Douay drilling doesn’t match earlier results

Results from two drill holes on the Douay property in northwestern Quebec failed to match results from the discovery hole announced two weeks ago. Inco (TSE), the operator, says hole 84610, which was drilled directly under the discovery hole, cut 2.6 ft. averaging 0.68 oz. gold per ton while hole 84611, drilled 200 ft. west of the discovery hole, cut 10.3 ft. averaging 0.15 oz. and a second intersection of 12 ft. averaging 0.42 oz.

Four more holes are planned to complete the current drill program. Hole 84610 will also be deepened to test a possible vertical extension of mineralization intersected in the discovery hole.

Meanwhile, a letter of intent which would give Inco an option to earn a 60% interest in adjacent Casa Berardi property, owned by Golden Rule Resources (TSE) and Northern Abitibi Mining (ASE), was never ratified by the boards of directors, say the two juniors.

Golden Rule and Northern Abitibi have filed a lawsuit in Alberta against Inco. The juniors want the court to declare the letter of intent void. Golden Rule is the majority shareholder of Northern Abitibi; their claims lie to the north and west.

According to the juniors’ statement of claim, Inco approached the two companies near the end of January expressing a desire to acquire an interest in the claims. They then entered into a confidentiality agreement.

During January, the juniors say, Inco and its partners drill-tested for mineral reserves in three locations in the western part of the Douay property, coming up with their discovery hole. The find was uncovered in an iron formation which might be expected to extend into other properties in the area, say the juniors.

During their talks with Inco, the juniors say Inco denied any knowledge of positive exploration results from the Douay property. The letter of intent, the juniors say, was executed Feb. 6. Inco and its Douay project partners made public their find on Feb. 13.

The option would allow Inco to earn a 60% interest in the claims under dispute by spending $1 million on exploration work during a 4-year period. Vior and Cambior say they will become partners with Inco in the option agreement.

Elsewhere, it appears Inco has failed in its attempt to enter into an option agreement with Joutel Resources (TSE) relating to property about six miles northwest of the Douay project in Aloigny and Joutel twps.

Subject to the required approvals, Joutel says it has made a deal with Noranda Exploration whereby the latter may earn a 60% interest in the property through cash payments of $210,000 over three years and work expenditures of $1.5 million over four years.