Exploration Update

RNS Number : 7221N

Eurasia Mining PLC

16 June 2010

 



Eurasia Mining plc

("Eurasia" or the "Company")

EXPLORATION UPDATE

The Board of Eurasia is pleased to present an update for West Kytlim, following an extensive drilling and exploration work in the region:

Background

Eurasia Mining plc holds a 50% interest in Urals Alluvial Platinum Limited, owned jointly with Anglo Platinum. It in turn owns 75% of a Russian holding company that holds the West Kytlim exploration licence, with an area of 171.3 km².  Yuzhno-Zaozersky Priisk, a local mining company, holds the remaining 25% interest. All the exploration work to date has been funded by Anglo Platinum with Eurasia acting as manager and operator.

The original exploration licence was granted to UAP in 2002 and is due to expire in December 2010. As previously announced in September 2009, application has been made to convert the exploration licence into a production licence and a decision on this is still awaited. A further announcement will be made when the decision concerning the licence is known.

Alluvial Deposits

As alluvial platinum exploitation is different from bedrock platinum mining, the Board has provided the following explanation as to its operations in the area and alluvial mining generally to enable shareholders to put the exploration results provided into context.

Alluvial platinum exploitation principally involves the washing of river sediments to produce heavy mineral concentrates, from which platinum is extracted. Such deposits, referred to as placers, can be present in active river channels as well as older river beds and terraces.

There are a number of ways such deposits are exploited; Eurasia has opted for the so-called 'dry mining' approach. Where the placer occurs in steep sided valleys this involves bulldozers pushing the platinum bearing sediments, comprising sands and gravels, towards a washing plant. Coarser boulders and rocks are removed while the finer sediments are washed in specialized sluices that capture the heavier mineral fractions. 

Where the placer occurs in broader flat lying areas, any barren material above the platinum bearing sediments (termed 'overburden') is often removed using a dragline excavator which may also be used to mine the productive layers.

For both methods the "black sand" concentrate from the sluices is bagged and then further concentrated to produce a platinum rich product, which is sold directly to any one of three refineries in Russia.

The directors of Eurasia anticipate that the capital commitment needed will be modest, although some capital investment will be required for the Dragline Excavator and a power substation. Until the mining licence is granted, it is not possible to calculate the detailed economics for the operation.

Alluvial platinum in the Urals

Alluvial platinum has been produced continuously in the Urals since its first discovery in 1824. Prior to the discovery of the Bushveld complex in South Africa, the region was the world's largest producer of Platinum ("Pt").   Russian sources, estimate that some 500t (16Moz) have been produced. Much of this appears to have come from two river complexes, Vissim (160t) and Issovsky (250t). It is estimated that the Kytlim river complex, where Eurasia's licence is located, has produced some 50t Pt.

The West Kytlim licence, which covers the Tylai-Kosvinsky Platinum Placer, has seen some past production, including dredging, underground mining in coarse gravels, and artisanal scale washing.  Eurasia's discovery at West Kytlim area followed from some preliminary pitting which identified buried placers below the overburden alongside some previously mined placers. In addition, early mining and dredging can be inefficient, and the Directors believe that potentially viable platinum grades exist in tailings from the older operations.

Exploration for alluvials

It is generally accepted that it is difficult to quantify reserves for alluvial deposits from drill hole data alone, as the location of the heavy minerals is extremely variable due to both the irregular distribution and the size of the platinum grains (this can be known as the Nugget Effect). Two samples side by side may give radically different results, whereby one has a high value and it's neighbour, none. The Directors believe, therefore, that the key to exploring for alluvials is understanding what the average production grade might be from a specific area or "polygon".  Drilling is used to establish the presence of placers before a more systematic sampling progamme is utilized.

For its drill programmes, Eurasia has used a drill-rig that takes disturbed samples as it cuts through the target sediments. This first-stage sampling method aims to identify the presence or absence of platinum within in the sediments.  Presence of platinum grains provides encouragement to continue sampling by trenching and pit sampling.  In the latter, samples as large as several tonnes will be processed.

Drilling and Sampling method

Reconnaissance drilling is undertaken on profiles, spaced between 1.2 and 1.6 kilometres apart, which allows for a first stage appraisal of the presence or absence of platinum in addition to the depth and thickness of potential mineralized zones.  In many of the prospective parts of the licence area no more detailed work has been done, and will not be done until mining is planned. At that stage detailed pitting will be carried out. This work will precede actual production mining by 1-3 years and will ultimately test the viability of each area outlined at the reconnaissance stage.

