Korea Zinc has completed its initial phase of due diligence and is satisfied with the data supplied by Woulfe Mining in relation to a strategic partner transaction covering Woulfe's South Korean prospects. It now wishes to progress the transaction.
The proposed investment will see Korea Zinc invest Can$38 million to receive a 51% stake in the subsidiary which holds the Sangdong tungsten/molybdenum project and Can$1.8 million into Muguk Gold Corporation to acquire 51% of that project.
The Sangdong project evaluation process has been briefly delayed as the drilling of the initial production area, from the unmined areas above the valley floor, has progressed more slowly than expected due to delays in obtaining spare parts and the extreme winter conditions in Korea. The weather in particular has caused the ice-over of the one level and access incline, preventing access for drilling.
The drilling program of 5000 metres announced in December 2010 has been redesigned to include 2000 metres of surface drilling. The underground drilling is being carried out by electric/hydraulic drills in main areas and kempe-pneumatic drills in the smaller areas.
Power was installed and commissioned to the site over the Christmas holiday period and is now being installed underground for the drilling.
The drilling is targeting the KORES NI 43-101 non-compliant historical reserves from 1998 which suggest a target grade of above 0.4% is to be expected in un-mined areas. These areas remain un-mined as they protect the old mine infrastructure excavations that are not required in the new mine plan.
Woulfe's president and CEO Brian Wesson says, “We are working closely with Korea Zinc to advance the strategic partner deal. We are disappointed at the speed of progress of the agreed drill plan as the data is required to complete a review of our resources and mining plan for the initial years of mining. It is in the initial years that the mining plan shows the project capital will be recouped.
“However, given the redesign of the program and the appointment of Don Smith, an experienced Australian geologist on site, we are confident we can complete the drilling by quarter two this year which will be followed by an updated resource estimate.”
The Sangdong mine was one of the largest tungsten mines in the world while Muguk was formerly South Korea's largest gold mine. Woulfe also has a number of other properties with significant known mineralization and excellent regional exploration potential.