Underground program planned by Citadel at Surluga property

Under new ownership, Citadel Gold Mines (TSE) is getting serious about its former producing Surluga gold property at Wawa in northern Ontario.

The junior mining company is planning an underground test mining and milling program which will cost about $15 million. Citadel says the program, which should be under way in September, is subject to financing and regulatory approval.

In announcing the results of a recent drilling program, Citadel said hole S-307 intersected 55 ft (vertical) of 0.12 oz gold per ton, including an 8-ft section grading 0.39 oz. The company reports 83 vertical holes drilled to test the Jubilee shear zone “located a definite elongated zone whose surface projection is 200-300 ft wide and 1,800 ft long.”

The Citadel property consists of 9,540 acres which are wholly owned, as well as optioned properties.

Plans call for underground exploration in the Surluga South zone and the new Jubilee South zone, the program to consist of 4,300 ft of underground drifting on four levels and 18,000 ft of underground drilling. The company anticipates the Jubilee South zone will be intersected on the fifth level in July.

A surface exploration program for the property will test the concept of open-pit mining of one or both of the above two zones. Property reserves

Current reserves (proven and probable) at Surluga stand at 358,500 tons averaging 0.22 oz; possible reserves are calculated to be about 150,000 tons grading 0.23 oz.

An old mill capable of processing 750 tons per day exists on the property. The company estimates partial refurbishment to allow the processing of 500 tons per day would cost $2.2 million. Cost to refurbish the surface plant would be an extra $500,000.

Citadel currently has about 9.9 million shares outstanding. Its major shareholder, with an approximate 20% interest, is Sherfam Industries. Previous controlling shareholders, with a combined interest of more than 80%, were Canhorn Mining (TSE) and Prairie Pacific Mining (ASE).

Elected to the board of directors at the recent annual meeting were R. Campbell Todd, Joseph Church, T. Robert Hambley, Eric Hoffman (Citadel president), W. Bernard MacIsaac, Harvey Organ (vice- president) and Bernard Sherman (chairman).