There are a number of occurrences of gold mineralisation in the region around the Pokrovskiy deposit, at distances from a few hundred metres to several kilometres. Exploration continues on the inner flanks licence area, concentrating on evaluation of the fanglomerates. Tests on bulk samples from this deposit have confirmed that processing should be simple following the washing and screening to remove the almost barren fine-grained clay matrix and larger boulders. The remaining material is similar to the run-of-mine Pokrovskiy ore and can be processed through the RIP plant or Heap Leach without any modification.
The Group's attention is now turning also to the several areas identified in the recently acquired Zheltunak licence. Of these, the first to be explored in any detail is Velikiye Luzhki in which extensive gold mineralisation is associated with tectonic thrust structures. Additional exploration licences are also being acquired from the State through various auctions and tenders at greater distances from Pokrovskiy, including the Aprelskoye prospect near Pioneer and others at similar distances.
In 2006, 17,450m of core drilling and 5,600m of shallow mapping holes have been completed on the Pokrovskiy deposit and the flanks, and 30,600m3 of exploration trenching was completed on the flanks. Emphasis has been placed on the detailed exploration of the fanglomerate deposit and the three newly discovered underlying hard-rock ore bodies in the Pokrovka-II area and on new exploration of outer flanks areas covered by the Zheltunak licence.
In the Pokrovka-II area exploration work continues on the unconsolidated fanglomerates and on the underlying ore zones in the crystalline basement. Due to the complexity of the geological structure the previously accepted drill hole spacing is considered inadequate for definition of a russian category C2 reserve. Accordingly, the categories have been redefined and implies the need for a more closely spaced exploration grid to provide the necessary definition. Metallurgical studies have established that these ores are easy to beneficiate, and through heap leaching it is believed to be possible to extract up to 77.4% of the gold from this ore.
At least two ore zones have been identified in the crystalline basement of Pokrovka-II.
In the Nadvigoviy area, a 20m wide mineralised zone of sulphised quartz-carbonatite metasomatites has been discovered and traced for a length of 300m, with gold grades up to 11.2g/t. In the Vodorazdelniy area, two section lines of deep holes have intersected two ore intervals associated with gently dipping mineralisation zones (pyrite up to 305%, silicification of the matrix) in a 28m thick tectonic zone. In both of these areas exploration continues.
In 2006 work started in four new areas on the outer flanks of the Pokrovskiy deposit: Velikiye Luzhki, Proletarskaya, Anatolevskaya and Zheltunak. These areas are located approximately 4-17km from the Pokrovskiy deposit.
The Velikiye Luzhki area is located 17km south-west of the Pokrovskiy deposit. A series of north-south trenches has been excavated across a mineralised zone (in Jurassic sandstones underlying a major north-dipping thrust) over an east-west length of 2.5km. Altogether a 4km strike length can be traced. Gold has also been discovered in Cretaceous diorites above the thrust. Drilling is planned in 2007 - a series of vertical holes to intersect the mineralised zone and allow the upgrading of the already established P1 resource to the C2 category of reserves.
The Zheltunak area is located 17km east of the Pokrovskiy deposit. Epithermal gold-quartz mineralisation has been known here since the 1970s. Geochemical and geophysical exploration was started in 2006.
