Breakwater aiming to develop Estrades

To earn that level of interest in the polymetallic massive sulphide project, Breakwater will have to bring it to final feasibility before the end of this year, then finance the property to production.

Estrades is currently owned 60% by Golden Group Explorations (VSE) and 40% by Golden Hope Resources (VSE). Breakwater in turn holds a 9.6% equity interest in Golden Group and a 7.2% interest in Golden Hope.

To get out of the option agreement with Teck, and into the new one with Breakwater, Golden Group and Golden Hope will have to pay Teck $500,000 and assign it a 2% net smelter royalty applicable only after the recovery of $72 million in net operating profits.

Breakwater will earn its interest in stages. By spending three million before year-end it will have 20%, with the additional 50% interest to be earned by financing the property to production and by paying $500,000 to Golden Hope and Golden Group.

The two juniors are required to contribute up to $1.2 million of Breakwater’s $4.2-million 1989 program of metallurgical testing, deposit delineation, exploration drilling, road construction and engineering studies.

The Main zone on the Estrades property has been explored by 243,569 ft of drilling in over 203 holes during the past four years. