First-Mover Gold Exploration in Japan
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Japan Gold (TSXV:JG) is a gold exploration company with a vast portfolio of 17 gold projects that cover 69,505 hectares across the island nation of Japan. Japan Gold’s leadership team has long recognized the potential for gold exploration in Japan. When the Japan Mining Act was amended in 2012 for the first time, allowing foreign mineral companies the ability to hold exploration and mining permits, Japan Gold was the first foreign mineral exploration company to seize this opportunity.
Japan Gold is the only foreign mineral exploration company to focus solely on gold exploration in the country and has gathered a large portfolio of projects that collectively host 40 past-producing gold mines which were all shut down during World War II due to a government moratorium on gold mining.
Of its 17 projects, Japan Gold has placed its primary focus on the Ikutahara Project, located in the northern island of Hokkaido. The Ikutahara Project covers 17 historic and working mines. Aggressive scout drill programs are planned to advance six high-ranked prospects at the Ikutahara Project.
As a first mover in the country, Japan Gold has also taken the opportunity to establish strong relationships with local universities and industry specialists, incorporating some of these—such as Mitsuhiko Yamada and Takashi Kuriyama—into its management team and board of directors. This first mover position has also made the company a key resource for other organizations looking to partake in gold exploration in the region.
Japan Gold has established a two-pronged exploration and development strategy. Firstly, the company is actively seeking joint venture partners to accelerate exploration on its significant Japan portfolio.
Secondly, the company plans to embark on an aggressive exploration program, a large component of which will be drilling to explore for high-grade gold mineralization in and around historic gold mines. These opportunities are particularly unique because of the lack and / or absence of drilling around these historic mines. As part of their exploration activities, the company has acquired three mobile drill rigs that can be transported as needed.
Recently, the company closed a private placement of $6.65 million, which resulted in the issuance of 44.3 million common shares. Key investors that participated include Goldcorp (TSX:G,NYSE:GG), which now holds 19.9 percent of Japan Gold’s issued and outstanding common shares, and RCF Opportunities Fund L.P., which now holds 8.8 percent. Goldcorp and RCF Opps have been granted certain anti-dilution rights allowing them to maintain their equity ownership interest in Japan Gold.
Japan Gold is led by an exceptional management team with extensive local knowledge and relationships. This team is supported by a knowledgeable board of directors and advisors. As Japan Gold is a spinoff of Southern Arc Minerals Inc (TSXV:SA)—a company that shares many of the same directors—53 percent of the company is held by its predecessor, making it a unique share structure.
- First-mover status as an international gold explorer in Japan
- 17 gold exploration projects in safe and stable jurisdiction of Japan
- Projects host 40 past-producing mines with high-grade gold mineralization
- 2018 exploration plans using three newly-acquired mobile drill rigs
- Strategic agreement with First Quantum for exploration of four lithocap projects
- Exploring joint venture opportunities for a selection of properties
- Management team with extensive local knowledge
Mining in Japan
A safe and stable jurisdiction, Japan host 76 known past producing gold mines, including five one-million-plus-ounce gold deposits.
All of the Country’s gold mines were shut down in 1943 as part of a moratorium that was implemented by the government in light of World War II. Following that, there was a short period of small-scale production in the 1960s and 1970s and since then, production has been limited to a handful of mines including the Hishikari mine which still produces today and is one of the world’s highest-grade gold mines. The Hishikari mine has produced over 7 million ounces of gold between 1985-2017 at an average grade of 30-40 g/t Au.
Understanding the potential for gold exploration in the island nation, Japan Gold has entered the country as a first mover, collaborating with local companies, universities and engaging local directors and advisors.
The first scout drilling program began in December 2017, focusing on the Akebono prospect at the Ikutahara Project, completing 33.6 meters across three drill holes. The program returned intersections of 0.45 meters at 29.7 g/t gold and 77 g/t silver as well as 0.4 meters of 4.6 g/t gold and 107 g/t silver.
Having confirmed the presence of high-grade mineralization, Japan Gold plans to conduct further scout drilling across the portfolio. The company will also conduct additional soil sampling and surface mapping initiatives so as to determine further target areas.
