Glencar Mining

Feature Story Date: December 21, 2005

Glencar Sets An Example Which Investors Hope Will Be Followed By Other Gold Explorers.

What we need in 2006 is a really big gold discovery to get this section of the market up and running. One of the disappointments of 2005 has been the lethargy exhibited by junior gold exploration companies while the gold price has advanced to 21 year highs. Our London Correspondent is not given to optimism, but last week in his review of the London mining market he commented, “The week’s best performer, by far, was veteran gold explorer Glencar Mining which more than doubled its value to close at 7p, the stock’s highest price for several years. Glencar has been around since the 1980s and has proved to be rather better at finding mines than building and operating them.” Fair comment, but Hugh McCullough, the managing director of Glencar, has always contended that the expertise of his company is in exploration and it should have left the development of the Wassa mine in Ghana to others.

Anyway the company was able to report some bonanza gold grades from drilling at its new Komana West project in Mali. One hole hit 53.6 g/t over 19 metres from 61 metres depth and finished in mineralisation. Within it there were two adjacent one metre intervals grading 340 g/t and 470 g/t. Another, which was 180 metres to the north, intersected two mineralised sections within the shear zone. The first section graded 9.57 g/t over 5 metres between 47 and 52 metres depth and the second 13.1 g/t over 5 metres between 60 and 65 metres depth. Our London Correspondent concluded, “It is still early days for this project as so far assays have been received for only nine holes, but it would seem that the company is onto something.” Praise indeed and there is a bit of delayed glory for Minews as when we last wrote about the company in the summer we anticipated that drilling would take place at Komana West towards the end of the year and at that time the news flow could be very interesting.

In fact twenty one holes have now been drilled at Komana West for a total of 1,942 metres. The initial drilling programme has now been completed and a proportion of assays received confirm ore grade mineralisation. While no firm evidence of the orientation of, or controls on mineralisation has yet been established and considerable additional evaluation is required, Glencar is clearly encouraged by the results to date. The target of the drilling is a north-south trending shear zone along which there is extensive artisanal working over a strike length of at least 900 metres – always a good sign. Ore grade mineralization was intersected in five of these first nine holes. Full details of the drilling programme, the hole locations and the assay results will be given early in January when the remaining assays have been received and collated.

Earlier this year a mapping and sampling programme was completed at the Komana West prospect with 19 grab samples yielding an average grade of 5.8 g/t from a 19 metre long exposure. This prospect lies on the Sankarani project which is down in the south west of the country near the border with Guinea. It is underlain by rocks of the Birimian System which also hosts Ashanti’s Siguiri mine 80 kms to the west. The Birimian has proved prolific in Mali with mines such as Yatela, Syama and Loulo all hosted by it. Previous rock sampling at Komana West had returned gold grades from grab samples of up to 108 g/t which should have attracted the attention of shrewd investors.

A structural mapping programme carried out in May 2005 identified a generation of east-west trending veins within a north-south shear envelope as a potential host for economic mineralization and it is here that the drilling took place. It is all rather bad luck for Gold Fields which signed an agreement with Glencar in the summer to acquire interests in the Bokoro, Sanioumale and Farasaba licences, which are also within the Sankarani project, but not Komana which will remain with Glencar though Gold Fields will have a right of first refusal. Goldfields can earn a 25 per cent interest in these licences by spending US$2.5 million on exploration and take this up to 51 per cent by spending a total of US$4 million by the end of 2008. Thereafter it can increase its overall stake to 65 per cent by funding additional exploration if required and a feasibility study, subject to a maximum additional expenditure of US$8 million. After that it is each party for itself, but Glencar also has the option of allowing Gold Fields to lend the funding required or for Gold Fields to arrange project finance. If Glencar takes up either of these options Gold Fields will be entitled to a further 5 per cent interest.

Gold Fields is still doing its due diligence, and in the meantime Glencar is doing follow-up field work on the helicopterborne ultra-high resolution aeromagnetic survey carried out at the Asheba concession in Ghana. The immediate focus is targets in the vicinity of the Atinasi North prospect where additional interpretation of the area is underway. The survey has yielded valuable geological data on the concession scale which had not previously been available for Asheba. The next round of drilling there is now scheduled for completion before the year end so Glencar is seeing out the year on a busy note. Let’s hope for more good news in the New Year.