Rigorously applied drill hole sampling methodology does not compensate for the large errors that result from the Nugget Effect, referred to above. However the confidence of the exploration team is based on the experience of over a century of work on alluvial platinum in the Urals.

Eurasia utilized a Russian rig to undertake its drill work, sampling in uncased or open holes. The diameter of most of the holes is 172mm but 198mm, and on some occasions, 151mm have also been used.  The wet samples are bagged and analyzed in the laboratory.

The last stage of the analysis is hand picking of the individual platinum grains from the final heavy fraction concentrate; these are then weighed. This process permits equating the platinum weight to the measured volume of sample to determine its grade, which in turn is used for estimating platinum grade per cubic metre of gravel.

The weighed platinum comprises mainly grains of isoferroplatinum, which contains 75-78% platinum metal and is referred to as "Raw Platinum". The actual Platinum metal grade in the sample, as well as in concentrates recovered from production, can only be determined at the refining stage. For this reason the State Reserves Commission requires that "Raw Platinum" grades are reported for all alluvial platinum exploration in Russia. This applies to all Platinum grades reported by Eurasia for West Kytlim. 

Exploration results at West Kytlim

The key data sets required to provide confidence for commercial exploitation are drilling, trenching, pitting and bulk sampling.  More detailed sampling has been carried out in several locations within the licence area but the Directors believe it would prove too expensive to sample the entire area at this stage. For this reason, no formal resource estimates have been produced.  Nevertheless the geologists working on the project, who are experienced in alluvial sampling, are hopeful that economic deposits are present in many other areas within the licence area.

To date, Eurasia has explored 9 areas within the Tylai-Kosvinsky Placer - the Bolshaya Sosnovka Creek; and also a further eight river valley systems which have had varying degrees of work completed on them, all of which are detailed below. The Directors do not believe drilling information on its own is sufficient to allow calculation of in-situ resources and indeed drill hole values for the mineralized intervals are composited in assessing the economic potential of an area. In some cases, Eurasia has undertaken pitting instead of, or as well as, drilling and these results can be more reliable.  Nevertheless the results obtained to date are sufficient to encourage continued assessment of the licence area.

Bolshaya Sosnovka Creek, (Tylai-Kosvinsky Placer Area 1)

Eurasia has an approved resource in this area. The resource occurs within a 6km long target zone within the Bolshaya Sosnovka Creek (one of the tributary streams feeding the Tylai- Kosvinsky Placer).  From Eurasia's work it appears, the area comprises un-mined buried placers with related terraces as well as waste from earlier mining. Due to the combination of near surface and buried placer, the average depth of overburden is 12.6m BS. This is because the flat lying buried placer is located beneath the steep sided bank of the creek, which creates a thickening wedge of overburden from surface to approximately 20 metres depth. The average depth of productive gravel occurs between 12.6 and 15.4 m (average width 2.8 meters).

Eurasia has conducted an exploration programme comprising 186 drill holes and 110 pits in the region; the maximum drill depth is 28.7m. It has also completed 3906 m³ of trenching and bulk sampling from near surface placer and dredge tailings in the area.

The Company has produced a resource estimate for this area, which has been approved by the Russian Authorities. In accordance with the Russian Standard, these are classified as C2 Reserves:

Approved C 2 reserves (cut-off grade 75 mgm/m3 raw Platinum)
	Buried Placer	Quaternary (near surface) Placer	Total
Average raw Pt grade, mgm/m3	430	221	316
Contained Platinum, kg	469.68	286.87	756.55
Average Gold  grade, mgm/m3	0.6	1.2	0.9
Contained Gold, kg	0.66	1.5	2.16

Currently this small resource is the only one that has been approved in the licence area; it has now been registered with the state, which followed recognition and certification of a new discovery.

T-K Placer Areas 2 -9

At this stage, and for the reasons set out above concerning the nature of alluvial deposits, the Directors believe it would be misleading to present the grades from the work carried out to date on T-K Placer Areas 2-9, until further work can be undertaken to verify the results. Instead, grades for the T-K Placer Areas 2-9 will be reported after the completion of the required infill exploration which includes, amongst other things, bulk sampling. It is anticipated that additional resources within the licence area will be submitted for approval by the Russian Authorities during the third quarter of 2010.

From work presented to date however the Directors can estimate an average grade for these areas of 237 mgm/m³ raw platinum and 5 mgm/m³ gold.

T-K Placer Area 2

A programme of 142 holes (1,172m) and 14 pits has now been completed in this area, on seven profiles at an average separation exceeding 1km. The holes and pits are approximately 41m apart and reached depths of 19.7 m.