As the country has diverse geography and climates, there is an opportunity to distribute exploration activities across various areas, providing results for investors throughout the year. Currently, the company plans to advance the North Hokkaido projects during the summer which will include scout drilling programs at the Ikutahara Project around historic mine workings, and surface exploration on its Hakuryu Project. On the Southern island of Kyushu, data compilation is in progress. Initial alteration mapping and geochemical rock sampling at the Kamitsue, Ohra-Takamine and Tobaru Projects will be implemented to define and rank targets for scout drilling, with the aim of having a drill targets ready at Kamitsue, the most advanced of the Company’s Kyushu projects.
Key Hokkaido Projects
The Ikutahara Project – Hokkaido, Japan
The most advanced of Japan Gold’s projects is the 19,114-hectare Ikutahara project, located in Japan’s northern island, Hokkaido. The property is made up of 56 claim blocks, of which 23 have been granted prospecting rights by the Japanese Ministry of Energy, Trade and Industry (METI). The project hosts 17 historic mines and workings, making it highly prospective for gold mineralization. Of these, a selection have been identified as target areas, which Japan Gold will incorporate into their exploration initiatives. These are the Akebono, Kitano-o, Ikutahara, Showa, Sakinzawa, Ryuo, Saroma targets.
1. Akebono Prospect
The Akebono target was the first prospect selected for drill testing as it was the first fully permitted and easily accessible. Results from the Company’s first scout drill holes completed in late December 2017 support the presence of high grade gold shoots in the Akebono vein system previously indicated by historic sampling of underground workings. Obtaining these results represents significant milestones for the company, firstly supporting high gold and silver grades at the Akebono prospect and secondly proving that Japan Gold can successfully work through the Japanese regulatory and permitting system from licence application acceptance to granting of prospecting rights and gaining approval for its first drill program.
Company mapping on the Akebono mine area has shown epithermal veins of up to 4 meters in width over a 770-meter trend open in both directions.
Past workings in the area were developed between 1938 and 1940 and included two 120-meter drives and winzes sunk to approximately 100 meters in depth. Historic channel samples across an underground vein include assay results of 1.2 meters of 446 g/t gold and 376 g/t silver as well as 0.65 meters of 91.5 g/t gold and 4,891 g/t silver.
2. Ryuo Prospect
The Ryuo mine, operated prior to 1943, was developed on five vein zones identified within a 1,000 m by 400 m NE-SW oriented zoned alteration system, which remains open to the southwest. The Metal Mining Agency of Japan (MMAJ) reported data on the Jinja and Shouei veins and shows workings developed on up to six levels to a depth of 75 m below surface. Underground workings of the Jinja veins were re-sampled during the 1950s and some noticeably high-grade samples were reported. Historic channel samples include results that show high-grade shoot development such as 72 meters with average grades of 40.8 g/t gold and 168 g/t silver and 9 meters of 31 g/t gold and 268 g/t silver.
3. Kitano-o, Ikutahara, Showa and Sakinzawa Prospects
The Kitano-o, Ikutahara, Showa and Sakinzawa eluvial and hard rock gold workings are located over an approximate 6 by 2.5 km area in the historic Kitano-o gold field. Historic production from the Kitano-o gold field is estimated at 96,450 ounces of gold from surficial alluvial deposits at an average grade of 5.9 g/t gold. The mine sits on a 3-kilometer trend that hosts a unique style of high-level gold mineralization within sinter.
In early 2018, Japan Gold conducted initial exploration work that saw the collection of 270 selective grab and chip samples from mine dumps, workings and outcrops. In the Kitano-o mine, there were high results of up to 54.5 g/t gold. Other results from the area ranged between 1.01 g/t gold to 8.59 g/t gold.
At the Ikutahara mine, the most notable samples from the mine dump were of 37.3 g/t gold and 35.3 g.t gold. The Showa mine, meanwhile, had five promising results including 93.3 g/t gold, 36.4 g/t gold, 19.35 g/t gold, 18.20 g/t gold and 17.6 g/t gold. Lastly, at the Shakinzawa workings, the company uncovered three results ranging from 1.34 g/t gold to 17.2 g/t gold. In November 2018, 15 applications at the Ikutahara mine were converted to prospecting rights. This raised the total of granted prospecting rights to 38 out of a total 56 applications on the project.
