This company’s management has an ability to behold their operating environment like an enormous chess board that extends in a multidimensional fashion in all directions across unfolding possibilities; pursuing constructive moves that create opportunities to maximize an enormous intrinsic  potential.   

During 2010, having obtained sufficient capital, steps were initially undertaken to augment exploration at early stage exploration prospects & push forward advanced projects; then focus was turned towards securing outside relationships designed to improve exposure with potential investors in Hong Kong and China, explore prospective strategic initiatives, entertain a dual listing on an Asian stock exchange, and enhance investor communication in Canada; - all the while “on the ground” taking measures to increase resources, reserves and production.

It is clear that, both strategically and tactically, Alhambra is back on track & heading down a path from which will arise very significant subsequent benefits.

 

What is this company lacking? It has an able management, excellent exploration prospects, existing production that throws off enough cash flow before changes in non-cash working capital to fund general and administrative expenses, and plenty of money in the bank to carry out aggressive exploration, - so what’s not to like?

Like chess, this company’s playing field is a checkerboard of possibilities, and I see the end game as being a takeover by one of the large well-capitalized industry players (after a bidding war); at such time as exploration results are in hand that are multitudinous, and manifold in every diversity of form, hue, and complexion.

Fundamental to the exploration process is an understanding of the geological framework of ore deposit generation; which starts with the Earth’s internal structures and mantle dynamics. A primary focus must be on the theory of mantle plumes and the role that they have in generating (directly or indirectly) ore systems, - touching upon the Earth’s mantle, its composition, dynamics and evolution through geological time.

Plume theory offers an explanation for the vast amounts of melts that are generated in the mantle (in settings other than convergent plate margins); with important implications for both magmatic and hydrothermal ore deposits.  For the Earth dissipates heat through various modes of magmatic activity, such as that which occurs at mid-ocean ridges, oceanic volcanic chains and in plate interiors; and, except in continental collision zones, the source of these magmas is in the mantle.

These phenomena are related to internal heat traceable to the early evolutionary stages of an accreting planet, during which segregation into distinct shells or layers took place; resulting in a layered internal structure, onset of convection, heat generation and dissipation, all of which have continued to play an important role. Eventually this is all destined to extinguish itself as the rate of internal heat production decreases with time and the planet loses most of its heat into space (someday ending up like the moon).

The Earth’s mantle, characterized by temperature and density differences, behaves plastically and flows at geological time scales; and the heat of the Earth’s core creates thermal instabilities at the core-mantle boundary, with plumes of hot mantle material rising from this boundary towards the surface. And, - it is thought that ore deposits have origins with either a direct or indirect link to mantle plumes.

Plume-related mafic-ultramafic magmas (and associated anatectic melts) constitute powerful heat sources; and these heat sources cause waves of high heat flow resulting in prograde high temperature/low pressure metamorphism. Thus, in addition to hydrothermal fluids that are exsolved from the differentiating magmas, dehydration (also called devolatilisation) reactions supply fluids that evolve through a wide range of temperatures and pressures. Then, connate and/or meteoric waters descending through fracture or fault systems nearer the surface are heated in these regions of high geothermal gradients and become ore solutions.

These ore solutions may mix with ascending metamorphic and/or magmatic fluids; and, in this way, the emplacement of large volumes of melts into the crust is capable of activating giant hydrothermal convection cells. Finally, these variably-sourced hydrothermal fluids carry metals in solution, which are then precipitated in structurally and/or stratigraphically-controlled locales, - to form giant ore deposits.

Geologically, deposits of each ore type tend to have a time-bound nature, and there are times in Earth history when particular deposit types are absent, times when these deposits are present but scarce, and other times when they are abundant. Naturally, understanding the details of such variation provides a critical tool for exploration targeting, - in that rocks that have formed or were deformed during a certain time slice may be very permissive for a given ore deposit type.

As fate would have it, orogenic deposits are the only important type of gold deposits for which many economically important examples are preserved throughout the geological record; and their existence correlates with the addition of new oceanic lithosphere onto older craton margins, - with these large-scale processes a major factor in determining gold endowment. Consequently, delineation of tectonomagmatic provinces of these ages provides a first-order control as to the most permissive ground for discovery of orogenic gold deposits.

Moreover, since ore-forming systems in different geodynamic environments differ in ore productivity, when searching for new giant ore deposits, by far, the most important targeting is done at the broad regional scale. Then (within this regional choice), the next essential ‘exploration challenge’ in targeting lies in discriminating between areas prospective for truly significant deposits and those likely to host only minor deposits. 
 

No unique special features set apart ‘giant ore deposits’ from the ‘smaller deposits’, and in most respects they are similar, except for the fact that they are mass-concentrative systems that are (for fundamental reasons of mass-balance) operating over very large scales.  And, in that these ‘giants’ become merely the final end-point of a much larger-scale system, (for predictive targeting) it is essential to focus on this much ‘larger entity’, - “the ore system” (a product of lithosphere-scale processes); rather than keying in primarily on the ‘deposit environment’ itself. In this light, the critical questions become “How large is the ore system?” and “What are its fundamental controls?”  

In Central Asia (a productive metallogenic belt), gold deposits are generally localized in Early Paleozoic (Ordovician) and Hercinian (between Devonian and Carboniferous times) orogenic belts; with such Paleozoic deposits (occurring in rift structures or aulacogens) generally confined to continental rifts, being related genetically to the mantle plumes; denoting a mantle origin of the ore-forming systems, and highlighting the importance of plumes. The linkage involving dynamic earth processes is between mantle plumes, magmatic processes, rifting and ore deposition, - manifesting as mineralizing events in the crust.

                                               
                                           Bottom line: gold deposits tend to have a time-bound nature, and circumstances in Earth history can conspire so that certain times and places (such as in Ordovician intrusive rocks at geosynclines in Kazakhstan) host abundant resources,      - in fact, all of the multi-million ounce Orogenic deposits (such as Vasilkovskoe, Aksu, Stepnyak, etc.) are genetically related to this.

 

Most metallogenic belts and provinces are dominated by deposits formed in one or more favored epochs, - and nearly twenty large (many world-class) gold deposits have been disclosed in Kazakhstan, in addition to hundreds of small and medium-sized occurrences; and while the basic gold-ore mineralization took place in the orogenic and postorogenic stages of the regional development, (as to formation time) gold was settled in the Pre-Cambrian period (with the main part of the deposits generated in the Caledonian and Hercynian metallogenic epochs).

Globally, most (if not all) metal accumulations of exceptional size are “the end of the spectrum” of decreasing size deposits of the same or similar types; where the 80/20 rule generally prevails, meaning that 20% of the largest deposits contain 80% of the total gold. 

 

Vasilkovskoe East’s geology is dominated by Early-Middle Ordovician volcano-sediment sequences intruded by several relatively big intrusions of Early Silurian (or older) age and some small Middle - Late Devonian granite porphyry stocks. And, on the opposite end of its license, Shirotnaia is hosted by a Middle Ordovician volcano-sediment sequence, truncated by Late Ordovician to Devonian intrusions. Moreover, Dombraly also enjoys a geological setting of Middle-Upper Ordovician volcano-sediment sequences; with the entire package intruded by Late Ordovician rocks of various kinds.

Meanwhile, at its center, gold mineralization at the Uzboy Project developed mainly during the Hercynian tectonic-magmatic cycle; and, during this period, vertical displacement along northwest and northeast-trending faults created a graben-synclinal structure overlaid by a sequence of volcanic-sedimentary formations of Ordovician-age.

 

So, yes, many of these gold deposits are found primarily in effusive-sedimentary Ordovician masses.                            …            How did this come about?

 

The Ordovician is a geologic period (the second of six in the Paleozoic Era); beginning approximately 490 million years ago (with the end of the Cambrian) and ending around 443 million years ago (with the beginning of the Silurian).

During this Ordovician period, volcanism was extensive, and all of the major tectonic plates were in motion; forming subduction zones and back-arc basins (where two plates converge, forcing one plate under another), - such as ‘Kazakhstan’. Many large deposits (of precious and nonferrous metals) were generated during riftogene, subduction and collision stages, with repeated redistribution of chemical elements and combined activity of several ore substance sources.

