U.S. REPORT (September 16, 1991)

Westland Minerals Exploration, a subsidiary of New York-based DRX Inc. (NASDAQ), has found a partner to replace Glamis Gold (TSE) at its Commonwealth gold project in Arizona.

Located in Cochise Cty., the property contains geological reserves of eight million tons grading 0.042 oz. gold per ton.

In June, Glamis was given 90 days to examine the property and decide whether or not to go ahead with an option agreement that could have earned it a 60% interest in return for bringing the property to the final feasibility stage. But Glamis backed out and DRX says private Colorado company Western States Minerals has been given the option to earn 60% of Commonwealth by bringing it to final feasibility and purchasing between 500,000 and three million DRX shares.

Under the agreement, Western States must purchase the shares within a year at 10-25 cents each. Western States will also act as project operator, while DRX is carried through the start of production.

In a separate development, DRX’s biggest shareholder, FennoScandia Bank Ltd., has increased DRX’s existing credit facility by $845,000 to $2.89 million and extended the maturity date to June 1, 1992.

The company’s five major trade creditors have also agreed to convert the amounts owed to them (approximately $665,000) to 2-year, unsecured promissory notes.

Nerco Minerals, a division of Nerco (NYSE), says it has added more than 730,000 oz. of gold to its known gold resource since the end of 1990.

Largely the result of an intensive surface exploration program around the Cripple Creek operations in central Colorado, the new finds boost the company’s total contained gold resource to 3.9 million oz.

Production at Cripple Creek, which will get under way this month, is expected to exceed 35,000 oz. in 1991, rising to 55,000 oz. in 1992.

Nerco will continue its aggressive exploration drive in the area said Chief Operating Officer Thomas Albanese. By the end of the year, about 300,000 ft. will have been drilled from surface to test for shallow gold mineralization. Three rigs are currently on-site.

Cripple Creek is an 80-20 joint venture between operator Pikes Peak mining, a wholly owned Nerco subsidiary and Golden Cycle Gold (NASDAQ). In 1989, Nerco paid $15.6 million for a stake in the historic gold camp, which was extensively mined in the early 1900s from numerous, small-scale, underground operations.

The joint venture’s assets in the camp include the open pit Ironclad, Globe Hill and Cresson deposits as well as its 100% owned Victor mine, where Nerco has boosted reserves by about 109,000 oz.

“A new discovery, called Wildhorse, has contributed to the increase in total deposits,” added Albanese.

Wildhorse, with an average grade of about 0.04 oz. gold per ton, is typical of the shallow, heap-leachable deposits in the district, he said. A jump in known reserves was also recorded at Nerco’s wholly owned Con mine in Canada’s Northwest Territories. There, an additional 88,000 oz. of contained gold has been offset by 54,000 oz. of production, for a net increase of 34,000 oz.

Nerco produced 181,000 oz. in 1990 and 73,000 in the first six months of 1990, but declined to comment on projected annual production for 1991. Charles Adams, former president of Nerco Coal, has

been named president of Nerco Minerals.

Less than two weeks after Newmont Mining (NYSE) said it was dropping its option on the Elmore gold project in Idaho, property owner Atlanta Gold (TSE) is set to continue exploration there.

Vancouver-based Atlanta says it has struck a $500,000 private placement deal with Consolidated Ramrod Gold (VSE), also of Vancouver, and drilling will resume at Elmore by the end of this month.

The private placement to Ramrod comprises 446,428 units consisting of one common share of Atlanta and one warrant priced at $1.12 per unit. The warrants are exercisable for two years at $1.40 a share.

With financing in place, Atlanta says it will spend US$325,000 on a 14,200-ft. deep-drilling program designed to expand reserves below two open pits hosting about 15 million tons of 0.05-0.08 oz. gold per ton.