ASIA — Junior under the microscope in Kalimantan

While some companies are licking their wounds after an unhappy Indonesian experience, Borneo Gold (BNO-V) has started a 5,500-metre drilling program on its Bunut gold prospect with cautious optimism.

Bunut, situated in the northeastern corner of Kalimantan Barat province, was one of three properties taken on by Borneo Gold in early 1996. An area known to have alluvial gold workings, it was covered by a small contract of work held by Aurum Bunut Nusatama, an Indonesian company 90%-owned by Borneo Gold.

Early work at Bunut revealed a small open pit, dug by local alluvial miners, in a valley near the headwaters of the Mentebah River. The miners were working weathered dacite that contained large amounts of visible gold. They would sluice away the overburden with pumps, then rip up broken bedrock, hand-cobbing the samples with visible gold. Any gold that didn’t come off the rock with a wire brush was recovered by crushing and panning.

Borneo released the news of its find before any assays were ready, and the Vancouver Stock Exchange enforced an immediate trading halt. The chemical analyses ultimately backed up the visual descriptions.

The results of the reconnaissance at Bunut prompted the company to sharpen its focus on the project. Its other two properties — Tanah Laut, in the extreme southeast of the island, and North Rumah, in the west — were placed on hold, and exploration started in earnest at Bunut.

Regional geophysics and satellite imagery showed a series of southeasterly-striking faults crossing a northeasterly-striking wrench fault. Near one of these faults was a prominent elliptical feature, which proved to be an intrusive body. Zones of low magnetism and high potassium-40 radioactivity suggested a smaller intrusion, possibly buried, poked out from the main intrusive body near the showing.

On the ground, soil geochemistry and an induced-polarization survey matched up well, delineating 14 potential drill targets.

Borneo Gold plans to test all the targets on the first pass of drilling, returning to the ones that show favorable results once the first assays come back.

Anticipating that the project would come under close scrutiny because of its proximity to Bre-X Minerals’ infamous Busang project, Borneo Gold has designed a system that would ensure careful sample custody. The company will split its core and then hand it over to a commercial laboratory, Inchcape Testing Services (ITS), which has set up a sample-preparation lab at Bunut that operates independent of Borneo Gold. That lab will send all samples out to ITS’ analytical lab in Jakarta.

Access to Bunut is easy, by Borneo-jungle standards. A paved road connects the nearest large town, Putussibau, with the coastal city of Pontianak, and a lumber road from Putussibau lies 1.5 km from the property. Heavy equipment can also be barged in on the Mentebah River.

“I believe we took a different approach than other companies,” says Ian Park, Borneo’s chairman. Unlike other participants in the Indonesian land rush of 1995 and 1996, which grabbed as much ground as they could, Borneo Gold took on small concessions that could be evaluated quickly.

And Park has no qualms about being in Indonesia now, with escalating social unrest having led to the resignation of President Suharto. He compares Borneo Gold to another company that started out in a corner of the world everyone was shunning, and gathered up a strong portfolio of projects just as the situation was changing. The place was Central America, the time was the 1980s, and the company was Greenstone Resources, now a prosperous young producer.

Indonesia’s economic troubles, especially its diving currency, work in a foreign explorer’s favor. Borneo Gold has seen its rupiah-denominated costs fall so drastically that the Canadian dollar goes about four times as far as it once did, and even its U.S.-dollar costs have fallen between 40% and 50%.

These financial developments have also placed Borneo Gold in the position of having money for property acquisitions; it has about $6 million in working capital, of which about $5 million is cash. If, regarding gold and currency values, the present climate persists, there will inevitably be properties available.