The results from this program also indicated the presence of open mineralization structures.
“The significance of newly identified sinter outcrops at Kitano-o underlain by historically mined eluvial gold deposits and sub-sinter quartz veins along with confirmatory high-grade samples reported by us here underscore the compelling nature of these prospects and the potential to discover additional mineralization beneath and surrounding these extensive historic workings,” said Japan Gold CEO John Proust. “A drilling program to test the Kitano-o Gold District has been prepared in anticipation of applications being granted and subsequent approvals for drilling this year.”
4. The Saroma, Chitose and Taiho Prospects
The historic Saroma, Chitose and Taiho gold workings are hosted in epithermal sheeted vein zones developed along a 4 km long northeast striking fault system. The Saroma prospect is composed of at least three subparallel vein sets traceable along a 1.2 km open-ended strike length. Vein thickness varies from few centimeters to approximately 5.0 m thick as observed in the historical workings. Operated during the 1930’s, records show the Saroma mine produced 13,189 tons of ore at an average grade of 9.7 g/t between 1933 to 1939.
The Hakuryu Project – Hokkaido, Japan
Surface exploration programs planned over the Hakuryu Project include mapping and geochemical surface sampling to aid in identifying extensions to the previously mined Konomai lodes and identification of alteration and geochemical footprints that may indicate the presence of concealed mineralisation.
Located approximately 30 km northwest of the Ikutahara Project, the Hakuryu Project comprises 4,901 hectares and includes the southern lodes of the large historic Konomai gold-silver mine. From 1915-73, Konomai produced a total of 2.35 Moz of gold at an average grade of 6.4 g/t Au and 40 Moz of silver at an average grade 109 g/t Ag. The southern portion of the Konomai vein system lies within the northeastern part of the Hakuryu Project. The largest of these lodes are known as the Motoyama and Fujishima veins, which produced more than 770 Koz of gold and 7.6 Moz of silver. Bonanza gold grades (> 40 g/t Au) in crustiform and colloform-banded, quartz-calcite-adularia ± sulfide veins are reported. The Hakuryu lode, which lies in the southeastern portion of the project, produced about 8,000 tonnes of ore at 4.9 g/t Au and 43 g/t Ag.
As part of a regional metallogenic study reported in 1990, the MMAJ undertook regional rock and soil sampling over a 15 x 12 km area, which partially overlaps and includes the eastern half of Japan Gold’s Hakuryu Project area. Analytical results yielded peak assays of 6.02 g/t Au and 18.9 g/t Ag from 78 rock samples.
Key Kyushu Projects
The Kamitsue Project
The Kamitsue Project is located in the Northern Kyushu Epithermal Gold Province covering 4,069 hectares, and is the most advanced of the Kyushu projects. Detailed surface exploration was completed at Kamitsue and reported by the MMAJ in the early 1990’s. The Company plans to initially confirm soil and alteration anomalies reported by the MMAJ and believes it will be able to plan an initial scout drill program once required permits are received. Most recently, the property’s 12 prospecting right applications were converted to Prospecting Rights by METI in November 2018.
The Ohra-Takamine and Tobaru Projects
The Ohra-Takamine and Tobaru Projects comprise 1,681 and 1,347 hectares respectively and are located in Southern Kyushu Epithermal province. The Ohra-Takamine Project hosts three historic epithermal gold mines that were mined periodically from the late 19th century until 1943 when the Japanese government imposed gold-mine closures. The MMAJ conducted regional and more detailed studies over the Ohra-Takamine area between 1983 and 1989, six drill holes were completed as part of this work. In September 2018, Japan Gold was granted five prospecting rights, which allows the company to implement more advanced exploration methods. The company has also submitted a further six prospecting rights applications that have been accepted by the METI.
At Tobaru, where the company was granted four prospecting rights, the company’s prospecting rights enclose a large area of alteration hosted in andesite-rhyolite volcanics centered on a northeast oriented 1,500 by 700-meter zone of silicification and quartz veining which includes pockets of advanced argillic alteration. No historic production is recorded at Tobaru; however, the area lies proximal to the Fuke and Okuchi deposits which produced in excess of 800,000 of gold.
