Joint milling plan possible for Grangesw, Muscocho

The principal operating companies involved in the adjacent Mishi and Magnacon gold projects, Granges Exploration (TSE) and Muscocho Explorations (TSE), have agreed in principle to test mill up to 200 tons per day of open-pit ore from the Mishi project at the Magnacon mill now under construction in the Mishibishu Lake camp of Ontario.

The Mishi property is a 50/50 joint venture involving Granges and MacMillan Energy (VSE) and ore from the project will be processed at the Magnacon mill which is expected to be in production in early 1989. Muscocho’s partners at Magnacon are associated company, Flanagan McAdam Resources (TSE), which has a 50% interest, and Windarra Minerals (VSE), with 25%.

A technical committee representing both operating companies has been established to facilitate the test milling arrangement. In a joint statement, Granges and Muscocho said preliminary analysis indicates “significant economies of scale may be achieved in a larger than earlier envisaged joint milling operation”.

Muscocho’s plans called for an initial 600-ton-per-day operation in order to produce about 70,000 oz of gold per year when up to full capacity. Terry Flanagan, president of Muscocho, said the mill was designed to be readily expandable to 800 tons per day, and only a few minor changes to the circuitry will be required to handle the extra Mishi ore.

Depending upon the results of the test milling and upon Granges’ continuing exploration work, and should a long term arrangement be made with Granges, Flanagan said the mill could be expanded even further although this would require extra equipment and involve some expense. “There could be a lot of synergy between our two neighboring projects if we work together for our mutual benefit,” he said.

Mike Muzylowski, president of Granges, said the test program will provide the opportunity to assess the open-pit and underground potential of the Mishi Main zone, where drill-indicated, underground geological reserves are 1.1 million tons grading 0.17 oz gold per ton.

“The development of the open- pit potential of the Mishi project, together with an ability to test mill our ore at a new facility within 3 km of the orebody, has dramatic immediate and longer term implications for the Granges-MacMillan joint venture,” he said.

Granges will be particularly interested to determine if bulk sampling of about 4,000 tons of ore blasted from surface will provide further indication as to whether “Magnacon effect” (upgrading of gold values) can be expected in both open- pit and underground operations.

According to Flanagan, this unusual upgrading effect is quite characteristic of the Magnacon deposit. “The sampling that we’ve done underground in the drifts and raises is giving us an average grade of about 0.36 oz gold per ton, whereas the surface drill intersections covering the same block averaged about 0.24 oz per ton.

“But the thing that gives us comfort is that it’s happening so consistently,” he adds. “Almost every drift and raise has given us substantially higher average gold content than the surface drill holes.”

Flanagan said the company has studied the effect and determined it to be a function of the density of sampling and the distribution of the mineralization in the form of relatively coarse particles of free (and often visible) gold in a quartz matrix, and to some extent in the sheared wallrock. “Underground sampling appears to be far more representative of the mass of the ore,” he said.

Granges, meanwhile, has continued development of its Main zone, focusing on the newly-discovered surface expression of the No 2 lens which has now been drill-tested along strike for in excess of 300 m, of which 200 m has been in-fill drilled at a 12.5 m spacing. Granges reports that results are continuing to demonstrate continuity of mineralization to the 60-m depth tested to date, with true width of the zone running from 4-20 m, and grade indicated to be about 0.15 oz gold per ton.

The most recent results from the closely-spaced drill holes included several holes where visible gold was noted in the core. Cut assays from these holes ran from 0.206 to 0.307 oz gold per ton, over widths from 10-27 ft.

Muzylowski said the joint venture was encouraged by the numerous wide intersections, including a 57-ft section that returned 0.10 oz gold per ton. “Even without the Magnacon effect, such widths and values have a positive impact on an open-pit’s bottom line,” he said.

Muzylowski also noted that revenues generated from potential accelerated production would allow the joint venture partners to expand exploration and development of not only the Main zone, but the currently-known four additional gold- bearing zones on the property.

Hemlo Gold Mines (TSE), which is active on a number of projects in the Mishibishu Lake area, including Central Crude’s Eagle River property, recently acquired a 9.8% stake in Granges. It is also the major shareholder in Windarra Minerals, one of the partners in the Magnacon project. Echo Bay Mines (TSE) has a substantial but not controlling interest in both Muscocho and Flanagan McAdam.