Report from Calgary Looking ahead to a good ’88

With Christmas and New Year’s behind us, it is time to look at the exploration events of 1987 and to prophesy how they will continue in ’88. The Alberta Stock Exchange in Calgary boomed along with no letup in new listings. Dominated by the Junior Capital Pools (jcps), the companies that “go public” without a definite business plan, the ase expanded to 740 listed companies from 491 at the close of 1986. The exchange has become a corporate stepping stone, as companies start on the ase, then move on to the Toronto or Montreal exchanges.

Mill City Resourcs, Gunnar Gold, Jordan Petroleum, Bresea Resources, Claude Resources and Pacific Trans Ocean Resources have made the upgrade, in addition to others, to the big boards of the east, seeking fame and fortune and hopefully larger trading volumes and greater price appreciation. These jcps are at the mercy of the investing public and, unless flow-through funding or a variation of it continues, there will be a high fatality rate of these “blind pools.” With limited funds, upon listing, and managed in some cases by accountants, lawyers and week-end prospectors, it is difficult to imagine the public providing financial support to these exploration rookies. Who deserves accolade?

The best, the discovery of merit in 1987 in the western shield, was the Golden Rule Resources strike at McLellan Lake, within the LaRonge gold belt of northern Saskatchewan. With partners SMDC, Goldsil Resources and Shore Gold Fund, the companies ajdjoining claim owner Mahogany Resources have delineated through drilling a gold-bearing structure over 2,500 ft in strike length and to a depth of 300 ft.

Exceptional high grades were encountered in surface showings and drill holes that could eventually average close to 1 oz gold per ton over modest mining widths (possibly up to 10 ft but would average less depending on cutoff grade). A January, 1988, drill program will be watched with keen interest as the two separate and adjoining projects (Fork and Transom lakes) will be investigated in detail. Comox Resources is well positioned with claims immediately south of Transom Lake, and could have an extension of the Fork-Transom Lake gold structure.

Successful Saskatchewan explorer Claude Resources continued its quest for golden treasures in the province. With operator/partner Placer Dome, it completed an underground exploration program on the Seabee deposit. Expected grades and tons were confirmed in this work such that a production decision could be made in 1988. The reserve base at Seabee is some 2.1 million tons grading 0.19 oz. Elsewhere in the province, Claude made additional gold discoveries, one of which, at Ithingo Lake near Buffalo Narrows, will be jointly explored with Newmont Mines in 1988.

The Northwest Territories is still the home of the golden giants in western Canada, and accordingly received considerable attention from over 50 companies. Courageous Lake attracted the majority of the effort based on the continued successes of the Getty/Noranda project on its Tundra deposit. This year it has expended $8 million on diamond drilling. The deposit is now known to extend over a strike length of 4,750 ft and to a depth of 3,500 ft. Late in 1987, the companies announced undiluted possibile geological reserves to be 26.4 million tons grading 0.18 oz, or 9.3 million tons grading 0.26 oz or 2.1 million tons grading 0.39 oz at a cutoff of 0.1, 0.2 and 0.3 oz per ton, respectively.

An underground exploration program estimated to cost $25 million will commence in the second quarter of 1988. The program will include installation of a temporary headframe and hoist, sinking of a 1,500-ft vertical shaft, underground diamond drilling, drifting and raising on ore for bulk sampling and metallurgical testing. The program is scheduled for completion in late 1988 and will include initial environmental permitting and metallurgical and feasibility studies.

Adjoining claim holders Bow Valley Resources, Giant Yellowknife Mines, Placer Dome, Gunnar Gold, Mill City Resources, Aber/Highwood Resources, Roxwell Resources, Claude Resources, Colray Resources and Courageous Exploration completed preliminary drill programs in 1987 that will be expanded in 1988. Late in 1987, Getty Resources was subjected to a takeover bid by Total Erickson.

Elsewhere in the district of MacKenzie, a lot of activity was centred about Contwoyto, Russell and Indin lakes. At Contwoyto, several programs came up with Lupin-type targets. Projects led by Aber/Highwood Resources, O.P. Resources. Parklane Resources, Bow Valley and Hecla Mining will be continued in 1988 to better define encouraging gold discoveries. Worthy of watching is Argus Resources, which will be drilling in January a coincident high grade gold showing geophysical anomaly at Pistol Lake, 80 miles southeast of Contwoyto.

