Asarco drops Frasergold after spending $3.4 million

After spending $3.4 million on exploration during the past two years, a unit of Asarco (NYSE) recently dropped all rights to earn an interest in the Frasergold property under the terms of a 1990 option agreement with Eureka Resources (VSE).

Frasergold is the fourth British Columbia project to be dropped by Asarco in recent months. The American-based major also elected not to continue exploring Westpine Metals’ Taseko copper-gold project, Kookaburra Gold’s Col copper-gold project and an early stage copper prospect near Lac La Hache. Located near Williams Lake, B.C., the Frasergold property is reported to host open pit preliminary reserves of 12-13 million tons grading 0.054 oz. gold per ton to vertical depths of 328 ft., and over a strike length of 1.8 miles.

Last year’s reverse circulation drilling program was focused on the Main zone, which is now reported to contain undiluted preliminary reserves of 3.54 million tons grading 0.05 oz. gold per ton over a 2,624-ft. strike length, and to vertical depths of 246-328 ft. These reserves are based on a cutoff of 0.02 oz. gold, after cutting high values to 0.3 oz. gold. The waste-to-ore ratio with a 50% pit wall is estimated at 5-to-1.

Eureka President Jack O’Neill said Asarco’s decision to terminate its option agreement at Frasergold was based on the fact that the drill established grades of 0.05-to-0.06 oz. gold per ton “could not substantiate a successful mining operation at current gold prices.”

The company had hoped that last year’s bulk-sampling program would confirm potential for a 30-50% upgrading factor as indicated by limited bulk sampling in the past. While samples collected in one area of the deposit did substantiate a 30-40% upgrading factor, samples collected from a second area returned values comparable to or slightly less than drill-indicated grades. Eureka said the uncertainty of establishing a potential upgrading factor means reserve estimates are based on drill assay data only. The company is now reviewing all technical data to formulate its 1992 plans for the property.