Fairbanks Gold confident of large tonnage operation

Armed with new reserve calculations for the Fort Knox gold property near Fairbanks, Alaska, 51% owner Fairbanks Gold (VSE) is confident it has the makings of a huge bulk tonnage mining operation. President Eric Friedland reported that four independent calculations place the property’s preliminary estimates of reserves at 80-100 million tons grading 0.036-0.047 oz. gold per ton with a cutoff grade of 0.02 oz.

Three of the calculations were done by major mining companies while the fourth was completed by an independent geological consultant to Fairbanks. The company has let a number of major mining companies look at drill results so as to make a deal to develop the property. Fairbanks would not comment on whether it is currently involved in negotiation with any of the companies.

The reserve calculation is based on drilling on 200-ft. centres covering an area of about 2,700×1,200 ft. to a depth of more than 900 ft. and open in all directions including depth.

The deposit is described as a quartz monzonite-granodiorite porphyry gold deposit. The gold occurs principally in a series of veinlets throughout the granodiorite intrusive. Fairbanks believes that the nature of the deposit’s gold content will behave much like that of disseminated gold in a true porphyry. The gold mineralization is well oxidized to a depth of at least 1,000 ft.

Preliminary testing by Lakefield Metallurgical Labs is reported to have calculated recoveries of 95% for –65 mesh material with a low cyanide consumption.

Fairbanks noted that grindability tests indicate a low to moderate work index for the rock which, combined with the excellent metallurgical recoveries and large tonnage, could make a carbon-in-leach operation feasible in the order of 20,000-30,000 tons per day. Also boding well for the project’s economics is its proximity to Fairbanks, Alaska, some 15 miles away.

Fairbanks plans a major drilling program this season starting in May. Friedland indicated that the program budget would be in the order of $10 million. The objective will be to determine the size of the overall deposit by drilling stepout holes on 400-ft. centres, backing in later on 200-ft. centres.

If results from the 1990 program continue to be positive, the company hopes to complete a detailed feasibility allowing for a construction startup in the spring of 1991. Fairbanks is also looking at the possibility of ramping into the deposit this season in order to obtain a bulk sample for grade and metallurgical confirmation.

Assuming completion of a recently announced private placement of 500,000 units at $6.50 per unit, Fairbanks Gold will have about 11 million shares outstanding and over $6 million in working capital.

The remaining interest in the property is held by Ventures Trident, a mining investment fund, and Bob Nye, the original owner of the claims.