Exploration ’88 INCO GOLD

Inco Gold, the recently-created company that handles Inco Ltd.’s gold exploration and development, will spend $40 million this year searching for precious metals around the world. This represents a 52% increase over last year’s budget and does not include capital costs for developing mines. The new offspring has quite a plateful. It will be in charge of production for the new mine under development at Casa Berardi in Quebec, where the Golden Pond East deposit is being readied for a September, 1988, start-up. The project is a joint venture with Golden Knight Resources. At the Crixas gold mine, which is being developed in Brazil, the Brazilian subsidiary of Inco Gold is a partner with an affiliate of Anglo American and Mineracao Morro Velho, operator of the project. Inco Gold has also completed a feasibility study on the Jardine deposit in Montana. The report, presented to Homestake Mining Co. (Inco’s partner in the project), recommended production. And both companies have agreed to proceed to production. At each of these developing properties, further exploration could expand known reserves. At Golden Pond West in the Casa Berardi area, a ramp is being driven to take a bulk sample of the ore, establish continuity and expand the proven reserves. The ramp will cost about $9.7 million. The mill at Casa Berardi has been designed to handle 1,320 tons per day, of which 880 tons will be from the East deposit and the remainder from the West zone. Future expansion is possible because the mill’s front-end — its grinding and thickening sections — can accommodate 1,985 tons per day. A $2-million surface drilling program will probe the remainder of the claim block at a number of untested drill targets. This should outline additional reserves, the company says.

Inco Gold is undertaking an aggressive program in the Kirkland Lake district with its partner, Queenston Gold Mines. Inco Gold is directing two distinct exploration projects, the first of which is a ramp drive at Anoki. The ramp will permit definition drilling of the deposit from underground, bulk-sampling and test-mining. About 600,000 tons of material grading 0.145 oz gold per ton have been outlined from previous exploration. Completion of the ramp and all of the underground drilling is scheduled for June, 1988. The ramp is being positioned so that it can test other mineralization known to exist to the east. The second part of the program at Kirkland Lake is the continuation of drilling on the Biroco and Esker zones of mineralization. These zones of mineralization, located within the Larder Lake Break, are fewer than 5 km from the McBean mill.

Inco Gold will be active in other Canadian gold camps this year. In Red Lake, the company has acquired a controlling interest in Wilanour Resources and the interest in the Wilanour Partnership mineral rights held by Esso Minerals. As a result, Inco Gold will be a major holder of mineral land in Red Lake. Drilling started during the first week of January on identified targets and will continue through 1988. In northwestern Ontario, Inco Gold is a partner (23.75%) in the Musselwhite joint venture, where known drill reserves are six million tons at 0.203 oz per ton. The venture will be sinking a 235-m shaft to permit underground exploration, and will be extending the surface drilling grid westward below Snoppy Lake where the mineralization is open to the west. Availability of milling capacity at Shebandowan has focused attention on the gold potential of western Ontario. A number of programs will be continued on ground controlled by Inco Gold. At the Shebandowan mine property itself, gold mineralization on the Inco mining leases is being tested by surface and underground drilling. At Burchell Lake, 25 km from Shebandowan, Inco Gold is testing mineralization along strike from the Moss Twp. deposit being explored by Storimin Exploration and Tandem Resources. On the Gold Creek property, immediately south of Shebandowan, gold mineralization was intersected by drilling completed at the end of 1987. It will be tested further in 1988. In Quebec, apart from Casa Berardi, Inco Gold will be operating six programs. Among them is the Matagami district prospect, where a joint venture with Cambior Inc. and Vior Inc. has outlined geological reserves of 614,000 tons at 0.23 oz per ton.

Last year, Inco Gold acquired the surface assets of Consolidated Rambler Mines at its Baie Verte property in Newfoundland, which included the mothballed mill capable of processing 1,500 tons per day. This acquisition underscores the company’s commitment to explore and develop gold properties in that area. Inco now is drilling near Buchan and on land at Bett’s Cove, where Inco Gold is a partner with Consolidated Rambler.

Elsewhere in the Atlantic Provinces, Inco Gold, participating through the Scominex joint venture, will further evaluate the claims totalling 317,000 acres in the Cape Breton Highlands. The company already has identified gold mineralization on the property. It will also carry out reconnaissance activities in other parts of Nova Scotia. In New Brunswick, Inco Gold will step up exploration now that a reconnaissance program is complete.

The company plans work on other advanced and grassroots projects throughout Canada. Of particular significance are the Vault project in British Columbia, where Inco Gold is a partner with Seven Mile High Resources on its property in the Okanagan Valley, and the Igloo project in the Northwest Territories. At Vault, drilling by Inco Gold has identified an epithermal gold system containing ore-grade intersections and, during 1988, efforts will be directed towards defining the extent of the system. At Igloo, near Rankin Inlet, drilling by the company has intersected “interesting” gold values associated with the margins of sheared dioritic stocks. This year, drilling will delineate the mineralization, which is open along strike and down-dip. In all, Inco Gold will be working on 42 projects across Canada.

Outside Canada, Inco Gold is maintaining a vigorous exploration program in the southwestern U.S. and Alaska. Properties known to have mineralization will be drilled and reconnaissance will be done in areas of favorable geology. In particular, a very promising start was made last year on property owned by Doyon Ltd. Native Corporation. Results in 1987 justify an increase in exploration during 1988. In Montana, Inco Gold has intersected potentially mineable-grade mineralization at its Grassy Buttes property, where it is in joint venture with Meridian Minerals.

Brazil will also see increased exploration by Inco Gold, following the company’s success at Crixas in the State of Goias. The neighboring State of Minas Gerais is a well-established gold producer, and Inco Gold will be working on 10 exploration projects between the two states. In Indonesia, the company is taking advantage of its operating experience in the country to evaluate two gold prospecting areas at Pasir and Tabang in Kalimantan. These properties are each 2,500 sq km. Pasir is near the eastern seaboard of Balikpapan. Tabang is 200 km to the north. Geochemical surveys carried out last year are being followed up this year. The company says it is evaluating other overseas opportunities as well.