Ore formation is a process of multistage localized concentration and accumulation          (of previously dispersed trace metals), with typical metallogene commencing within a favorable geological foundation ("geosite" / "play"); commencing with metal source(s), followed by conditions of metal liberation, flux towards the ore site with concurrent or subsequent metal enrichment, and (finally) ore deposition. The terminal stage includes orebody enhancement, modification (through metamorphism) and preservation; with "giants" most likely to form when most, or at least the crucial components of a system, operate at peak efficiency, - so that there is a trend of steady metal increase throughout. Importantly, there must be a role for regional rock mass as a source of metal; with the depletion zones being the mobilization environments.

However, extensive multi-element geochemical mapping (in ore regions) has shown that ore deposits and zones of enrichment as a whole constitute only a part of the geochemical field. The process may be quite complex, including both enrichment and depletion zones; and, since these appear to be spatially linked to each other, they are a single geochemical system. And, as these geochemical ‘circumstances’ would have it, the size of ore deposit systems vary, ranging from a few hundred square kilometers to thousands of square kilometers (in the case of giant ore deposits).

Repeated studies have demonstrated that the content of ore metals in the depletion zones is more than 40% below regional background levels; and (where these different zones have been indentified) a good correlation exists between the physical dimension of the depletion zone and the abundance of the depleted elements in the corresponding enrichment zone.

The Ordovician system (identified on all the continents except Antarctica) forms part of the structure of the sedimentary mantle of most platforms and is widely found in folded structures; and the thickness of deposits of the Ordovician system reaches 10,000 meters in the interior parts of geosynclinal belts, such as in ‘Kazakhstan’. There were numerous volcanoes in these zones, and thick layers of lavas, tuffs, and siliceous rocks accumulated in addition to detrital sediments. Moreover, both shallow-water and deep-water sediments are found in these places; and as a result of the Taconic orogeny (a  major mountain-building episode), folded structures and mountains were formed in the Caledonian geosynclines toward the end of the Ordovician.

Given all of this, deposits of gold (and other metals) are associated with the widespread Ordovician intrusive rocks and geosynclines in Kazakhstan, and many of Kazakhstan’s hydrothermal-sedimentary polymetallic gold deposits are located in the continental riftogene structures, - in fact, all of the multi-million ounce Orogenic deposits (such as Vasilkovskoe, Aksu, Stepnyak, etc.) are genetically related to this.

 

Within the metallogenic province of northern Kazakhstan, gold deposits are located along the trend of deep seated lineaments orientated within the Stepnyak and Selentinsky synclines, which are comprised mainly of Ordovician sediments; and the major deposits of gold are found within Late-Ordovician or Silurian low-normal-sulphur gold-quartz veins.

 

Gold deposits are genetically and spatially related to granite-like rocks; with the larger deposits of gold related to intrusions, which are characterized by multi-stage, complex activity (intrusion formation made up of various structures and ages, with small intrusions and dykes lying inside them). Conversely, simple structured intrusions usually contain only minor gold mineralization.

 

The gold is derived from ancient Pre-Cambrian rocks.

 

The amount of contained gold in any deposit depends on the intensity of Caledonian intrusive activity.

 

Structure is fundamentally the most important factor in gold deposit formation; and gold deposits are formed in clusters within the most complex structures, - where tectonic activity has formed large and deep breaks/faults, schistosity zones, and areas of faulting tectonics of pre-intrusion and ore stages. In addition, gold deposits are chiefly situated close to prominent horst and graben structures, among the pre-Cambrian and Palaeozoic basement.

 

The Shirotnaia Project area ("Shirotnaia") is located in the south-eastern part of Alhambra’s Northern Kazakhstan license block; with a Middle Ordovician volcano-sediment sequence, truncated by Late Ordovician to Devonian intrusions, underlying the prospect (where the mineralization belongs to the volcano-sediment hosted Orogenic style).  Mineralization here is thought to be related to the anticline-syncline inflexion line and probably to fluid barriers formed by volcanic rocks covering sediments.

The Shirotnaia zone is located in a major flexure of the Aksu-Balusti Mineral Trend, and the massive Aksu gold deposits are also located within the same area of this flexure. Moreover, the topography of both Alhambra’s Shirotnaia and KazakhGold’s Aksu/Quartzite Hills mine sites are very similar and typical of the ‘‘steppe’’ country found in northern Kazakhstan. Specifically, the Aksu mine is found on the main undulating plain at an average height of 350 meters above sea level; and the climate is characterized by a long severe winter and a short, hot summer.

