Investment Comment Capital gains opportunties found in Canada gold

Mines and metals analysts Mike Pickens and Robert Sibthorpe, both of Yorkton Securities, have drawn up a portfolio of nine stocks which they believe represent excellent value for investors looking for a long-term exposure to gold at the advanced exploration and development stage.

Four of the candidates for superior capital gain performance were looked at in the order of preference in this previous column. This week, the balance of the portfolio is presented.

Work to date on the Almaden project near Boise Idaho by joint venture partners Ican Resources and Canu Resources has outlined in excess of 20 million tons of heap leachable open pit reserves with an approximate grade of 0.04 oz gold per ton.

The two joint venture partners, numbers five and six in Messrs Pickens and Sibthorpe’s portfolio, completed a farm-in agreement in 1985 covering the Almaden project from Homestake Mining which requires expenditures of $2 million(US) over seven years and a positive feasibilty study for the joint venture to earn a 100% working interest in the property.

The analysts point out the Almaden produced during World War I and in 1954-55. This enhances the property’s early mine-making potential, they say.

Besides the main zone, significant reserves are indicated to be present in the North zone where 50 holes have been drilled to date with further infill drilling needed to establish proven reserves. Preliminary drilling southwest of the Main suggests that a third zone, called the K, may be present.

Metallurgical leach tests have been started and completion of a large-scale pilot test is anticipated by year-end as is a feasiblity study with production planned for early 1988.

Preliminary estimates to bring the Almaden to production is $13-$14 million(US) with operating costs expected to come in at less than $225(US) per oz.

At the time of the report, Ican was trading on the VSE at the $2.30 level with a yearly high and low of $3.70 and 95 cents , respectively. Canu was trading on the VSE at $5 with its yearly high and low of $5.75 and $1.35, respectively.

The two companies have agreed to amalgamate on the basis of one common share of the amalgamated company for each common share of Ican; and two common shares of the amalgamated company for each common share of Canu. Subject to regulatory and shareholders approval, the amalgamated company will have 13.2 million issued and outstanding shares. Trader’s Tel looks good

Trader Resources Corp.’s exploration programs have expanded reserves for the Tel portion of its Bank’s Island, B.C., holdings and established Bank’s Island as a potential new gold producing area. Mineable reserves for the Tel deposit lying within 500 ft of surface now total 206,400 tons of 0.64 oz gold and 1.28 oz silver per ton. The potential for development of more reserves at depth and along strike is excellent, say Messrs Pickens and Sibthorpe.

Trader is pick number seven for the analysts and at the time of their report it was trading at $1.80 on the VSE with a yearly high and low of $2.55 and $1.55, respectively.

The company has a joint venture agreement with Montague Mining Investments whereby the latter will spend $10 million developing Trader’s Tel deposit to earn a 49% interest in the Tel and be granted an option to earn a 25% interest in Trader’s Kim and Discovery deposits.

To date, 11 zones of mineralization have been discovered within the boundaries of Trader’s 7,400- acre Yellow Giant project on Bank’s Island. Of these, four major deposits currently known have been sufficiently developed to allow ore reserve calculation.

The current ore reserves at the Yellow Giant project see the Kim deposit with 1.1 million tons of 0.72 oz gold per ton; the Bob with 50,000 tons of 1.17 oz; the Discovery with 100,000 of 0.46 oz and the Tel with 173,200 drill proven reserves of 0.73 oz.

The analysts point out the high grade nature of the company’s known deposits should make an early production decision possible. Aur has four

With combined exploration expenditures of almost $18 million for this year and for the first two months of next, Aur Resources has four underground exploration programs under way leading to feasibilitiy studies in the immediate future with surface drilling programs on other selected projects continuing.

This number eight pick of Messrs Pickens and Sibthorpe trades on the TSE at the recent price of $3.20 with a yearly high and low of $3.70 and $1.20, respectively

Aur is very active in the acquisition and exploration of mineral properties, primarily in one of this country’s more prolific gold mining camps: the Val d’Or area of northwestern Quebec.

Its first principal project is the Orenada in Bourlamaque Twp., in which Aur holds a 93.8% stake. Three main zones (zones 4, 5 and 2) of gold mineralization have been outlined to date. Drill-indicated reserves of 740,000 tons of 0.16 oz gold per ton above a depth of 850 ft are present in zone 4. An underground program started last year, which includes shaft sinking to a depth of 900 ft, drilling in ore and 60,000 ft of diamond drilling on two levels is continuing and should lead to a production feasibility study by early 1987.

The company is earning a 100% interest in the 245-acre First Canadian property in Malartic Twp. Diamond drilling has outlined drill- indicated reserves in excess of 700,000 tons at an average grade of 0.20 oz gold per ton over a strike length of 1,000 ft and to a depth of 800 ft in the Kierens zone. The deposit is open at depth and along strike. Aur has started sinking a 2-compartment exploration shaft.

Located in Vassan Twp., Aur and Cogesco Mining Resources are in a 70/30 joint venture on the Malartic property, a former producer. Cogesco is earning its 30% interest by providing $5 million of exploration funding.

Here, the main, north and north- north zones all have potential for developing into economic deposits and the current underground program consisting of dewatering and refurbishing of the Norlactic shaft, and underground exploration should establish the extent and grade of the mineralization, write the analysts.

Aur’s 1,688-acre Hewfran property is located near Desmaraisville, adjacent to Bachelor Lake Gold Mines’ 500-ton-per-day mine. Aur is carrying out an underground exploration program from the 625-ft level of Bachelor Lake Gold Mines to explore for the westerly extension of the ore structure and, i f present, to define reserves. The program involves some 400 ft of drifting to the west and 10,000 ft of diamond drilling. 006 Claude in La Ronge

The Seabee project in the La Ronge area of Saskatchewan is Claude Resources’ most advanced gold property. Claude acquired the property in 1984 and in 1985 entered into an agreement with Placer Development whereby Placer as operator and manager may earn a 55% interest by spending $2.5 million in exploration and bringing the property to production. A feasibility study must be completed before July, 1988.

Exploration work prior to 1986 defined drill proven, probable and possible gold reserves of 1.12 million tons grading 0.32 oz gold per ton in two shear systems, the No 2 and 3 shears.

Since this February, three new gold zones have been discovered and the main gold veins in the No 2 shear system have been extended to a vertical depth of about 1,100 ft below surface.

With the conclusion of this year’s exploration program, engineering and evaluation studies should be completed by Placer by year-end, say the analysts with a decision to proceed on an underground program at Seabee by year- end.

At the time the report was written, Claude was trading on the Alberta Stock Exchange at $3.35 with a yearly high and low of $3.75 and $2.60, respectively.