The Placer consists mainly of alluvial sediments in older terraces and to a lesser extent of younger river sediments. The drilling established that the Placer occurs from surface to a maximum depth of 16.5 m with an average thickness of 1.5 m. On average the placer extends from 6.5 to 8.0 meters below surface.

The next stage will be to increase the pitting and drilling cover in this area to assess the area for eventual mining.

T-K Placer Area 3

Works completed in the area comprises one drilling and pitting line (from which 13 holes were drilled) but due to ground conditions and also the near surface location of the placer the vast majority of exploration in the area was conducted on 6 pit lines comprising a total of 68 pits. Average drill holes and/or pit separation on the lines was 29m. The drilling reached depths of up to 21m.

Having interpreted the data, the Directors believe the Placer platinum in this area is derived from nearby bedrock sources; it is characteristically coarse grained, poorly rounded with a large number of in-growths of chromite. It appears that the Placer (from which the Platinum will be extracted) varies in thickness between 1.2 and 3.9 m, with an average thickness of 1.7 m. Approximately two-thirds of the drillholes in this area showed that the placer is exposed at the surface, while the remainder continues beneath overburden, itself varying in thickness from 2.5 to 8 m (average depth 4.0 m).

T-K Placer Area 4

Additional small placers have been identified in several tributary streams adjacent to the Bolshaya Sosnovka Creek. The Company has conducted a sampling programme of 32 pits of average separation 20 meters. From the results it has established that a Placer is present between 3.6 and 4.1 m in depth (average 1.6m thickness).

T-K Placer Area 5

Based on a reassessment of historical drilling data in this area (59 holes, each hole averaging 23m apart to depths of 14.1m).  It appears the platinum-bearing layer is approximately 1.2m thick, on average the placer extends from 4.75 to 5.95 meters below surface. Further exploration is planned by the Company to follow up and verify this data.

T-K Placer Area 6

Eurasia has conducted a small drilling campaign in this region, drilling 5 drill holes to a maximum depth of 8.8m, with the drill holes being approximately 62 m apart. From the results to date, it appears that the Placer occurs between 4 and 6 m depth and is approximately 2.0 m thick.

No pitting or trenching has yet been carried out in this area.

T-K Placer Area 7

Exploration in this area is at an early stage, and the total strike length of a potentially economic placer has yet to be established. In addition, no drilling has yet been carried out in this area by Eurasia.

However, placer samples were taken from 8 pits of average depth 3.8 m, (located approximately 20m apart). The average productive layer thickness is occurs between 1 and 2.4 m.

The Directors intend that substantially more exploration work will take place in this area.

T-K Placer Area 8

In Area 7, Eurasia implemented a single 1,600 metre long drillhole profile, drilling 23 holes to a maximum depth of 30.1 meters which intersected Platinum, The average hole separation is approximately 40 m. From the interpretation of the data, it appears that potentially economic placer extensions may be present to the north and south of an historic dredge field.  To the north, two separate occurrences 470 meters apart were intersected on the profile. The first extends over a length along the line of 360m in 9 holes, on average the placer extends from 2.5 to 5.2 meters below surface.

The second occurrence was intersected in the northernmost five holes of the profile over a line length of 220m; on average the placer extends from 3.4 to 12 meters below surface. This block remains open to the north with the northernmost hole indicating a Placer thickness of 10.9 meters.

The placer extension to the south of the dredge field extends over a line length of 350 meters, based on 9 holes drilled to a maximum depth of 16.7 meters. The average depth of productive gravel occurs between 12 and 13.1 m, (average width 1.1 meters).

Further detailed exploration is planned in this area.               

T-K Placer Area 9

Eurasia has completed 116 drill holes on 4 profiles in the area; the hole separation is approximately 26 m. Maximum hole depth is 45.4m.

The composition and thickness or Prospective Gravel in the area, is quite variable with thickness sometimes exceeding 30 meters, although the average thickness is 2.8m. Platinum is also irregularly distributed in parts of the area.

Overburden depth above this layer averages 7.8 meters.  Dragline stripping would be deployed in this area.

Conclusion

The Company is awaiting the granting of a production licence for the West Kytlim licence area.  Current activities are directed at preparation of reports required to expedite this. The Board believes that the award of a production licence is the essential next step in the establishment of a mining project at West Kytlim.

Consent for release

Christian Schaffalitzky, FIMMM, PGeo, CEng, is a director of the Company. He has reviewed the update and consents to the inclusion of the exploration information in the form and context in which it appears here. He is a Competent Person for the purposes of the reporting of these results.

For more information please contact:

Eurasia Mining Christian Schaffalitzky / Michael de Villiers	Tel: [phone]
Katy Mitchell, WH Ireland Limited	Tel: [phone]

 

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