Copper and gold exploration in Kalimantan

Materials World magazine
1 Sep 2013

Michael Forrest talks to Gerald Cheyne, Director of Corporate Development at Kalimantan Gold Corp, about exploring for gold and copper in this geologically active area.

Kalimantan forms the Indonesian part of Borneo, which in turn is part of an extensive arc of islands that stretches more than 5,400km from the western tip of Java to eastern Papua New Guinea. The area is geologically dynamic because it marks active plate boundaries, as demonstrated by the 2004 Boxing Day tsunami, the eruption of Mount Pinatubo in 1991 and the 1883 explosive eruption of Krakatoa. Mineralisation is also a product of active plate margins and associated volcanism. High heat flows and the emplacement of molten magma at depth, together with circulating fluids from intrusions and ground water, have been responsible for large resources around the world. Not many are larger than the giant Grasberg mine in western Irian Jaya (Indonesian Papua New Guinea). Hosted in a porphyritic intrusion, it is the world’s thirdlargest copper mine and the world’s largest gold mine by output.

Central Kalimantan is covered by a magmatic arc that is the result of the collision of three lithospheric plates – the Eurasian to the north, the Australian to the south and the Pacific plate to the east. During the middle Eocene (around 40Ma), the region was affected by the northward movement of the Australian continental plate and the much quicker thrust to the north of the Indian oceanic plate, both of which were subducted beneath the Eurasian plate that lies beneath Kalimantan. This series of events resulted in long-term volcanic and magmatic activity over Irian Jaya and Kalimantan.  

Gerald Cheyne, Director of Corporate Development at Kalimantan Gold Corp (KGC), explains, ‘We have recognised the potential for hosting world-class gold and copper–gold mineralisation in this geological setting, which has so far been fulfilled in a limited number of operating mines.’ The founders of the Bermudan company have been working in the region for more than 30 years, and during that time have developed a strong connection with local communities and national government. ‘We have a sixth-generation Contract of Works (CoW) that is regarded as particularly favourable,’ adds Cheyne.

The Indonesian system of regulation was determined by a regime that varied from the usual exploration and mining licences found in other codes. These were the CoWs that guided foreign investment in the mining sector and allowed exploration and mining, and are regarded as contracts with the government in terms of tenure and taxation. Although well-regarded, the CoW system is being replaced by a new mining law that offers greater transparency in areas of tax, royalties, divestment and land area holdings. But with large companies reluctant to change, transfer to the new system will be a long process. Whatever the outcome, the CoW will remain a contract and not a permit as defined in the new mining law system.

Targeting Kalimantan

KGC has two developed projects in Kalimantan – the gold–copper Kalimantan Surya Kencana (KSK) project located in the centre of the magmatic arc that bisects the island, and the Jelia-Mewet gold property at the eastern end of the Arc, in Borneo. The KSK local geology reflects the Eocene–Miocene collision of plates, where the northern plate was subducted beneath the southern part of the island, forming a suture. Here sedimentary and volcanic rocks were deposited in a shallow trough that was intruded by fractionated porphyries resulting from high heat flows and melting. Later plate movements caused deformation of these rocks. The dominant structural trend is northeast, parallel to the suture, and the main control for the sedimentary/ volcanic basin and the subsequent intrusions, particularly where they coincide with the northwest-trending faults of the basement. These intrusions also display strong signatures, which appear as major anomalies in aeromagnetic surveys.

Some 38 targets have been identified within the 600km2 KSK licence area, the most promising so far being the Mansur, Beruang Kanan, Beruang Tengah and Baroi projects. KGC has been expending effort within these since 2002, based on a programme to define porphyry copper–gold mineralisation at depth. At Baroi, in the eastern part of the KSK licence area, exceptionally high values of 16.4% copper, 460g/t silver and 17.3g/t gold were obtained from surface samples where regional structural trends intersect at the margins of an intrusion, and where numerous porphyries show intense alteration and quartz veining. Similar altered porphyries occur in the east of the KSK and Beruang Kanan prospect areas and at Mansur, with copper and gold mineralisation at the edges of large-scale circular intrusions defined by strong magnetic anomalies.

In October 2012, McMoRan Exploration (a subsidiary of US-based natural resource company Freeport-McMoRan Copper and Gold Inc), with whom KCG shares an earn-in arrangement in Kalimantan, elected to fund all further exploration in the KSK project. ‘This is a significant moment in the search for a deep-seated, large copper–gold porphyry in Kalimantan that many geological experts have predicted, and is in addition to the US$7m already expended,’ says Cheyne. Exploration will focus on surface and deep drilling to confirm the porphyry intrusion model that has been established elsewhere in the region.

In search of gold

In contrast to the porphyry style of copper–gold mineralisation, KGC has also been exploring for gold in the eastern part of the Kalimantan Arc. The regional geology comprises elongate basins that extend more than 100km and are infilled with late Miocene (10–20Ma) sediments and volcanics. The Jelai project is based on gold occurring in quartz veins hosted in volcanic and volcano-clastic rocks. The mineralisation is classified as low sulphidation epithermal, which encompasses those with reduced sulphur species in the ore fluids and/or vapours. They are usually pH neutral and gas rich, and typically show quartz in various forms (crystalline and amorphous) and carbonate minerals.

Seven major vein systems are found at Jelai, with widths ranging up to eight metres wide in systems separated by host wall rocks that bifurcate and join together (anatomisation). Five separate ore shoots have been identified and were subjected to a 136-hole drill programme, 27 of which were drilled before KGC took over the prospect. Significant results were found in 17 of the holes, with gold values up to 10.5g/t, and one of these veins, the Mewet, has been proven to a depth of 200m.

‘Exploration in Kalimantan is challenging, as the topography is steep and covered in thick equatorial jungle,’ says Cheyne. Access from the coastal plain is by barge, and upstream by native boat with outboard motors. Accessing the KSK area can take a day of boat travel or 55 minutes by helicopter. For Jelia, river access is available by fast launch to the Jelai–Mewet landing stage and then to site by old forestry roads.

KGC’s persistent efforts to explore and develop its projects since the 1990s are now beginning to bear fruit, especially with the arrangement with the Freeport-McMoRan subsidiary. A number of commercial and academic geologists have recognised the Kalimantan arc and the region for its potential to host other large copper–gold deposits similar to those evidenced at Grasberg.