In October 2018, Japan Gold entered into a binding agreement with First Quantum Minerals Ltd. to explore four of its lithocap projects in Hokkaido, Honshu and Kyushu. Under the agreement, First Quantum will manage and oversee a surface exploration reconnaissance program across all four projects (Eboshi, Kobui, Minamikayabe and Kamitsue) before June 30, 2019.
“We are delighted to partner with a company with First Quantum’s international reputation, exploration, development and production expertise and financial capability to advance four of our highly prospective gold and copper-gold exploration targets in Japan,” said Proust. “We believe this to be a first of many validating events for our pioneering efforts to re-establish Japan as a major mining jurisdiction. Separately, Japan Gold’s portfolio includes an additional twelve epithermal gold projects focused on the islands of Hokkaido and Kyushu, all of which sit within historic mining districts. Taken together, we believe that the Company is in an excellent strategic position in Japan, and we heartily welcome First Quantum as a partner.”
Once First Quantum has completed the project, they will have the option to enter into a formal earn-in agreement on any of the projects, which will allow the company to earn-in to 51 percent of the project by completing a minimum US$5 million in exploration expenditures by June 2022, with further opportunities to increase their ownership to 80 percent.
John Proust—Chairman and CEO
John Proust has successfully founded and managed a number of resource companies. He has served on the boards and held senior operating positions, and has directed and advised public and private companies regarding debt and equity financing, mergers and acquisitions and corporate restructuring since 1986. He is currently Chairman and CEO of Southern Arc Minerals Inc., Chairman and a director of Canada Energy Partners Inc., non-Executive Chairman and Director of Tethyan Resources plc, Executive Director of TekModo Industries Inc., a director of Pinedale Energy Limited and a director of Q Investments Ltd. He has extensive experience in corporate governance, is a graduate of The Directors College, Michael G. De Groote School of Business at McMaster University and holds the designation of Chartered Director.
Dr Michael Andrews, PhD, FAusIMM—President, COO and Director
Dr Mike Andrews is a geologist with more than 30 years of research and mining industry experience in gold, copper, coal and iron exploration. He holds an honours degree in Geology from the University of Reading, and a doctorate in exploration geochemistry from the University of Wales. He is currently President & COO and a director of Southern Arc Minerals, a director of Q Investments Ltd., and non-Executive Director of Tethyan Resources plc. He was a founding director of Kingsrose Mining and played an instrumental role in the discovery, exploration, feasibility and development of its Way Linggo Gold Mine in Indonesia. He also held the positions of Executive Director and Chief Geologist of AuIron Energy Ltd., Director of Gold Operations for Meekatharra Minerals Ltd., and managed the Teck-MM Gold Indonesian Joint Venture, an exploration portfolio of thirteen gold and copper projects in Indonesia. He also held senior exploration positions with Ashton Mining Ltd, Aurora Gold Ltd and Muswellbrook Energy and Minerals.
John Carlile, BSc, MSc, FAusIMM—EVP, Director
John Carlile is a geologist with more than 35 years of experience in the resource industry. He has held senior executive and director positions with both major and junior resource companies, including as President of Indonesian and Philippines subsidiaries of Newcrest Mining Limited. As a geologist, he has a proven track record of mineral discovery and business building in Asia, most notably as Exploration Manager, Asia for Newcrest Mining Limited when it discovered its Gosowong mine. He has served on the boards of several resource companies, and currently holds the position of director for Southern Arc Minerals, Equator Gold and Arc Exploration Limited. He holds a BSc in Geology from University of Reading, England, and an MSc in Mineral Exploration from the Royal School of Mines, Imperial College, University of London. He is a Fellow of the AusIMM and a Fellow of the Geological Society of London.
