General geology of Lao PDR

Geologically the Lao PDR is the least known of the Southeast Asian countries, but the stratigraphy is quite similar to the neighbouring countries. Metamorphic rocks believed to be Proterozoic outcrop in northwest and in eastern Lao PDR. Palaeozoic and mesozoic cover rocks consisting of continental fluvial and shallow to deep marine sediments dominate throughout the country. These rocks have been intruded by numerous granitoid plutons comprising grannodiorites, monzonites and quartz porphyries during the devonian to triassic. Permo-triassic acid extrusive rocks comprising rhyolites and dacites are frequently seen especially in the southern part of Lao PDR. Extensive covers of redbeds of mesozoic age are seen mainly in the southern part of the country. Intense folding took place during the Early Paleozoic, mid-to late Paleozoic and triassic periods.

For more detailed information click herefor a pdf file with more information on the geology of Lao PDR.

Simplified cross section showing Precambrian basement (B) with paleozoic and mesozoic cover rocks intruded by grannodiorites and porphyries (I). (Source Geological and Mineral occurrence map published by Asean Development bank 1991)

Click here for simplified geological map of Lao PDR.

Economic geology

The geological potential to develop mineral resources in Laos is excellent, principally for gold and copper, but also for other commodities such as potash, sapphire and coal.

Most of the gold and copper is associated with intrusive porphyries. Supergene alteration of the mineralised intrusive rocks has often produced thick covers which are highly enriched in gold and copper. Locally the copper has been completely removed and left a soft gold-rich cover such as the Phu Bia deposit owned by Panaustralia.

In other cases the original chalcopyrite has been altered to chalcosite as seen in the Sepon copper deposit owned by Oxiana.

The Sepon gold deposit contain 3.5 g/t of gold and 5.6 g/t silver in an estimated 14 million tonnes of ore (see table below from Oxiana web page).

Sepon Project Ore Reserves of Summary for the three months ending 31 Mach 2007
(from Oxiana Magazine Quarterly Report )

Category	Mar Qtr 2007
Gold produced at Sepon	33,647 oz
Gold produced at Sepon Grove	12,751 oz
Silver produced at Sepon	60,225 oz
Silver produced at Sepon Grove	511,167 oz
Average received gold price	US$ 651/oz
Copper produced at Sepon	13,827 t
Copper produced at Sepon Grove	7,297 t
Average LME cash Copper price	US$ 2.61 / lb
Zinc produced at Sepon Grove	24,514 t
Average LME cash price	US$ 1.57 / lb

Sepon – Copper

Mining and Production

The stripping ratio in the Khanong pit increased to 3:1 for the quarter as the Pit was deepened. Ore mined was 622,758 t.

An unscheduled maintenance shutdown, due to a valve failure in the pressure oxidation circuit, saw production slightly lower at 13,827 t.

Copper production in the second quarter is expected to be higher with scheduled maintenance brought for ward to the first quarter shut-down.

Copper production guidance for the full year is unchanged at 60,000 t to 63,000 t.

The average London Metal exchange cash price for copper was US$ 2.61 / lb.

Engineering work on the expansion feasibility study continued during the quarter.

Table 1: Quarterly Copper production statistics

Category	Units	Mar Qtr 2007
Ore Mined	t	622,758
Grade	%	5.1
Strip Ratio	w/o	3.0
Ore mined	t	283,607
Grade	%	5.4
Recovery	%	91.5
Production (Stripped)	t	13,827
Cathode Sold	t	13,831

Costs

Lower copper production due to the maintenance shutdown offset a reduction in mining costs as a result of a lower fuel price. Direct cash costs for 2007 are expected to be in the order of US65-70c/lb.

Table 2: Quarterly Copper costs.

Category /ALL IN USc/lb	Mar Qtr 2007
Direct cash cost	67
Market premium	4
Royalties	10
Total cash cost	73
Depreciation & amortization	17
Rehabilitation	0
Total production cost	90

At the PhaBing prospect, north of the Thengkham north deposit, ongoing drilling has confirmed the presence of a new zone of near surface super gene copper mineralization that will likely add to the overall Sepon copper resource inventory. Better results received during the quarter include.

Table 3

Hole	From (m)	Interval (m)	Cu ( % )
PHB028	18	7.3	7.98
PHB028	35	21.8	1.85

Sepon – Gold

Mining and Production

Higher mined grades offset lower mined volumes and throughput and saw gold production of 33,647oz for the quarter.

Preliminary mine planning commenced at part of the feasibility study due for the completion later in 2007.

Also as part of study, pilot plant result indicated an overall recovery of greater than 77% for the selected flotation / pressure oxidation process route.

