Dog and pony show in Europe spurs Seabright to new highs

What has been dubbed by the industry as a “dog and pony” show is probably what led to a round of heightened trading activ ity in the shares of Seabright Resources on the Montreal and Toronto stock exchanges this week. Some 268,000 shares traded on the week in Toronto and an additional 52,000 in Montreal, driving the stock up to an all-time high of $9.87. Warrants, which give investors two options, traded briskly (180,000) to a high of $6.37.

Two business trips: one by President Terence D. Coughlan to Europe and one by vice-president of finance Kenneth W. MacDonald to Toronto, designed to inform th e investment community of the company’s rapid progress over the past six months through slide presentations, may be responsible for the heightened interest in the stock.

Interest may also be building for another reason in New Brunswick, Prince Edward Island and particularly Nova Scotia where the company has all of its gold holdings. A series of three 10-minute news clips were aired on the local atv networ k during ratings week last week describing Seabright’s mill at Gays River and un derground exploration work at Beaver Dam and Forest Hill, the company’s two most promising properties. Seabright plans to be mining both deposits by May, 1987. The clips, which featured interviews with some of the highly qualified professionals Seabright has attracted in the past year , were realistically optimistic and unpromotional. In fact, the first clip did not even mention Seabright by name.

Maritime investors have already accounted for about 80% of Seabright’s $33 million in financing to date. (The company is currently completing another $3.5 mil lion flow-through deal). The big investors in Upper Canada have largely been l eft out of the picture,” Ken MacDonald says, as have the major mining compani es in the country.”

But vice-president of exploration Donald Pollock does not complain about this fact. The unwillingness of the majors to become involved in gold exploration in Nova Scotia has allowed Seabright to prepare for the long term by accumulating a massive ground holding that covers the majority of the turn-of-the- century producers in the region. Last week the company acquired an additional 1 ,800 claims bringing their total holdings to a little over 6,000, many of which are in the g rassroots stages of exploration.

Senior project geologist at Beaver Dam, Dan Duncan, says Seabright’s hectic exploration program is equivalent to cramming five field seasons into one.

On the Beaver Dam property, for example, where published proven (holes drilled on 25-m spacings) and probable (50-m spacing) reserves as at Oc t 29 are 1.56 million tons grading 0.29 oz gold per ton, stripping began a short eight months ago.

We are growing so fast the exploration department is going to be relocated in a rented office complex in Sackville, a suburb of Halifax,” Mr Pollock says. The company’s exploration budget for 1987 will be between $12 and $20 million, which is comparable to some larger mining companies in Canada.

(The only exception to the exclusion of the majors from Nova Scotia’s gold exploration boom is Inco Ltd. which is working with Northumberland Mine s on the Cochran Hill property near Forest Hill, N.S. Old underground workin gs there have be en dewatered and crews are waiting for the necessary financing to go underground to take a bulk sample. But compared to two of Seabright’s properties this project is moving at a snail’s pace.) Major concern

With all the activity generated by Seabright, the company is rapidly evolving into a major business concern in Nova Scotia. The company is on a fast track to the mine feasibility stage and hopes to be treating at least 400 tons per day by May; 300 from Beaver Dam and 100 from Forest Hill. But as mill superintendent Edward W.J. Thorton told The Northern Miner, the mill has the capacity to treat 1,200-1,500 tons a day.

To prepare the mill for processing gold ore Seabright has installed a jig at the discharge of the existing rod and ball mills, has purchased a Wilfl ey table t o concentrate the finer gold fraction, and has bought a new furnace for producin g dore bar. Mr Thorton, who mothballed the mill for Esso Minerals in 1981, plans to use two of four banks of flotation cells to recover gold from the Wilfley table tailings.

About 75% of the contained gold is recovered in the gravity milling stage, he says. Concentrates from the flotation step, because of its high arsenic content (ranging from 2% to 35%), will likely be sold to smelters overseas. Three thousa nd tons of ore from Forest Hill is being ground to about 80% minus 200 mesh in a bulk metallurgical test run. Indicated recoveries over all are the 87%-96% range. Beaver Dam

Based on the results of underground work to date, initial milling rates could increase rapidly over the first two years of production.

Since the inception of its exploration program at Beaver Dam, Seabright has put down 150 drill holes, outlining two parallel, continuous and high g rade gold-b earing zones in the south limb of a slightly overturned anticline. The zones are 2,200 ft long and 0.5 to 25 m wide defined so far to a depth of 1,200 ft.

An updated reserve figure which will include all drill results up to the end of November but not include underground sampling, should be available f rom mph Consulting of Toronto by mid-December, Mr Duncan says.

Crews are now advancing rapidly on underground development work (8 m a day), driving a crosscut through the gold-bearing zones from an access ramp collared in the host rock — a intercalated sequence of slates, quartzites and greywacke. It was collared between the Papke and Austin ore zones, two parallel, interbedded gold-bearing quartz vein systems where the gold occurs as coarse, visible grains and as fine grains in association with arsenopyrite.

Where ore widths are more than 3 m bulk mining methods such as blasthole mining could be used. The method would be similar to that used at the D ome mine in Timmins. But mining superintendent Patrick G. Keohane expects t hat somewhat less t han half of the production will come from narrower shrinkage stopes. Preliminary mining plans suggest mining costs will be in the order of $160-170(US) per oz before taxes and depreciation. With the company’s low capital expenditures, howev er, depreciation should be minimal.

Ore will likely be hauled to surface in 15-ton jdt 413 mine trucks initially, but conventional hoisting may eventually prove more economic. J.S. Redpath of No rth Bay has been contracted to do a production feasibility study which should be completed this March and geotechnical engineers from Golder Associates will make an initial site visit in January. Rock mechanics advice may follow .

Two alternatives for bringing electric power to the site are being considered in co-operation with the Nova Scotia Power Corp.

It takes about 50 minutes to haul a load of ore to the mill at Gays River and tenders for the long-term contract for this work are now being evaluated. Roads are being upgraded by the Nova Scotia Department of Highways in preparation for the heavy traffic.

So far, mining crews have encountered few problems with bit life in development drilling and the steeply dipping structure (80 degrees-85 degrees) means very few rock bolts are required to support mine openings. Long Term Potential

Two diamond drills continue to drill from surface to delineate the ore zones a long strike to the west and at depth. To the east the zone has been cut off by t he Mud Creek fault and to the west a deep (2,000-ft) hole is about one-third complete. Drilling is being done by Logan Drilling of Halifax .

To keep up with the flow of information from the field an ibm-pc will be installed at the Beaver Dam camp by the New Year. Crews will use geolog software deve loped by International Geosystems Corporation of Vancouver.

Production from Beaver Dam is subject to a royalty to Acadia Mineral Ventures. It will likely be based on the grade of the rod mill dischar ge and could be as high as 3%. The royalty could make o
re blending from other properties difficult. An investment report prepared by Stephen Kibsey and Jean Demers of Levesque, Beaubien Inc. in Montreal concludes that Seabright could gross $7.2 million in 1987 and generate 14 cents per share in net earnings based on the Beaver Dam property alone. Production from the F orest Hill property should increase those estimates significantly, however. (Next week: the Forest Hill property)