Alaska placer mine enters fourth year of operations

A $150,000(US) development drilling program has begun at the Valdez Creek placer gold mine in Alaska, and stripping operations are expected to get under way there in early June.

The work program opens the fourth year of operations at the Valdez Creek mine, which is jointly owned by Camindex Mines, American Barrick Resources and Sullivan Mines.

Mining operations approved in 1986 were completed April 9 of this year, with 24,700 oz gold produced under the 1986 plan (13,400 oz in 1986 and 11,300 oz during the winter months of 1987). The mine produced 25,200 oz in 1985.

The operators forecast a production of 30,000 oz for the balance of 1987.

The delay in completing 1986 operations during that year was caused largely by problems related to ground-water flows, problems the owners believe have been resolved, reports a Camindex spokesman.

Gold production in 1986 fell short of the forecast amount largely because, in developing the 1986 forecast, too great an emphasis had been placed on several high grade holes, reports the spokesman. Grade of the pay gravel recovered in 1986 was consistent with grades of the previous two years. The 1987 plan assumes grades which are more consistent with previous years’ experience.

In order to meet its funding obligations and obtain working capital for ongoing operations, Camindex has retained Capital Canada to complete a private placement of a $10- million debenture, convertible into common shares of Camindex or gold bullion.

Existing debt holders of Camindex have indicated they will subscribe for $4.6 million of this issue in exchange for existing debt obligations, and additional new investors, including American Barrick, have indicated an interest in a further $2.6 million of this issue, the spokesman reports. The company anticipates commitments for the balance of this financing will be in place in the near future.

Meanwhile, American Barrick has agreed to provide additional funds to the project to alleviate Camindex’s shortfall and, in return, American Barrick will be granted an option on one million common shares of Camindex at 67 cents (C) per share. These transactions are subject to regulatory approval.