On a very positive note, a significant proportion of KazakhGold’s ore reserves (at both Aksu and Quartzite Hills) are in the form of oxide ore, which may be mined through open pit methods, - which are significantly cheaper than extracting ore from underground mining.

Alhambra’s recent diamond drilling program at Shirotnaia disclosed two significant widths of high grade gold mineralization encountered within a large area of lower grade gold mineralization, suggesting the probable continuation of the high grades to depth (as is usual for this style of mineralization).

·         Diamond Drill Hole ("DDH") 100-02 intersected 4.32 grams per tonne ("g/t") gold over an interval of 36.0 metres ("m") including a higher grade interval of 16.80 g/t gold over 9.0 m

·         DDH 32-02 intersected 2.13 g/t gold over an interval of 20 m

·         Broad intervals of anomalous gold concentrations (for +0.10 g/t) were intersected in all nine drill holes

What does all of this mean anyway?

                 And, - what ‘might’ they find?

To ‘find out’, let’s take a closer look at the Aksu/Quartzite Hills orogenic gold deposits, which are located a mere 3 kilometers to the south of Alhambra’s Shirotnaia Project.

KazakhGold estimates that as of June 13th, 2005, the B and C1 gold reserves and C2 and P1 gold resources under the FSU Classification at the Aksu and nearby Quartzite Hills deposits were approximately 5.4 million ounces and 15.0 million ounces, respectively.

 

At Aksu (including Quartzite Hills), KazakhGold’s mineable resources average 2.70 g/t gold, - being 8.26 g/t Underground, 2.06 g/t Open Pit,  0.97 g/t Tailings, and 1.00 g/t at the Waste Dumps.

 

The Dombraly Project area ("Dombraly"), situated in the eastern part of Alhambra’s Northern Kazakhstan license block, enjoys a geological setting of Middle-Upper Ordovician volcano-sediment sequences; with horizons of sandstone, tufaceous sandstone, siltstone, siliceous sandstone and limestone underlying the project area. The upper sequence is composed of porphyritic pyroxene andesite-basalt lava and tuff interbedded with felsic volcanic; with the entire package intruded by Late Ordovician subvolcanic dolerite, andesite and trachyandesite.

 

The intensely folded supracrustals form an isoclinal anticline with limbs dipping Northeast (“NE”) and axis plunging to the north; and this fold hinge is complicated by a secondary syncline. While an ENE striking brittle-ductile shear zone with reverse kinematics truncates the western limb of the anticline, it’s Northwest ("NW") splays indicate sinistral movement and control zones of chlorite-sericite-quartz and sericite-quartz alteration host the known Dombraly mineralization.

Since these structural controls combine with fluid barriers formed by volcanic rocks covering sediments to localize alteration and mineralization, similar mineralization may be expected about 1 km NE of Dombraly where the same geological and tectonic factors are observed. This is supported by numerous, wide-spaced, rock samples that returned greater than 0.5 grams per ton gold ("g/t Au") (with peak of 1.2 g/t Au) taken there as well as by arsenic anomalism in soil.

Dombraly (a former producing open pit gold mine) was discovered in 1952, and since then its uppermost part (first 30 m) consisting of oxide ore has been intensely explored by trenches, pits and a shallow shaft; with sparser drilling probing the transitional material and sulphides to a depth of 170 m.

 

Open cast mining of the deposit from 1985 to 1988 carried out by a small mining cooperative is reported to have produced 140,000 tons of ore grading 6.96 g/t Au, using a 2.5 g/t Au mining cut-off.

In 2002-2006, Alhambra explored the Dombraly area; including the down dip and strike extension of the gold mineralization exposed in the bottom of the open pit, with particular focus placed on exploration of the mineralization under the open pit level as well as sampling of the material used for its backfill and that stored in the waste dump. During this period, 8 trenches totaling 1,741 meters ("m") long, 613 rotary air-blast ("RAB") drill holes amounting to 4,152 m and 10 core holes (2,394 m) were completed and 354 samples from the trenches, 2,076 from RAB and 1,958 from core holes were taken.

At this point, the potential exploration target in the oxide zone that is the focus of an ongoing exploration program could range from 5 to 7 million tons with gold grades ranging from 1.40 grams per ton ("g/t") to 1.80 g/t. However, these potential quantities and grades (of the exploration target) are conceptual in nature; and to date there has been insufficient exploration to define a mineral resource. It is uncertain if further exploration will result in the target being delineated as a mineral resource.

