, given the steep dip of the veins, the holes were drilled at a projected angle of 75º to depths ranging from 38.2 m to 228.6 m. The maximum drill hole angle of inclination was determined by the design features of the Russian drilling rig masts, which are designed to drill holes within a narrow range of angles from vertical to minus 70º.
During the drilling program, SKB-4 and SKB-5 Russian drills with hard metal and diamond bits were used. Depending on the section, water, clay slip or a polyacrylamide solution was used as the washing liquid, which made it possible to strengthen the walls of the drill holes and prevent them from caving in. The initial drilling diameter was 132 mm, with 76 mm used as the basic drilling diameter for the mineral zone intercepts. MIR-36 inclinometer readings, conducted at 10 m intervals, were used to control the assigned drilling direction of the holes.
To increase core output, drilling was conducted with OES-73 jet dredges. The OES-73 jet dredges were placed behind the drill bit to redirect water to the core in order to prevent loss of core. On the mineralized zones, typically showing significant fracturing, drilling was performed by cutting down the core runs, which made it possible to ensure good core recovery. Recovery for the zones ranged from 82 to 100% and averaged 97%.
The diamond drilling conducted by Vostok on the Avlayakan and Kirankan deposits totalled 95 drill holes for a total length of 7,618.0 m and averaging a depth of 80.2 m.
Historical Reserve Estimates
The discussions related to the reserve estimates contained in this section refer to historical estimates only. The reserve estimates discussed in this section were conducted according to the accepted Russian reserve classification definitions for the period to which they relate. However, they do not comply with the current Canadian Institute of Mining, Metallurgy and Petroleum (CIM) standards and definitions for estimating resources and reserves as required by Canadian NI 43-101 and as such should not be relied upon. The Russian historical reserves discussed below are for information purposes regarding the historical background of the Avlayakan Project only. Investors should review the 2006 CIM compliant mineral reserve estimates discussed under "Mineral Resources" below.
Between 1992 and 1996, ZAO Dalplaz conducted exploration work at the Avlayakan deposit. Based on this exploration work, preliminary provisional quality requirements for estimating reserves were approved in the 1994 Minutes No. 370 of the Far East Territorial Natural Resources Committee of the Russian government. ZAO Dalplaz and V.K. Savin completed a historical reserve estimate according the Russian reserve classification system as of January 1, 1999 for the Avlayakan Kirankan deposits. The reserves were classified as C1 and C2 Booked reserves and C1 Unbooked reserves.
January 1, 1999 Historical Russian Reserve Estimates for the Avlayakan Project
(Non-CIM Compliant Estimate)
| Name of Deposit |
Zone |
Russian
Mineral
Category |
Tonnage
(x1000 t) |
Average
Gold Grade
(g/t) |
Gold
Reserve (kg) |
Average
Silver
Grade (g/t) |
Silver
Reserve (kg) |
Avlayakan |
Central |
C1 Booked |
134.0 |
18.5 |
2,479.0 |
68.8 |
9,219.2 |
C2 Booked |
20.1 |
5.4 |
108.5 |
11.9 |
239.2 |
C1 Unbooked |
22.17 |
6.3 |
140.6 |
11.6 |
257.3 |
Northeastern |
C2 Booked |
113.4 |
12.9 |
1,459.6 |
65.8 |
7,465.1 |
Kirankan |
Basovy |
C2 Booked |
60.0 |
11.2 |
673.4 |
9.9 |
595.8 |
Tock |
C2 Booked |
71.45 |
10.8 |
771.7 |
16.0 |
1,143.2 |
Total Reserves for the
Avlayakan and Kirankan
deposits (Historical
January 1, 1999 estimate) |
C1 Booked |
134.0 |
18.5 |
2,479.0 |
68.8 |
9,219.2 |
C2 Unbooked |
264.95 |
11.4 |
3,013.2 |
35.6 |
9,443.3 |
C1 Unbooked |
22.17 |
6.3 |
140.6 |
11.6 |
257.3 |
The January 1, 1999 historical Russian reserve estimate used the following indices approved by the 1994 Minutes No. 370 of the Far East Territorial Natural Resources Committee.
For open pit mining:
- gold equivalent cut-off grade in the sample, 1.00 g/t.
- minimal economic cut-off of gold equivalent in estimated block, 3.89 g/t.
- minimal width of mineralization, 5.0 m.
- maximum allowable width of waste rock and substandard mineralization, 4.00 m.
- strip ratio limit, 4.66:1
- silver to gold equivalent conversion ratio, 88.90:1
For underground mining:
- gold equivalent cut-off grade in the sample, 2.50 g/t.
- minimal economic cut-off of gold equivalent in estimated block, 5.77 g/t.
- minimal equivalent gold grade at mineralization interceptions, 3.36 g/t.
- minimal width of mineralization, 1.0 m.
- maximum allowable width of waste rock and substandard mineralization, 2.00 m.
- silver to gold equivalent conversion ratio, 88.90.
No historical underground or open pit mine production has occurred on any of the mineral leases which comprise the property, or generally in this region of Russia, due to the remote locations involved and the lack of any major infrastructure to support mining development. However, numerous placer gold deposits in the basins of the Maymakan, Avlayakan and Kirankan rivers have been worked since the 1970's.
Historical gold placer production from the Avlayakan and Kirankan rivers was estimated to have been approximately 5,033.8 kg of gold.
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