Andrew Rowe, BSc, MAusIMM—VP Exploration, Japan Country Manager
Andrew Rowe comes to Japan Gold through his previous position with Southern Arc Minerals. He joined Southern Arc in 2006 as a Senior Geological Consultant and was soon promoted to Chief Geologist and then Executive Vice President, leading Southern Arc’s exploration programs from grassroots exploration through to completion of the first resource estimate at the Company’s West Lombok Project. He planned and implemented large-scale exploration programs, managing both the technical and administrative aspects of the projects. He briefly left Southern Arc in December 2014, and then rejoined the Company as a consultant in August 2015 to continue with Southern Arc’s exploration projects in Japan. He graduated with a Bachelor of Applied Science degree in Geology from the University of Technology, Sydney, Australia. He is a Member of the Australasian Institute of Mining and Metallurgy and a Fellow of the Society of Economic Geologists. He has experience in mineral exploration and project management in Australia and various countries in Southeast Asia including Thailand, Indonesia, Mongolia, China and Laos. During this time he held exploration positions with Renison Goldfields, Normandy Anglo Asia, Phelps Dodge, Aurora Gold and Ivanhoe Mines. Immediately prior to joining Southern Arc he was the principal geologist for Pan Australian Resources Ltd (Laos) and part of the team responsible for successfully bringing the Phu Kham Cu-Au porphyry deposit through to bankable feasibility.
Vincent Boon, CPA, CA—CFO and Corporate Secretary
Vincent Boon is a chartered accountant with over ten years of professional accounting experience with private and public companies focusing on financial reporting, regulatory compliance, internal control and corporate finance activities. His experience includes financial reporting for both Canadian and U.S. listed companies with international subsidiaries, strategic planning, tax planning, corporate governance, equity financings and due diligence for acquisitions. As an employee of J Proust & Associates, an organization providing public company management and venture capital to start-up and junior companies, he is also the CFO of Southern Arc Minerals Inc., Canada Energy Partners Inc., and TekModo Industries Inc. He holds a Bachelor of Science degree from the University of British Columbia and is a Chartered Professional Accountant, CPA, CA.
Mitsuhiko Yamada, BA—Director
Mitsuhiko Yamada is a mining business professional with international experience overseeing all aspects of mining projects from exploration through to production. He earned his degree in International Economics at Keio University and spent his career with Sumitomo Corporation. He worked around the globe for Sumitomo, managing various mining projects and overseeing joint venture relationships with some of the world’s biggest mining companies, including Newmont, Phelps Dodge, Teck, Xstrata, Rio Tinto and Sherritt. He held increasing senior roles with Sumitomo, ultimately achieving the position of Executive Officer and General Manager of Mineral Resources. He retired from Sumitomo Corporation in 2012 and is currently a Lecturer of English at the Department of Industrial Engineering & Management at Kanagawa University.
Robert Gallagher, BApSc—Director
Bob Gallagher has worked in the mining industry for more than 40 years and has extensive knowledge of the development and operation of large-scale mining projects. Most recently, he was President & CEO and a director of New Gold, an intermediate gold producer with projects on three continents, from 2008 until retiring in June 2016. Prior to the merger of Peak Gold, Mettalica, and New Gold, Mr. Gallagher was the President & CEO of Peak Gold. Previously, he spent 15 years with Placer Dome Inc. and seven years with Newmont Mining Corporation, most recently as Vice President Operations of Newmont Asia Pacific. During his time at Newmont, he oversaw the completion of development and operation of the Batu Hijau Mine, the billion-ton, world-class copper-gold mine located in Indonesia and was responsible for seven smaller mines in Australia and New Zealand.
Dr. Sally Eyre, PhD—Director
Dr. Sally Eyre is a mining finance professional with extensive experience in global resource capital markets and mining operations. During 2011 to 2014 she served as President & CEO of Copper North Mining and prior to that she served as Senior Vice President, Operations at Endeavour Mining, responsible for a portfolio of exploration, development and production projects throughout West Africa. She also served as President & CEO of Etruscan Resources Inc. (now Endeavour Mining Corp.), a gold company with producing assets in West Africa. She has served as Director of Business Development for Endeavour Financial Ltd. and has held executive positions with a number of Canadian resource companies. She was appointed Senior Vice President, Corporate Development of Petro Rubiales Energy Corp. (now Pacific Rubiales Energy) and also served as Vice President, Corporate Affairs of UrAsia Energy Ltd. (now Uranium One). In 2003 she served as President & CEO of TLC Ventures Corp. (now Calibre Mining Corp.). She has a PhD in Economic Geology from the Royal School of Mines, Imperial College, London. She is a member of the Society of Economic Geologists (SEG) and a former Director of the SEG Canada Foundation.
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