The objective of the 2010 exploration program at Dombraly is to continue core and non-core drilling on the oxide and sulphide zones of gold mineralization, to test the depth extensions of the known zones of gold mineralization, to locate new zones of gold mineralization in close proximity to Dombraly, and to validate the gold mineralization and grade of the former stockpile and open pit back-fill.

In addition, Alhambra's focus is to further define the extent and continuity of the gold mineralization at Dombraly, - leading to a National Instrument ("NI") 43-101 compliant resource estimate. As such, Alhambra has engaged the independent geological and mining consultants, ACA Howe International Limited on the drilling program in preparation for the resource estimate.

 

What’s up with this?

 

            Where is this heading?

 

To find out, let us consider Bestobe; which is not far away; - geologically speaking.

 

Bestobe hosts 3.1 million ounces of mineable gold “reserves” at 2.74 g/t; - consisting of 1.3 million ounces Underground (7.28 g/t), 1.5 million ounces Open Pit (2.24 g/t), 0.2 million ounces Tailings (1.00 g/t), and 0.1 million ounces Waste Dumps (1.02 g/t).

 

In addition, Bestobe hosts the following “resources”: 3.8 million C2 ounces at 12.90 g/t and 6.4 million P1 ounces at 6.00 g/t; for a total of another 10.2 million ounces.

 

            So, - is this the kind of thing to look forward to at the Dombraly Project area some day?

 

Alhambra’s “Vasilkovskoe East” Project Area (500 square kilometers) is located in the western part of its Uzboy Gold Project; where the geology of the prospect itself is dominated by Early-Middle Ordovician volcano-sediment sequences intruded by several relatively big granite and granodiorite intrusions of Early Silurian (or older) age and some small Middle - Late Devonian granite porphyry stocks.

 

Situated only 22 kilometers west of Alhambra’s “Vasilkovskoe East” (a mere geologic blink of the eye) is Glencore’s world class Vasilkovskoe deposit, hosting reported resources of roughly 12.6 million ounces of gold; (a typical intrusion related Orogenic style deposit).

Glencore’s massive Vasilkovskoe deposit consists of zones of vein, veinlet and disseminated gold mineralization that shows a strong correlation to the contacts of Ordovician-Silurian granodiorite intrusions; and the distribution of these intrusions as well as the interpreted main mineralized corridor is controlled by a Northwest striking deep-seated tectonic structure; - the extension of this structure and an interpreted mineralized corridor to the east toward “Vasilkovskoe East” is confirmed by the regional magnetic survey data, - with the same type intrusions that host the Vasilkovskoe gold deposit occurring in “Vasilkovskoe East” (producing similar style hornfels and hydrothermal alterations as in Glencore’s Vasilkovskoe gold deposit).

This is one of Alhambra’s high potential, early stage exploration projects and in all, twelve known zones of gold mineralization occur in “Vasilkovskoe East”, - but there is very little information concerning their geological settings, size or gold concentrations.

More specifically, the objective of Alhambra’s 2010 exploration program at “Vasilkovskoe East” was to check for Vasilkovskoe style mineralization in the western and southern (Ivanovka) parts of the project area and for Uzboy style mineralization in its central (Akshasor) part. This included geological traverses, plus soil and rock-chip sampling.

In the Western part of this project area, soil sampling was conducted along 4 North-South orientated lines from 5 to 7 kilometers in length and situated 500 m apart (with a total of 225 soil samples taken). In the Akshasor area, 9 NW orientated soil sampling lines, 1,000 to 1,650 m long and 200 m apart, were completed, and a total of 336 samples were taken. Meanwhile, in the Ivanovka area, 30 kilometers of geological traverses covering an area of 12.7 square kilometers resulted in 54 rock chip samples being taken.                     On a positive note, the geological setting is characterized by interesting lithology and hydrothermal alterations, which looks favorable for gold mineralization.

As just noted, -

the nearby world class Vasilkovskoe deposit (with roughly 12.6 million ounces of gold) is currently being mined by the Vasilkovskoe Gold Company, owned by Glencore International AG (via Kazzinc).