Costs

Lower mining and processing costs and higher than planned gold production result in total cash costs below the expected US$ 450 to US$500/oz.

Table 4 : Quarter Gold Production Statistics

	Unit	March Qtr 2007
Ore mined	t	628,505
Grade	g/t	2.3
Strip Ratio	w/o	1.3
Ore milled	t	490,300
Gold grade	g/t	2.3
Silver grade	g/t	11.3
Gold recovery	%	81.0
Silver recovery	%	31.8
Production
Gold	oz	33,647
Silver	oz	60,225
Gold sold	oz	27,470

Table 5: Quarter Gold Costs

All in US$ / oz	Mar Qtr 2007
Operating ^(1)	349
Refining & Transport ^(2)	2
By – product credit	18
Royalties	25
Total cash cost	359
Depreciation & Amortization ^(3)	188
Rehabilitation ^(4)	5
Total production cost	551

In the Thengkham area intensive drilling campaigns were in progress to define additional oxide gold resources. Drilling was completed at the Dankoy prospect and resource modeling commenced.

Table 6

Hole	From (m)	Interval (m)	Au (g/t )
PVT606	23	31	2.98
PVT601	30	24	2.05

Table 7: Golden Grove Production statistics

	Unit	March Qtr 2007
Mined Zn Ore	t	227,318
Mined Cu Ore	t	166,000
Grade Zn	%	17.2
Grade Cu	%	4.6
Milled Zn Ore	t	154,611
Grade Zn	%	17.7
Recovery Zn	%	89.4
Milled Cu Ore	t	184,498
Grade Cu	%	4.5
Recovery Cu	%	88.9
Zn concentrate	t	47,949
Zn grade	%	51.1
Cu concentrate	t	29,933
Cu grade	%	24.4
HPM concentrate	t	5,574
Cu grade	%	8.1
Pb grade	%	32.2
Au grade	g/t	62.6
Ag grade	g/t	1,830.1
Contained metal in concentrates
Zn	t	24,514
Cu	t	7,297
Au	oz	12,751
Ag	oz	511,167
Pb	t	1,796

Table 8: Golden Grove quarterly casts

All in US$ / lb	Mar Qtr 2007
Operating	63
Realization	28
By- Product credits	96
Royalties	10
Total cash cost	5
Depreciation & Amortization	14
Rehabilitation	0
Total Production cost	19

Gold Grove Exploration

Exploration beneath both the Xantho and scuddles deposits has continued to produce high grade Zinc and copper intersection. Result from Xantho included.

Table 9

Hole	From (m)	Interval (m)	Zn (%)	Cu (% )
RHDD083D4	1,747.0	24.0	24.9	0.02
RHDD085	1,719.7	44.50	0.3	4.8

Prominent hill and regional exploration

Infill drilling continued to further evaluate the current resource below the planed pit for potential underground mining. Significant results received during quarter include.

Table 10

Hole	From (m)	Interval (m)	Cu (%)	Au (g/t )
PH07D295	387	71.3	1.5	0.3
PH07D296	559.9	107.2	2.2	0.6
PH07D298	669	101	0.9	0.4

Drilling program also continued to evaluation and extend the prominent Hill IOCG system below and to the west of the current known resource.

Table 11

Hole	From (m)	Interval (m)	Cu (%)	Au (g/t )
PH06D279	1080	53	0	1.9
PH06D278	1133	53	1.3	1.1
PH07D297	1018	93	1.6	0.4

At the present time there is on gold mine in production at Seppon in the southern part of Lao PDR. Another gold deposit (Phu Bia owned by Panaustralian) is planned to be on stream early 2005. One copper mine at Seppon (owned by Oxiana) is under construction and will be in production early 2005 and another one (Phu Kham owned by Panaustralian) shortly thereafter. Several gypsum mines are in production. One tin mine is working and another is under consideration. A large potash deposit is presently being drilled. This deposit is found in the same sedimentary basin as a very large potash deposit in neighbouring Thailand, which has been drilled and mining conditions are presently being negotiated with the Thai government.

Aerial photo of the Sepon gold and copper mine.

Links to mineral occurrence and geological maps:

Geological map of Lao PDR in 1:1,500,000 (as pdf files). Published by the United Nations Economic and Social Commission for Asia and the Pacific in co-operation with Lao PDR Department of Geology and Mines.

Mineral resource map of Lao PDR in 1:1,500,000 (as pdf files). Published by the United Nations Economic and Social Commission for Asia and the Pacific in co-operation with Lao PDR Department of Geology and Mines.