The Ladolam deposit lies within the altered volcanic rocks of the caldera floor, part of which now forms Luise Harbour. It was discovered in 1982 in the course of a reconnaissance drainage sediment sampling programme. This was designed to follow up indications of surface hydrothermal activity noted by Government geologists during an earlier survey of the Tabar-Feni island chain. Diamond drilling began in September 1983 and by the end of 1989 a payable and proved mineable reserve containing 19 million ounces of gold had been established. Rock types and structures are masked at the surface by intense alteration and weathering. An extensive drilling programme has enabled the identification of these features and the relationships between them necessary for an understanding of the factors controlling gold mineralisation. It has also led to the recognition of two distinct phases of alteration. The first phase of porphyry-style potassic alteration was followed by violent caldera formation, producing extensive brecciation and veining._x000D_
The second alteration phase partly over- printed the first phase and was an epithermal one, evidenced by argillic, advanced argillic and phyllic assemblages._x000D_
During this event, a large volume of fluids circulated under the favourable structural conditions; these fluids included a sulphur- rich, neutral chloride brine believed to have transported the gold. Boiling and mixing of circulating fluids in the open breccias is thought to have resulted in deposition of the gold. There is evidence that this process is continuing at the present day.