Falconbridge options ground to seek Kidd Creek `satellites’

Toronto-based Falconbridge is gearing up to spend at least $500,000 in 1992 on ground held by White Star Copper Mines (CDN) west of its Kidd Creek copper mine near Timmins, Ont.

After years of discussions between the two companies, Falconbridge has agreed to earn a 100% stake in the 160-claim B property by paying White Star $100,000 up front plus a further $500,000 in annual instalments of $100,000. Under the agreement, White Star is retaining a 3% net smelter return on any future production until Falconbridge has recouped its capital costs and a 4.5% net smelter return thereafter.

White Star has also granted the 50% owned Noranda affiliate a right of first refusal on its “A” and “C” groups located northwest and south of its “B” property where there has been no drilling to date.

In addition, the nickel miner can purchase one million common shares of White Star at $1 for up to two years from the date the agreement was signed. Shares of the junior were trading recently at around 60 cents. Falconbridge’s decision to sign the deal was based on the fact that most massive sulphide orebodies have satellite deposits nearby, said Neil Provins, a senior geologist at the company’s Kidd Creek division.

With geophysical work scheduled to begin immediately after Christmas, Provins said the company will spend at least 50% of the $1.3 million earmarked for exploration within a 7-mile radius of Kidd Creek on or near the White Star claims. He hopes to have enough information on which to base a surface drill program by March.

As the Kidd Creek No. 2 shaft is less than two miles from the corner of the White Star property, Provins said exploration could be conducted from mine workings if results of surface drilling are sufficiently positive. Apart from a small lens situated on the Chance Mining and Exploration (CDN) property, adjoining the White Star claims to the west, Falconbridge has not yet found any massive sulphide deposit beyond the Kidd Creek mine. As the Kidd Creek orebody is pinching out at depth and mine throughput is scheduled to drop considerably over the next 3-4 years, Falconbridge is under pressure to find more ore to feed its large metallurgical complex. In an interview with The Northern Miner, Chance Mining President Mike Zurowski said the deal could have positive implications for his company because it still retains a 10% net profits royalty on the Chance ground. Zurowski believes the White Star agreement could lead to further development of the South Chance zone, hosting 250,000 tons of grade 12% zinc, 4% lead and 6.5 oz. silver per ton at a depth of about 2,000 ft. Before the deal was signed, Chance shares were trading between 20-33 cents.