Agreement paves the way for McWatters

If all goes as planned, the gold deposit at the McWatters property, 12 km southeast of Rouyn-Noranda, Que., will be placed into production under a management contract between BLM Services Group and joint-venture partners McWatters Mining (ME) and ECU Gold Mining (ME).

BLM, a subsidiary of William Resources (TSE), will manage production for a fee estimated at $11 million over three years, and may also provide working capital. The agreement is subject to a due diligence review.

BLM’s participation means that underground production from McWatters can start earlier than had been planned, and operating cash flow should start some time next year. Full production of 20,000 oz. per year is planned for the end of 1997.

Projected net income (assuming eight months of production in 1996, a recovered grade of 0.18 oz. per ton, and a gold price of C$520 per oz.) is $779,285.

The project has 121,609 tons of probable reserves grading 0.17 oz. gold per ton, and 270,754 tons of possible reserves grading 0.19 oz. — all above the 400-ft. level. Reserves below that level are 182,093 tons probable grading 0.19 oz. gold, and 312,959 tons possible grading 0.17 oz.

The companies plan to drive a decline to the existing workings, at the 400-ft. level. A 29,045-ton bulk sample from a pit at the head of the proposed decline had a head grade of 0.15 oz. gold, and test milling provided a recovered grade of 0.09 oz.

The deposit was in production from 1933 to 1944, with production estimated at just over 100,000 oz.

McAdam Resources attempted to put the deposit into production in 1986-1989, but arrangements to finance further work fell through and the company abandoned the attempt.

McWatters and ECU report that surface prospecting has revealed a 450-metre shear zone up to 4.6 metres wide.

Thirty-two samples were taken at surface, and the best assay results were 3.36, 6.93 and 10.87 grams gold.

A 1,800-metre drill program is planned, which will include underground testing of the showing.