ATLANTIC REPORT Onitap selling Goldboro interest

The 37 Guysborough Cty., claims are to be sold for an aggregate purchase price of $8 million, which is to be completely paid by October of 1993. Goldboro had been the subject of an option agreement under which Rouyn-Noranda- based Orex could earn up to a 50% interest in the property by spending up to $12 million.

Onitap’s board of directors say the sale represents at least the net return Onitap would have received by remaining Orex’s joint venture partner and bringing the property into production. The sale also relieves Onitap of the costs of supervising work done under the option agreement with Orex — about $80,000 in 1988 — which was not an eligible expenditure for income tax purposes and couldn’t be financed by flow-through shares.

Furthermore, Onitap now can pay off about $250,000 in debts and fund the company’s 1989 exploration program in the Goldboro area without issuing more shares, the directors said. The sale also provides a more assured income than that generated from a mine, they added.

In 1988, Orex carried out both surface and underground exploration on the Goldboro deposit. The old Boston-Richardson shaft was dewatered and rehabilitated to the 400-ft level. A ramp was driven from surface to the 250-ft level and two crosscuts were driven through the New Belt on the 125- and 250-ft levels. The crosscuts also intersected the limbs of the Boston- Richardson belt.

Mineralization discovered on those levels corresponded well with models constructed from surface drilling information, according to Onitap’s management. Further surface drilling was done to confirm information from widely-spaced drill holes and to find extensions of the various belts. Onitap’s management believes that the deposit contains probable reserves of 1.35 million tons of ore grading 0.2 oz gold per ton, with several of the belts still only partially explored.

Onitap’s Goldboro property contains three former producing gold mines in what was once referred to as the Upper Seal Harbour gold district. Gold was found there in 1892 when a prospector discovered a large belt of low-grade ore called the Richardson belt. Between 1893 and 1944, the district produced 620,884 tons grading 0.13 oz, most of which came from the Richardson ore shoot. Limited production came from the East Gold Brook mine to the east and the Dolliver Mountain mine to the west. The mineralized zone at East Gold Brook ranged in thickness from 7-22 ft, and was mined to a depth of 150 ft.

Ore shoots mined at the Goldboro property consisted of a series of interbedded saddle reef vein structures in the axial zone of a major anticlinal fold. The fold limbs dip 78 degrees north and 65 degrees south respectively. The fold plunges easterly at 25 degrees. The limit of the ore on each limb plunged easterly at the same angle as the fold itself.

The Richardson ore shoot varied in width from 8-20 ft, and the entire width was mined and milled to a depth of 700 ft. Stoping was so extensive that in 1910 the workings caved in and operations halted when flooding problems could not be overcome. Due to the wide nature of the ore shoots, mining dilution was minimal, compared to most other Meguma-hosted gold deposits, where handsorting was common.

The Goldboro claims have been held by either Narex Ore Search Consultants or Onitap since the late ’70s. Exploration began in earnest early in 1987, when Petromet Resources (VSE) and Greenstrike Gold Corp. (ASE) took an option on the property and drilled a series of holes.

When the property reverted to Onitap later that year, the company conducted its own drill program and outlined possible reserves of 500,000 tons grading 0.15 oz. By the end of 1987, at least three major goldbearing reefs had been intersected stratigraphically below the Richardson belt. Another series of stacked reefs, all with good grades and widths, were encountered above the Richardson belt around the East Gold Brook mine. Onitap estimated that it then had possible reserves of 1.1 million tons grading 0.19 oz.

Exploration Orex took an option on the Goldboro property in February, 1988. After a review of previous data and another round of drilling, Orex announced in its 1988 annual report that the property had probable and possible reserves of 5.58 million tons grading 0.19 oz.

Orex is keeping its future plans for the Goldboro property under wraps until Onitap’s shareholders decide the outcome of its offer to Onitap.

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