Better grades improve Brewery – Loki outlining large tonnage

An accelerated exploration and development program is being planned by a unit of Noranda (TSE) for the Brewery Creek property. It is a promising bulk tonnage gold prospect 35 miles east of Dawson City, Y.T., and 13.6 miles east of the Dempster Highway. Work on the property this year was funded by Loki Gold (VSE), which can earn a 49% interest by spending $4 million on exploration by the end of 1992. The junior is headed by President Lawrence Nagy, best known for playing a technical and financial role in the early stages of the Snip and Eskay Creek gold projects in northwestern British Columbia.

Nagy said exploration and drilling success this year has advanced the Brewery Creek project to the stage where sufficient information should be in hand within the next several weeks to allow for a calculation of preliminary reserves.

“We had a gentlemen’s agreement with Noranda that if this looked like it was less than 10 million tons, they would dilute and we would take over as operator,” Nagy said. “But I doubt this will happen because it appears now they are looking at a 10-20 million-ton range with a much better grade than we both expected.”

Although the bulk of reserves is expected to come from lower-grade zones, it appears the project also has potential for some smaller, higher-grade “plums” such as in the Kokanee zone where recent drilling returned 72.1 ft. of 0.19 oz. gold per ton and 32.8 ft. of 0.20 oz.

“The plan for next year is to move ahead with definition drilling along with a little more exploration drilling,” said Nagy. “This project is gradually moving from exploration to Noranda project planning.”

Geologists from Noranda’s Whitehorse office are reported to have made the initial discovery, the Moosehead zone, in 1987 while testing a large soil geochemical anomaly on the property.

Since then, seven additional zones have been identified, with about 3.7 miles of the 5-mile-long anomaly tested to date by trenching and drilling. The zones are considered to be amenable to open pit mining techniques.

Loki said work to date has confirmed the presence of significant free gold mineralization in quartz stringers within sill-like bodies of shallow dipping felsic intrusives.

“The control now appears to be a major thrust fault that occurs right at the contact with the Road River shales and the intrusive,” said Nagy.

Referring to preliminary test work, Loki said the oxidized intrusive material returned “excellent” recoveries on cyanide bottle and column tests, although more comprehensive test work is still under way. The tests will help determine potential processing methods, including milling or, alternatively, straight crushing and heap leaching.

So far this season, 309 percussion drill holes, 15 large-core diamond drill holes, and about 19,500 ft. of backhoe trenching have been completed on the property which is easily accessible by road.

In early November, Loki Gold released results from 41 of 107 reverse circulation holes recently completed on the project (assays are pending for the remaining holes). The highest-grade results were released from drilling in the Kokanee zone with the depth to the intersection ranging from 6.5 to 118 ft.

But impressive results were also released from other areas. Selected results from drilling on the Moosehead zone include: 32.8 ft. of 0.048 oz. gold; 78.7 ft. of 0.046 oz.; 65.6 ft. of 0.061 oz.; and 72.1 ft. of 0.043 oz.

The best result from recent drilling in the Blue zone was 78.7 ft. of 0.097 oz., while a 39.2-ft. intersection grading 0.052 oz. was returned from the Fosters zone.

Drilling on the Lucky zone — a more recent discovery which represents the most easterly drilling to date — returned results and thicknesses which appear to have the kind of potential typically associated with bulk-tonnage deposits.

Some of the better results from this drilling include: 104.9 ft. of 0.067 oz.; 203.4 ft. of 0.062 oz.; and 144.3 ft. of 0.076 oz. The depth to each of these intersections is 6.5 ft. Drilling in the Canadian zone returned: 98.4 ft. of 0.044 oz.; 72.1 ft. of 0.12 oz.; 59 ft. of 0.062 oz. and 59 ft. of 0.078 oz, with the depth to these intersections ranging from 6.5-13.1 ft.

The 1990 season at Brewery Creek property is now over, and work will resume in the spring of 1991.