John Teeling is one of those mining entrepreneurs who relish going where others fear to tread. Iraq, Zimbabwe – and more recently, Iran.
And he also relishes the pursuit of the wealth that lies in the ground. Often thought of as the archetypal incurable prospector, Teeling has now taken his pick and pan to the underexplored mineral belts of Iran in the search for gold. The Tethyan Belt is the key focus of Persian Gold’s exploration activities – a volcanic province which traverses Iran in an arc from Turkey and Armenia to Pakistan, and on which no explorer has set a serious foot in more than 30 years within the borders of Iran.
What drew Persian Gold initially were vast deposits of alunite, as found in the Andean Cordillera of South America. Yanacocha, the second largest gold mine in the world, is a gold in alunite deposit, as is Barrick’s La Pierina. By the time Persian Gold listed on AIM in June 2005, work was well advanced on a large land area in north western Iran, containing an estimated 1 billion tonnes of alunite deposits. Eight exploration licences have been secured, with the aim of discovering and proving up at least one multi-million ounce gold deposit. Permits are awaited for trenching and drilling at the two most advanced projects at Takestan/Twin Hills and Zehabad.
At Chah-e-Zard, another advanced project, a preliminary resource of 160,000 ounces of gold and 1 million ounces of silver has been modelled following drilling and trenching on a small part of the project area. Persian Gold and their Iranian partner have applied for a Discovery Certificate prior to carrying out a pre-feasibility study for an open pit heap leach operation. Should this proceed to development, the company foresee production of up to 60k ounces per annum with low capex and op costs of around $200 per ounce, starting in 2010.
Whilst the gold-in-alunite was the driver for Persian Gold’s entry into Iran, now they are there, many other opportunities are presenting themselves and the strategy has shifted. As the only Western company currently operating in Iran, Persian Gold’s Irish origins mean they have no “political baggage” and their staff enjoy good relations with the authorities. Thus, the company is being approached and offered mineral opportunities on a regular basis, with particular emphasis recently on the copper porphyry projects hosted by the Tethyan Belt. Copper-gold porphyry style deposits are much sought-after due to their large tonnages and “open-pittability”, which make them economic in spite of apparently low grades, which often average just half a gramme of gold and half a percent of copper. The company’s activities are currently focused on development drilling at just such a project, brought to them a year ago, at Dalli, which lies about 200km south-west of Tehran, and where they have secured a 70% interest from Iranian owners Dorsa, who retain 30%.
The Dalli project comprises a large hydrothermal alteration zone, on a north-east trending intrusive corridor, some 6km long and up to 3km wide. Current activity at Dalli centres on two hills, 1.7 km apart in the western half of the alteration zone, where soil sampling has demonstrated strongly anomalous gold and copper at the surface, and geophysical work has turned up a number of IP anomalies. The South Hill, a conical structure some 190m x 225m, exhibits the intense potassic alteration typical of porphyry mineralisation. Initial drilling at Dalli has confirmed that South Hill is indeed a gold rich copper porphyry system, something of a rarity in Iran, where porphyry systems are usually low in gold.
Results from the initial two holes drilled at the South Hill showed intercepts from 0 - 211 m grading 0.68 g/t gold and 0.45% copper overall and 0 - 213 at 0.75 g/t and 0.57% copper overall, although both cores included high grade zones of more than 1% copper and 1 g/t gold. The two holes were 200 metres apart, and showed the probability of a medium sized copper-gold porphyry deposit, with slightly above average grades for their setting, and likely to be commercially viable if grades are maintained in further drilling. Drilling at the North Hill also showed gold of similar grade from surface to a depth of 233m, although the copper grade was much lower.
Four follow-up drill holes centred on the more prospective South Hill, three of them angled to test lateral extent of the mineralisation, whilst a fourth hole - DDH06 - was drilled vertically down to 400 metres seeking the higher grades that were discovered at depth in the initial drilling. DDH06 showed four distinct layers of worthwhile mineralisation from 57m below surface down to 358m depth. The best of these was 11m at 307m depth, grading 0.71% Cu and 0.8 g/t Au, whilst the lowest grades lay in the thickest intercept of 66m between 196m and 262m, where 0.31% Cu and 0.39 g/t Au were found. Of the other three holes, DDH05 was barren, but DDH07 and DDH08 produced encouraging results, with a best intersection of 220 m from just 24m depth running at 0.42% Cu and 0.5 g/t Au.
Since the commencement of the last round of drilling, Persian Gold have carried out an extensive programme of additional exploration at Dalli, adding more information to the existing geophysics and geochemical result databases. Detailed topographic and geological maps have been completed over both hills, and 16 trenches covering 1,513 metres have been dug, generating 819 mineral samples, the results of which are awaited. Persian Gold hope this will enable a greater understanding of the deposit, and indicate where similar structures are likely to be found in the immediate vicinity. It will also enable 3D modelling to indicate the potential tonnage at the project.
The “being there” factor has led to a number of other new projects, almost all gold/copper, being presented to Persian Gold, several of which they are now evaluating. One of these, at Khoineroud, is an undrilled copper-gold porphyry intrusive hosting an ancient gold mine, and located just 6km away from the 796 million tonne Sungun copper mine, to which it has similarities. Another copper-gold project at Qareh Chaman is also being investigated, centred in a large alteration footprint some 400 km north west of Tehran, which is known to contain copper, gold and silver mineralisation.
At the company’s AGM in June, Dr Teeling reported that the company was expanding its relationship with Iranian institutions such as Parsian Bank and Pars Olang. He also revealed that early stage negotiations are underway with two mining multinationals whereby one or other would enter into joint ventures with Persian Gold. Targets for 2009 were to bring a number of new projects into the portfolio, and to bring Chah-e-Zard and Dalli to decision point.
The current market situation and what Dr Teeling describes as: “the continuous diatribe against Iran from the West” is presently masking Persian Gold’s successes at Dalli and Chah-e-Zard. “Threats of war frighten investors.” he said. “They sell into a market with no buyers. In one small deal in recent months, the market capitalisation of Persian Gold was halved.” He isn’t far wrong. Since we last looked at Persian Gold, the share price has fallen to just 5p, giving a market cap of some £3.5 million.
But in spite of current market woes, funding difficulties and political posturing by the West, Teeling is upbeat about Iran. “We believe that the potential in Iran is vast;” he concluded in his recent AGM statement, “and for those who stay the course, the rewards may be substantial.”