 

Zhanatobe is one of Alhambra's 2010 early stage exploration targets, located within the Mamay block approximately 90 kilometers southeast of Alhambra's Uzboy gold deposit and 40 kilometers northwest of the city of Stepnogorsk (Alhambra's Kazakhstan operating base).

Like many other similar fields, the Zhanatobe project area is underlain by a Middle Ordovician volcano-sediment sequence, truncated by several intrusive complexes of Late Ordovician to Devonian age. The volcano-sediment formations are represented by dacitic volcaniclastic rocks, epiclastic and calcareous grit, sandstone and siltstone with lenses of chert and limestone and subvolcanic bodies of porphyritic andesite. Meanwhile, this package is intruded by numerous gabbro, diorite, granodiorite and granite stocks belonging to the Late Ordovician Krykkuduk intrusive sequence.

All of the multi-million ounce Orogenic deposits in the district (Vasilkovskoe, Aksu, Stepnyak, etc.) are genetically related to this intrusive complex; and gold in the Zhanatobe deposit belongs to this intrusion related gold mineralization style. It is believed that the mineralization in the deposit (and probably in the entire area) is controlled by a North North East ("NNE") trending brittle-ductile shear zone and its North West ("NW") striking splays.

Alhambra first explored the “Zhanatobe project” area in 2006, commencing with soil sampling on an area of 5.5 square kilometers around the known deposit. Then, in 2009, soil sampling was expanded to the entire area (77.7 sq kilometers); - and for a selective part of the area, geological mapping accompanied by rock chip sampling was conducted (1,877 samples were taken).

Mapping and surface rock chip sampling carried out in 2009 outlined two zones with a high density of anomalous gold concentrations (above 70 parts per billion gold) in volcano-sediment rocks.

The main zone has a NNE orientation and is about 15.8 kilometers long and is up to 5.8 kilometers wide, remaining open in both NNE and South Southwest ("SSW") directions.

The second zone trending NW to West Northwest ("WNW") is intruded by a granodiorite intrusion and has dimensions of approximately 7.7 by 1.2 kilometers.

Anomalous gold grades in both zones are supported by elevated silver (which suggests that mineralization is just slightly eroded and could continue to a significant depth); and, as with the multi-million ounce Orogenic deposits in the district (Vasilkovskoe, Aksu, Stepnyak, etc.) geological mapping of the “Zhanatobe project” area has demonstrated that the gold anomalies are controlled by a NNE orientated district scale shear zone and its NW striking splays.

There are several clusters of higher (+0.1 g/t) gold concentrations in rock chip samples inside both anomalous zones, and they have the following dimensions and peak gold grade concentrations:

• Northern Area (cluster) - 3.3 kilometers by 0.8 kilometers with the highest grade of 34.4 g/t Au;
• Central Area - 3.7 kilometers by 2.5 kilometers, up to 11.5 g/t Au;
• Western Area - 1.3 kilometers by 0.7 kilometers, up to 2.0 g/t Au;
• Eastern Area - 5.3 kilometers by 1.2 kilometers, up to 6.3 g/t Au;
• Southern Area - 6.0 kilometers by 3.1 kilometers, up to 5.1 g/t Au;

At this stage the Northern and Central Areas look the most prospective, demonstrating not only high gold concentrations but also consistent spatial distribution of the rock samples containing more than 0.1 g/t Au.

At the Northern Area (which includes the old Zhanatobe mine), rock samples containing high gold concentration cover a much wider territory and are related to sets of quartz veins and silicified zones.

However, the Central Area looks even more promising; for here, the gold-silver mineralization is related to zones of silicification, - some of them up to 520 meters wide and 180 meters long.  (Fragments of opaline-jarosite and jasperoid style silicification zones in brecciated calcareous sediments looking similar to Carlin-style collapse breccias were also mapped in the Central Area indicating the potential presence of epithermal style gold mineralization; a style not recognized in the license before; and the higher silver values support this scenario).

Given all of this, the objective of the 2010 exploration program at Zhanatobe was to determine grade consistency and the shape and size of the gold mineralization (as outlined by mapping and surface rock chip sampling carried out in 2009). In this regard, recall that two large zones measuring 12 kilometres by 3 kilometers and 10 kilometers by 2 kilometers of anomalous gold concentrations of high density have already been identified.

