NO HEADLINE (March 25, 1991)

TEXT:

Local mining analysts are not expecting 1991 to be a banner year for exploration in British Columbia. The general economic downturn, the gutted flow-through financing mechanism, bearish equity markets and weak precious metal prices are collectively taking their toll on junior companies which have typically dominated exploration activity in the province. Political uncertainties related to environmental and land use issues, unresolved native land claims, and the possibility of a New Democratic Party victory in the next provincial election are also influencing the general decline in exploration investment.

Nevertheless, industry observers predict spending in British Columbia will remain at healthy levels relative to other provinces, particularly in Eastern Canada where the impact of the loss of flow-through financing was felt the most.

With conventional funding sources drying up, more and more junior companies are teaming up with majors in order to continue work on their projects in Western Canada.

“A great deal of the raw work in 1991 will be completed by major mining companies,” says Don Poirier, a Vancouver-based mining analyst with Brink, Hudson & Lefever.

In 1990, total Canadian exploration expenditures declined significantly compared with 1989. But preliminary estimates of 1990 exploration spending in British Columbia totals about $160 million, higher than 1989 expenditures of $150 million. Some $83 million alone was spent in northwestern British Columbia’s “Golden Triangle” which covers the Iskut, Eskay, Galore Creek and Telegraph Creek camps.

The region surrounding the Mt. Milligan gold-copper deposit near Fort St. James, B.C., also attracted plenty of attention in 1990, particularly afterMDBO Placer Dome (TSE) aid about $260 million to acquire the project from Continental Gold and BP Resources Canada (TSE). This area should be relatively active again this year, even though exploration results on properties near Mt. Milligan didn’t generate much news or excitement last summer.

Northwestern British Columbia is expected to continue to attract the lion’s share of exploration expenditures in 1991. An important stimulus will be the construction of an access road being built this year to access the Iskut and Eskay Creek camps with their high profile mining and exploration ventures.

Assuming all goes as planned, partners Cominco (TSE) and Prime Resources Group (VSE) should have easier access to their joint ventured Snip gold mine along the Iskut River once road construction is completed.

Cominco, as operator, began production at the 330-ton-per-day underground mine early this year. The operation is expected to turn out about 93,000 oz. gold annually when up to full speed, with 60% to the account of Cominco and 40% to Prime Resources Group.

In the meantime, Cominco is hauling out concentrates produced through the operation’s flotation circuit (it also has a gravity circuit) by hover craft to Wrangell, Alaska.

The road could also give a new lease on life to the Johnny Mountain mine owned by Skyline Gold (TSE). The company closed the gold mine last fall after it was unable to develop new reserves with grades that would be economic to mine at existing gold prices.

Skyline is continuing exploration of its land holdings in the Iskut River area, either on its own or through joint ventures. Some 1,800 acres located adjacent to the Cominco-Prime Snip gold deposit was explored by Placer Dome (TSE) last year with mixed results. More work is planned for this summer.

The Iskut River camp is also being actively explored by companies associated with Murray Pezim’s Prime Equities (VSE). A $1.5 million program is in progress for the Black Dog massive sulphide prospect owned equally by Thios Resources (VSE) and Eurus Resource (VSE).

Only a small portion of the prospective Black Dog horizon has been tested to date, but drilling results have not been as good as expected. A number of other companies in the Prime Equities fold plan to or have started exploration programs on adjacent or nearby properties aimed at both precious metal and base metal targets.

The promising Tulsequah Chief project is still the most advanced massive sulphide project being explored in northwestern British Columbia. Cominco owns 60% of the former producer and is operator, while Redfern Resources (TSE) holds a 40% interest which it earned through exploration expenditures.

Redfern is expecting to release soon an updated preliminary reserve estimate for the project which will incorporate results from the 1990 program. Before that program began, preliminary reserves were reported as 5.8 million tons grading 1.6% copper, 1.3% lead, 7% zinc, 0.08 oz. gold and 2.94 oz. silver per ton.

The initial phase of this year’s continued deep drilling program will begin with three or four holes, with the drilling designed to extend the H lens to depth. Details of the subsequent exploration phases, such as in-fill drilling, will be determined as work progresses.

Crews are expected to be mobilized in April, and all heavy equipment items are already on site. The property is located near tidewater, not far from Juneau, Alaska.

Further south and to the east, activity in the Eskay Creek region will be dominated by the ongoing development of the rich Eskay Creek project owned by Prime Resources Group and Stikine Resources (TSE). Two majors, Corona (TSE) and Placer Dome (TSE), each hold substantial interests in the high grade polymetallic (precious and base metals) project.

Corona is looking to complete a feasibility study this year, and envisions the start of production in late 1992 or early 1993. The two majors have called off discussions to determine what role each company will play as the project moves toward production.

Besides its interest in Eskay Creek, Placer Dome owns and is continuing work on its Kerr copper-gold deposit in the Sulphurets camp south of Eskay Creek. The major acquired this porphyry deposit from two juniors which discovered it during a gold exploration program in 1988.

Porphyry-type copper-gold deposits are an important exploration focus for the Galore Creek camp to the north, despite the region’s rugged terrain and lack of infrastructure. In particular, the peripheries of existing deposits in the region are being actively explored for precious metal deposits or gold- rich copper zones.