Contwoyto Goldfields, a forthcoming ase listing has a substantial land position near the Lupin mine that has been explored jointly with Hecla Mining since 1986. At Indin Lake, Echo Bay Mines and partners Comaplex International Resources and Petromet Resources, after drilling 75,000 ft on three nearby gold prospects, are close to having something of economic value, if logistics and metallurgy can be combined in a viable fashion. Echo Bay recently did a shuffle of upper exploration management, substituting Canadian personnel with U.S. talent. It could mean a change in exploration direction for the company. Echo Bay has become a successful buyer of gold mines, especially when its pockets are deep and full of money. Recent acquisitions such as the Tenneco buy-out in the U.S. have increased the company’s gold production substantially (maybe mines are easier to buy than to find).

Indin Lake neighbor Neptune Resources appears destined to put its Colomac deposit into production in the coming year. Inclement weather, tough logistics because of poor access and seemingly low grade ores, have not deterred its effort. If successful, the management of Neptune deserves full marks by making this innovated vat leach operation a reality. Several companies, such as Triple Crown Resources and Tanqueray Resources at Indin, have completed airborne geophysical surveys and will be conducting ground surveys this year.

Russell Lake has seen a lot of activity by Aber/Highwood, in part with partner Asamera Minerals at Bugow Lake, and others such as Noranda/Getty, Neighbor Prolific Resources announced some interesting surface gold showings uncovered in’87 that will be drilled in ’88. High expectations with modest risk is the scenario at Russell because of the proximity to Yellowknife.

Base metals in the Mackenzie district have generally been taboo due to poor logistics and low unit values. In the ’70s several precious metal-rich base metal deposits were found at Yava and Izok lakes and elsewhere, but shelved due to inaccessibility. A new polymetallic deposit may be in the making at Sunset Lake. Here, a significant silver-rich high grade zinc, lead and copper deposit has been discovered by Aber Resources and Hemisphere Resources.

To date, a massive sulphide body has been defined by drilling over a strike length of 300 ft and to a depth of 400 ft. In 10 holes, a mineralized zone has been encountered ranging from 15 to 50 ft thick, grading on the average 15% combined zinc and lead, 0.20% copper, 15 oz silver and 0.03 oz gold. Located less than 65 miles from Yellowknife and within 35 miles of all-weather Ingram Trail, this occurrence has year-round access to Yellowknife.

With the former Pine Point railroad looking for much-needed traffic southward and the easy access between Yellowknife and Hay River, the Sunset Lake property makes a lot of economic sense if a high dollar-value ore can be found. The one-drill program will be expanded to two drills in January in an effort to make more tons on this very promising deposit. Edmonton- based Ark La Tex Industries, with adjoining claims and showings in not dissimilar volcanic rocks to the Sunset Lake deposit, will be conducting an exploration program here in 1988.

Next door, in the Keewatin district, several companies were active with a variety of successes reported. Borealis Exploration continued with its underground program at Fat Lake in an atttempt to put a mineable situation into place. Neighbors Noble Peak Resources and Sunmist Energy fielded sizeable crews conducting extensive geophysical, geochemical and geological surveys. These high-cost projects are at the mercy of flow-through funding programs and unless these are continued beyond 1988, some other fairy godfather will have to be found.

Leaping provincial borders to maritime lands has been beneficial to some Calgary companies. One firm fortunate to have spread its wings to our youngest province, Newfoundland, has been Yarna Gold (formerly Marker Resources). Starting with a strong land position acquired while others were sleeping and ignoring Newfoundland, Varna, with partners such as BP Resources, is engaged in several projects such as at Jacksons Arm and Mings Bight and with Rio Algom at Huskers Pond, appear destined for successful conclusions.

Both large tonnage, low grade open pit, and higher grade and conventional tonnage underground gold deposits are in the making. The rush is on to Newfoundland and the once-best-kept-secret is now on the exploration agenda of many companies for 1988.

Nearby, in neighboring Nova Scotia, a lot of good news continues to come forth. The Seabright Resources takeover by Western Mining Co. implies that the Australian giant intends to become serious about this maritime province. Pan East Resources, Greenstrike Gold Corp. and Petromet Resources continue to expand drilled-out reserves at the Fifteen Miles Stream, Halifax Cty., prospect. Coxheath Gold Holdings, one of the more dedicated Nova Scotia explorers, should have its Tangier property close to a production status in 1988.

There are other Alberta companies which can be proud of accomplishments in 1987 and are preparing for new and wonderful things in 1988.

Armistice Resources has taken on the former producing Armistice gold mine at Virginiatown in the Larder Lake area of Ontario. The mine lies directly west of the Kerr Addison mine recently sold to Golden Shield Resources. Armistice is deepening the mine shaft from 1,250 ft to the 4,000 level in search of the expected faulted extension of the Kerr Addison orebody.

Aurora Gold has assembled an attractive package of six gold properties in British Columbia, Ontario and Quebec. The recent ase-listed company is well funded and managed, and appears determined to become an aggressive gold explorer.