Goldstake hunts for gold in Homestake’s shadow

It has acquired a piece of ground adjacent to the Homestake property and along the trend of the venerable mine’s orebody. Goldstake’s chief geologist Richard Redfern, a former Homestake geologist, theorizes that the same series of gold- bearing “ledges” that Homestake has been mining for 113 years could run across the boundary and on to his company’s ground.

To test the theory, the company will probe with a $2.5-million, deep drilling program next summer. However, with the recent flowering of open-pit, heap leach mines in the area, Goldstake will first test for gold mineralization much nearer surface. Such a strategy is far cheaper and, based on the odds, less speculative.

In fact, after The Northern Miner tramped around on the 4-sq-mi property with Redfern recently, it became obvious the oldtimers around the turn of the century found more than a hint of near- surface gold. One whole hillside was pockmarked with old workings — a collapsed adit running maybe 100 ft into the hillside, numerous shallow diggings and a few rather deeper holes where miners had hand-steeled into the rock. Redfern also pointed out an area of collapsed ground that he thinks might be a local fault.

One hole drilled in 1936 to a depth of 1,380 ft (and, to add a little color to the tale, financed by such celebrities as singer Al Jolson and movie mogul Darryl F. Zanuck) cored gold mineralization.

To test the ground for open pit gold mineralization and to develop a clearer picture of the structural geology in preparation for deeper drilling, Goldstake will trench across numerous old workings and drill about 30 shallow, reverse- circulation holes this summer.

Although bigger mineralized game might be found at depth, testing the open pit potential is a wiser move at this point, Redfern said. Gold mineralization is known to exist on this ground, called the Stowell property. It also is in an established and growing open-pit, heap leach camp, which includes such owners as Bond Gold Corp., Coin Lake Gold Mines, MinVen Gold Corp., and Wharf Resources.

In addition, Goldstake has already earned its spurs in the area by initiating a tailings recovery project on ground owned by Homestake Mining ( (NYSE) that not only has the blessing of the major, but also its participation as a 50% joint venturer and operator. In fact, Goldstake has been paid $2.4 million (US) by the joint venture operating company for the costs it incurred in developing the Whitewood Creek project, as it’s known. The junior will also receive annual payments of $500,000 and a $1-million advance royalty against tailings income 10 days after mining permits are approved. (Strawberry Hill Mining Co. has a 20% interest in Goldstake’s 50% production interest.)

According to Redfern, the environmental approval process is nearing completion. This state is renowned for its strict environmental regulations, but it’s difficult to imagine this project receiving a thumbs down by the regulators. The tailings are laced with arsenic and below it lies fertile farmland. Mining the deposit, an operation that will involve nothing more than front-end loaders, will result in the liberation of arable land and safe disposal of the arsenic. Neither farmers nor environmentalists should object to such laudable goals.

The mill flowsheet has yet to be established, but preliminary testing seems to indicate the need for a grinding circuit, to treat tellurium; gravity separation; and agitated leach. Metallurgical tests suggest an average 84% recovery rate. There may also be a recoverable rare earths component to the ore.

The tailings deposit hosts 14 million tons grading an average 0.052 oz gold per ton. No drilling, blasting or crushing is required. The ore will be slurried and delivered to the mill through a pipeline.

Cash operating costs are projected at less than $200(US) per oz. On the table now is a proposal to mine 6,000 tons per day, 350 days per year. At that rate and given an 84% recovery rate and an average grade of 0.052 oz gold per ton, the tailings project could produce roughly 91,728 oz per year.

Company President Robert Cleaver said the targeted startup date is July, 1991. However, production could be begin as early as late 1990.

Goldstake, which recently was accepted for trading on the Toronto Stock Exchange, has $1.5 million in cash and short-term securities to finance exploration on the Stowell property and cover any operating expenses on the tailings project.

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