The 2010 drilling program consisted of approximately 465 rotary air blast ("RAB") holes totaling 4,700 meters on the Northern and Central areas of Zhanatobe.

It was anticipated that the exploration program for the Northern area would consist of 191 RAB holes totaling approximately 2,000 meters; including 7 drilling lines ranging in length from 600-700 meters, spaced 200 meters apart (located in the northern, central and southern parts of the Northern area).

For the Central area, the exploration drilling program would consist of 8 drilling lines comprised of 274 RAB holes totaling approximately 2,700 m; including 6 drilling lines ranging in length from 400-1,000 meters, spaced 200 meters apart (located in the northern and southern parts of the Central area). Moreover, to test the geologically most promising part of the area, two additional RAB lines, approximately 280 and 350 meters in length with closer hole spacing along the line will also be drilled in the northern part of the Central area to test the silicified body discovered there.

As the situation on the ground would have it, during 2010, fifteen drill lines with 483 holes (amounting to 4,744 meters were drilled); and a total of 2,672 samples were collected (as only the samples from the bottom of each hole and the samples from the holes drilled in the silicified rocks will be assayed).

Geological results of the RAB drilling are encouraging as established by the drill chip logging, - with numerous bodies of completely silicified iron oxide rich rocks intercepted; for these types of rock could be an indicator for the presence of carbonate hosted gold mineralization.

                      Bottom line: given the large anomalies outlined and the high peak gold grade of up to 34.4 grams per tonne ("g/t") identified previously, we eagerly await the detailed results and analysis of the 2010 drilling program at the “Zhanatobe project” area.

 

Geologists undertaking exploration for gold deposits have long understood their heterogeneous distribution, - to such an extent that experts have made it an art to refine their classification into very specific types based upon their distribution in space and time.

These mineral deposits exhibit extremely heterogeneous distributions with each major deposit type showing a distinctive (typically unique) temporal pattern; and these individual temporal patterns reflect a complex interplay between fundamental forces of formation and forces of preservation that (in turn) have largely been shaped by changing tectonic processes and environmental conditions.

In essence: the temporal distribution of gold deposits will reflect the forces that originally produced the deposits (global heat flows in a cooling Earth), the depositional environments in which they formed (changes in tectonic regime), and then the preservation potential of the deposit-hosting environments (where these deposits currently reside).

Within the metallogenic province of northern Kazakhstan, major gold deposits are located along the trend of deep seated lineaments (orientated within synclinal zones), being composed mainly of Ordovician sediments. Both Alhambra’s North Balusty Project Area ("North Balusty") and its Kerbay Project Area (“Kerbay”) are located along the same structure of volcano-sediment hosted Orogenic style mineralization as is the world-class Aksu/Quartzite Hills gold deposit.           This same distinctive temporal pattern also hosts Alhambra’s promising Shirotnaia and Dombraly targets, - and it seems more than likely that similar volcano-sediment hosted Orogenic style mineralization will be evident at both the North Balusty and Kerbay project areas.

 

At all these sites gold deposits are found in effusive-sedimentary Ordovician masses; with gold deposits genetically and spatially related to granite-like rocks where the larger gold deposits are related to intrusions characterized by multi-stage complex activity; with intrusion formation made up of various structures and ages (with small intrusions and dykes lying inside them). On this prolific trend, Kerbay is positioned between Dombraly (30 kilometers to the North) and Shirotnaia (15 kilometers to the SouthWest); while Dombraly is located just 7 kilometers south of North Balusty.  

 

North Balusty is a particularly promising early-stage exploration project                     
where a Middle Ordovician volcano-sediment sequence  (forming a very large generally N-S trending regional syncline structure) underlies the prospect.

 

As a result of exploration already conducted, a 12.8 kilometer long and up to 2.5 kilometer wide zone of gold anomalism in alluvium and saprolitic rocks was established, consisting of numerous wide individual anomalies ranging from several meters to tens of meters where the gold grades exceed 0.1 grams per tonne gold ("g/t Au"); and in three potential target areas the concentration of anomalies is higher and the gold grades reach 0.5 g/t in RAB samples. Trenching in the same areas have returned the best intercepts of 30 meters @ 0.4 g/t Au, 9 meters @ 0.76 g/t Au and 6 meters @ 0.36 g/t Au. Going into the 2010 exploration season, it was still unclear whether it is a very large zone of low grade mineralization, broad low grade aureole of a significant deposit, or just a set of transported anomalies in reworked saprolite and alluvium.

