ATLANTIC REPORT Underground work heats up

In Nova Scotia, an unprecedented number of underground exploration programs are either under way, about to commence or being contemplated for 1988 by eight junior exploration companies and two majors. At a recent meeting of the Maritime Minerals Exploration Discussion Group at Waverley, N.S., representatives of several companies discussed their current exploration programs and practically all had plans for underground exploration programs involving new access, rehabilitation of existing shafts and bulk sampling. The most advanced underground programs are at the Forest Hill and Beaver Dam properties of Western Mining of Australia, acquired from Seabright Resources (TSE) early this year. Although little news trickles out of the Western organization, it was confirmed that underground testing of gold-bearing structures is continuing at both properties to prove up reserves, verify structure and to provide feed for the company’s gold mill at Gays River. Activity was cut back recently at Beaver Dam and underground equipment from there has been moved to Seabright Exploration’s Moose River property.

Greg Isenor, exploration manager for Seabright Explorations (TSE), reported that the underground program at the Caribou property in Halifax Cty. is well advanced. “The workings have been dewatered and rock is being broken on three different headings,” he said. Twenty people are employed in the program. A new hoist has been installed and the mined rock is being brought to surface. An extension of the main ore zone has been found beyond where it faulted off and previous mining had stopped. Seabright plans to drive into it later. At the moment, the company is evaluating the hangingwall area of the main ore zone. An area where the zone is projected to surface may be stripped and perhaps mined by open-pit in the near future.

Seabright Explorations has also commenced an underground program at its Moose River property, also in Halifax Cty. “A decline into the Higgins Lawlor zone has just begun,” said Mr Isenor. Also, the Dr Sutherland shaft has been dewatered and “beautiful VG” has been observed there, according to Mr Isenor. The company is also excited about some gold-bearing argillites that puzzle geologists because they have appreciable free gold within them. This mineralized argillite may be similar to some discovered at the Fifteen Mile Stream property, Halifax Cty.

Regionally, Seabright is examining half-a-dozen major properties, including Dufferin, Miller Lake and Liscomb. The company will be drilling, trenching, and eventually taking bulk samples from all of them. Last year, the company evaluated 17,000 claims using helicopter-assisted till sampling; 50 anomalies were found and will be followed up.

“Caribou and Moose River are definitely our biggest properties and we’ll be taking bulk samples from both of them this year,” said Mr Isenor.

Another well-advanced underground program is at Tangier, Halifax Cty. Michael Riddell, president of Coxheath Gold Holdings (TSE) of Bedford, N.S., says his company’s underground program has shown that it has 230,000 tons of proven and probable ore grading about 0.3 oz gold per ton. Within a couple of months, a lot of it will be ready for full-scale mining. An additional 300,000 tons are accessible underground and there are another million tons of geologically-inferred ore. All reserves are from only three vein systems.

Coxheath has completed 11,500 ft of underground workings and constructed a small bulk sampling plant — gravity mill with a capacity of up to 200 tons per day — and an analytical fire assay lab. Coxheath hopes to collect 80% of the recoverable gold on site and 10-15% of the gold in a concentrate, which will be shipped to Europe for processing. About 5% of the gold will be lost and go out in tailings. To date, the project has cost $11.5 million. Lab and mill facilities may be available to process other companies’ samples.

Mining plans enabling the company to mine to a width of 4 or 4.5 ft are being developed. Shrinkage mining and cut-and-fill methods are being considered. Milling plans are to operate at 250 tons per day if physically possible with the present equipment. The company has stockpiled 17,000 tons of potential ore at surface from drifting and raising on the three vein structures.

“We recognize that we do not have sufficient ore developed to conservatively justify a mining operation at this time,” Mr Riddell said. “So, in addition to our mining plans, we will be trying to develop additional ore by raising within known zones and crosscutting to intersect several other of the 40 or more vein structures known to exist.”

By virtue of its recent successful take-over bid of Northumberland Mines (TSE) of Toronto, Halifax- based NovaGold Resources (TSE) now has the second largest land position in Nova Scotia after Western Mining, holding 2,500 claims covering 100,000 acres, as well as having two major underground exploration programs in progress in Guysborough Cty.

MPH Consulting of Toronto was contracted to manage the Goldenville property in 1987. Forty drill holes totalling 35,000 ft were completed by the end of last year, according to MPH’s Bob Chataway. Rehabilitation of the Stuart shaft, the last shaft used by Ventures before that company ceased operations in 1942, began in January. The Goldenville district produced 200,000 oz of gold from 500,000 tons of ore, with about three- quarters of it coming from the Stuart workings, primarily from the 400-ft and 260-ft levels.

Along with rehabilitating the Stuart shaft, the company will continue dewatering to the 600-ft level, which should be finished in a few weeks. The next step will be to sample the different leads and take a 5,000-ton bulk sample. Mr Chataway said the company hopes to obtain the same grades of gold the old-timers did, 0.25-0.3 oz over a minimal mining width.

The major structure on the property is the Goldenville anticline. Most of the earlier mining was from the south limb, where the beds are near vertical to overturned. There are about 46 vein structures on the south limb, and they seem to be repeated on the north. The north limb dips 45 degrees to the north, making mining more challenging.

