Freewest reserves explanding _ New figure out soon

Partners Noranda (TSE) and Freewest Resources (TSE) are likely to announce a major increase in reserves soon for the Lightning gold zone on their Holloway project near Matheson, Ont. At the beginning of 1990, preliminary reserves for the deposit were conservatively estimated at around 2.5 million tons grading 0.20 oz. gold per ton.

But by year-end, a 165,000-ft. drill program had expanded that estimate to around five million tons grading 0.2 oz. gold. Since the deposit is still open at depth, both east and west, the potential remains to double that figure.

This month’s latest batch of drill results yielded more wide intercepts such as 78 ft. of 0.29 oz., 85 ft. of 0.34 oz., 48 ft. of 0.16 oz. and 35 ft. of 0.27 oz. gold. But holes 86, 123, and 124W, returned no significant values and indicate there is a gap in the deposit at 2,000 ft.

According to Freewest President MacKenzie Watson, the recent drilling also included two holes on each of the Desserault claims east of the Lightning zone, but Noranda didn’t release those assays because they were not significant. Freewest has 40% interest in the Desserault and Cadden claims which lie just east of its original 5-claim Freewest property.

Five drills were turning on the Holloway project prior to the Christmas break on Dec. 15. Drilling is expected to get under way around Jan. 7 on the Cadden claims, immediately east of the Freewest claims. The adjoining property held by Card Lake Resources (COATS) is still tied up in a lawsuit with Teddy Bear Valley Mines (COATS) which is disputing ownership with Card Lake.

Meanwhile, there is still untested deep potential to the west on the Teddy Bear claims, and more drilling is planned to test that area.

Denis Francour of Noranda Exploration said the company is drawing up its plans for next year’s program which will likely see at least $2 million spent on deep drilling. He said a preliminary gold reserve figure may be released next year also.

Freewest has a 40% stake in the original 5-claim property and a 23.8% interest in the surrounding claims of Teddy Bear Valley Mines. Freewest currently has about 12.3 million shares outstanding on a fully diluted basis.

At present, Noranda owns under 10% of Freewest’s stock, but just last month Hemlo Gold (TSE) acquired an initial toe-hold stake in Freewest via a $500,000 flow- through financing at $3.30 per share. Analysts say Noranda is contemplating a reorganization which would see all of its gold assets transferred to Hemlo Gold in a move similar to that done recently by Falconbridge and Inco (TSE).

Noranda has the option to buy another two million Freewest shares at market price less a 10% discount as part of its original agreement with the junior.