The objective of the 2010 exploration program at North Balusty was to check the origin of the gold anomalies (established by trenching in 2005 and 2007) and to estimate the width of the mineralized zone. During 2010, Alhambra’s exploration activity consisted of a test line where 51 KGK holes were completed; with a total of 2,018 meters drilled at depths ranging from seven to 79 meters with an average depth of 40 meters, and, in all, a total of 988 samples were taken, split and prepared for shipment to the lab. We eagerly await the results. Contingent upon a favorable outcome of these drill results, approximately 900 meters of deep reverse circulation ("RC") holes are planned for 2011 with the objective to check possible mineralized zones established by KGK drilling. 

Meanwhile, at the Kerbay project area, where a Middle Ordovician volcano-sediment sequence is covered by an Upper Ordovician terrigenous sediment formation (and truncated by Late Ordovician intrusions), during 2010, two diamond holes were completed with a total of 305 meters drilled; and both holes intercepted interesting intervals of hydrothermal alterations in andesite and siltstone (that could indicate the presence of gold mineralization).  Kerbay is intruded by granodiorite and diorite stocks belonging to the Late Ordovician Krykkuduk intrusive sequence and it is believed that the multi-million ounce orogenic gold deposits known in the district (such as Vasilkovskoe, Aksu and Stepnyak) are related to the intrusions of the same complex. 

         Actually, Aksu’s 15.0 million ounce gold deposits are situated just 18 kilometers to the south.

        By way of perspective: mineralization in the Kerbay area was discovered in 1951-1952 during regional geological mapping; and in the 1970's, the National Geological Survey carried out soil sampling of the area, – establishing a +100 parts per billion gold ("ppb Au") anomaly about 3.5 kilometers long and 500-1,000 meters wide. This was followed by 3 trenches, several lines of hydro-core lift ("KGK") drilling and 2 diamond drill-holes. The Northern core hole returned an intercept of 36.0 meters @ 1.47 grams per tonne ("g/t") Au starting from 94 meters, with gold values ranging from 0.4 g/t to 2.3 g/t Au. Meanwhile, the Southern hole returned several intercepts; the best being 17.1 meters @ 0.71 g/t Au starting from 6.6 meters, with gold values ranging from 0.25 g/t to 1.4 g/t Au.

Modern exploration by Alhambra started in 2003 when 387 rotary air-blast ("RAB") holes on four lines were completed and 2,230 samples taken. Exploration continued in 2005 when 12 trenches were completed, with 1,316 channel samples (each being 1 meter long). A second stage of trenching was conducted in 2006 with 19 more trenches dug and 2,868 channel samples taken. Both trenching and RAB drilling outlined an anomalous gold zone with open flanks measuring about 1,200 meters long and 300-500 meters wide where the gold grade in saprolitic rocks usually exceeds 0.1 g/t Au. The gold grades tend higher in the Northeast ("NE") and Southwest ("SW") where values of 3.98 and 4.05 g/t Au, respectively, in 1 meter long trench samples were measured. The best trench intercepts are 12 meters at 1.27 g/t Au and 16 meters at 0.71 g/t Au. The highest gold grade returned by RAB drilling is 32.5 g/t Au in a 2 meter long individual chip sample. Overall, the gold grades tend to increase in depth; a trend confirmed by the old core hole data.

The objective of the 2010 exploration program at Kerbay was to determine the dip direction and continuity to depth of the gold mineralization established by trenching; with the exploration program concentrating on those areas where the mineralization exhibits significant width and higher gold grades. As already noted, during 2010, both holes intercepted interesting intervals; and, during the 2011 drilling season, - follow-up drilling programs will continue to determine the size, quality and continuity of mineralization.

 

              Keep an eye on these two early-stage projects (particularly North Balusty), - they could someday become significant.

 

Let’s remember that, as far as gold mining is concerned, it is never an easy or frustration-free enterprise; requiring considerable expenditure of capital while juggling a complex set of time-consuming regulatory and technical considerations; all in the face of simultaneously staring upward cost pressures and the steely gaze of uncertainty in the face.