NovaGold’s other underground program is at the Cochrane Hill property. In 1982, Northumberland Mines ran a small open pit test of 60,000 tons of ore which graded about 0.06 oz over a width of 75 ft. More recently, Inco Gold, as part of the Scominex joint venture, went underground via the Mitchell shaft and retrieved a 4,500-ton bulk sample. After analyzing its results, Scominex did not exercise its option to proceed and the property reverted to Northumberland. Undaunted, Northumberland itself began an underground program last January to access the area where the best drilling results had been obtained. The program included ramping down to the 200-ft level and crosscutting and drifting along various leads. Underground diamond drilling is now in progress and further underground development is being considered for the property.

Northumberland’s cyanide mill has been modified to a gravity plant, using components from a small plant set up at Goldenville by Northumberland in 1986. NovaGold will be using this plant to do all its future bulk-testing. The mill may be moved to Goldenville in the next couple of months.

NovaGold’s plans are to concentrate on making Cochrane Hill an open pit operation that can be brought to production quickly; to continue with underground operations at Goldenville in order to identify mineralization underground so a bulk sample may be removed to determine grade and tonnage; to bring the Murray Brook, N.B., gold and silver property into production by early ’89; and to get the Steeple Rock, New Mexico, gold and silver property into a cash flow position as soon as possible.

Ian M.T. McAvity of MVP Capital Corp. and Dr William L. Young of Northumberland were added to NovaGold’s board of directors at the company’s annual meeting recently.

Wayne Benham of MPH Consulting reported on the Fifteen Mile Stream property of Calgary-based Pan East Resources (ASE). Gunnar Gold (TSE) and Mill City Gold also of Calgary, have the right to earn a 37.5% interest in the property by contributing up to $5 million in property expenditures — to date, $2.5 million have been spent — and thereafter, 75% of further expenditures to production. Petromet Resources (TSE) would then have a 12 1/2% interest in the property, with Pan East retaining a 50% interest. Greenstrike Gold (ASE), a 50%- owned subsidiary of Petromet, previously earned an interest in the property which will be exchanged for about 1.5 million shares of Pan East, 27% of the issued common shares.

Fifteen Mile Stream differs from the typical Meguma gold district in that instead of having very thin argillite units, there are thick packages of gold-bearing argillite on the order of 100 ft thick. Most gold production in the past came from the Mother Siegel argillite zone.

In 1987, the property was covered with IP and magnetic surveys. Last winter, exploration shifted to outside the area of the workings. Forty-seven holes totalling 32,000 ft were drilled. Twenty-one of the holes were on the Novamin option ground east of the mine. This work located a new gold discovery in the central part of the Novamin claims, where gold was intersected along a strike length of 300 m drilled-off at 100-m intervals. It differs from known mineralization in the Egerton-Maclean workings in that there is a general lack of veining, but there is an increase of pyrrhotite in the argillites, usually aligned along cleavage planes. Several sights of visible gold have been encountered in each hole, not associated with quartz but in the argillites themselves.

Another 14 holes were drilled to test an argillite unit in the Egerton- Maclean workings where veins are fairly narrow, only 1-2 mm wide. There are occasional sights of 0 3/8gold in this area, but no real concentration of gold mineralization, said Benham.

Gunnar now plans to drill the “known” zone on 25-m centres in preparation for going underground later this year. Environmental engineering studies have been done and plans are being readied to protect the area from flooding. Gunnar intends to dewater and rehabilitate the Maclean shaft and then drift out along favorable vein structures and take a bulk sample for testing mineability. Diamond drilling has started, dewatering will commence in August and the company should be underground by October, with sampling done next winter. The estimated cost of the program is $4 million.

Two other major underground programs are about to get underway. Hecla Mining is undergoing site preparation to sink new underground access at the Mooseland property in Halifax Cty., optioned last year from Toronto-based Acadia Mineral Ventures (TSE).

Exploration Orex has commenced site preparation for an underground exploration program at Onitap Resources’ (TSE) Upper Seal Harbour gold district property, Guysborough Cty. Orex can earn a 25% interest in the claims by spending $6 million over the next year. The Boston-Richardson shaft will be dewatered and rehabilitated and a 2,000-ft decline will be driven to access newly discovered belts. Onitap estimates that the property has 1.2 million tons grading 0.2 oz.

Two companies with plans for underground programs within the next six months are Jascan Resources (ASE) of Toronto and Scotia Prime Resources of Halifax. Jascan is drilling the Dufferin Mine property in Halifax Cty., 180 km east of Halifax. The property was originally a joint venture with Novamin Resources, but Jascan acquired a 100% interest in it last March. Jascan is in the midst of a 10,000-ft drilling program over the eastern extension of the workings. The company may consider going underground as its next step, should assays over the next two or three months be positive.

“Scotia Prime sees an underground exploration program as the logical next step in the evaluation of the Lower Seal Harbour gold district property,” says President Craig Miller. The company has earned a 51% interest in the Guysborough Cty. gold property from Lotus Resources, a private Dartmouth-based company. Drilling in 1987 and a current joint venture drill program with Lotus has traced the extension of the 150-ft-wide mine structure to a vertical depth of 1,300 ft. The mine structure is not a typical Meguma-type vein deposit, but instead consists of a substantial crosscutting dilation zone that plunges 30 degrees westward. Several 20-ft-wide zones of 30-50% gold-bearing quartz have been encountered. Substantial tonnage potential has been inferred from the drilling, but bulk sampling will be required to determine mineable tonnage and grade. The deposit produced 435,000 tons grading about 0.09 oz gold from 1936 to 1941. Scotia Prime is 79% owned by Petroco of Texas (ASE) and Lotus is seeking a listing on a major Canadian stock exchange.