EXPLORATION 1997 — Quincunx poised for action in Mongolia

A small Canadian company with two 4,000-sq.-km exploration licences in Mongolia is quietly establishing itself in that country.

Toronto-based Quincunx Gold Exploration, a private company with $3 million in its treasury, is preparing to send a Canadian rig and crew to an area near the Gobi Desert in southern Mongolia to test the properties for bulk-minable gold deposits.

The junior hopes to go public on the merit of those drill results, once they are complete. In the meantime, it has conducted geophysical surveys, collected more than 22,000 rock and soil samples and completed 19 km of trenching on the wholly owned land package. Results from those tests have enabled the company to outline three priority drill targets.

Attracted by the region’s geological similarity to the Basin and Range districts that host Nevada’s gold deposits, Quincunx was the first foreign company to acquire a fully owned gold exploration licence in the country. It did so in 1994, the year that Mongolia revamped its mining laws to lure foreign investors.

Historically, exploration in the country has focused on copper porphyry deposits (though occurrences of mostly vein-hosted gold are more common). The Erdenet mine, the eighth-largest porphyry copper deposit in the world, produces 20 million tonnes grading 0.8% copper each year. Mining from placer deposits accounts for most of the country’s gold production, which amounted to a meagre 4.7 tonnes in 1995.

Orogenic belt

The company was attracted to the contiguous Harteeg and Shuteen licences, as they lie along the axis of the orogenic fold belt that hosts Newmont Mining’s (NGC-N) Murantau mine in Uzbekistan, the world’s largest open-pit gold deposit, and Cameco’s (CCO-T) Kumtor deposit in Kyrgyzstan. A belt of gold occurrences stretches across the property and ends 150 km west of Olon Ovoot, a deposit under development by a Mongolian-Russian joint venture.

On a regional scale, the project area is part of the South Mongolian tectonic unit, a magmatic arc environment superimposed upon an accretion-subduction complex. The unit hosts several types of gold occurrences, including metamorphogenic mineralization (similar to that mined at Murantau), mesothermal veins associated with fault zones, and gold-rich copper porphyry deposits.

Mongolia’s hard-rock gold mineralization, however, remains virtually unexplored, and only a few foreign mining companies, including Vancouver-based Mongolian Resources (MGR-V), have ventured into the landlocked country.

Indeed, according to some analysts, the level of gold exploration in Mongolia is surprisingly low, considering its new mining code, extensive geochemical-geological database and numerous gold occurrences.

Among the companies that are working to reverse that trend are Mongolian Resources, which has a 49% interest in the advanced Bumbat gold project, situated in the country’s north-central region. The junior was recently awarded a 1,340-sq.-km exploration licence bearing “Carlin-type” (sediment-hosted) mineralization.

Also active is RTZ-CRA, BHP and Armada Gold (AAU.A-T). The last of these is focusing on cathode copper production from waste rock at the Erdenet mine.