It is in the narrow area between the cylinder and valve housing as near as I can tell. It's hard to even see in there to figure out exactly where it's coming from let alone to weld in there. JB weld wouldn't hold in that application IMO. The cylinder wall is scored a bit in the area opposite the exhaust valve and one of the score marks is probably a fine crack.
I cleaned the engine up last year and ran it to find out where the oil was coming from. This picture was after running for about 5 hours. I cleaned it up again and ran it for about 1/2 hour and you could see it was coming from that narrow passage between the valve and cylinder sections of the block. Pretty much impossible to get at.
I wonder if you could sleeve that block?
I still dont know what the balance gears are do you see them in my pics? I would scrap em if possible. I hear the are a cause of troubble