Santa Fe builds on grassroots projects in Kazakhstan

The geologic potential of Kazakhstan has prompted Santa Fe Pacific Gold (GLD-N) to intensify efforts in the region, where it has been quietly proving up grassroots projects for the past two years.

The company is carrying on with its drilling initiative on the Sharaltyn joint venture, in which it holds a 50% interest, with the remainder held by the Kazakhstani government.

Under the joint-venture agreement, Santa Fe must relinquish 25% of the 31,500-sq.-km land package one year from now.

To earn its interest, the company must spend US$6 million over the next five years. It is also responsible for financing development of any mining project. Santa Fe would receive 100% of cash flow until payback. It would also receive, over the first 10 years of production (and until its investment is recouped), 60% of cashflow from its first mine, and 50% thereafter on subsequent mines.

The Sharaltyn joint venture is in the Charsk gold belt. According to old Soviet records, the property contains more than 400 gold prospects and is in the vicinity of eight operating mines, including the 8-million-oz. Bakyrchik gold mine, operated by London-listed Bakyrchik Gold.

The joint venture was formed in September 1994 and registered in January of the following year. The government issued a combined exploration and mining lease in April 1995.

In the past two years, Santa Fe has completed 100,000 metres of drilling, most of which has focused on a handful of targets.

None of the results has been released to the public, yet Frank Wells, Santa Fe’s manager of business development, describes them as encouraging. “We like what we are getting or we wouldn’t still be here,” he says.

The Jiama target is a sediment-hosted structure that bears geological similarity to Santa Fe’s mines in northern Nevada. To date, the company has conducted trenching and augering and completed more than 23,400 metres of drilling.

Equally prospective is the Mialy target, on the eastern edge of the joint-ventured area, where Santa Fe has completed more than 40,000 metres of core, reverse-circulation and air-blast rotary drilling.

Meanwhile, nearly 10,000 metres of drilling have been completed at the Suzdal-10 target.

Other targets being drilled include Kostobe and Ashaly.

Wells says the company is currently focusing on shallow oxide deposits and will explore refractory gold prospects in the future.

He adds that it is too early for the company to attempt resource calculations.

Kyrgyzstani prospects

In the next-door republic of Kyrgyzstan, Santa Fe has formed several joint ventures.

Chief among these is a 50-50 partnership with the Kyrgyzstani government on the Soltan Sary project, near the state-owned Altyntor gold mine.

The company can earn its interest by spending US$2.5 million on exploration over four years. Toward that end, it has already drilled more than 3,000 metres of core.

The Soltan Sary project contains a known resource of 1.5 million oz. gold.

Santa Fe is also involved in two exploration joint ventures with the government on the Kainar and Sary-Jaz projects.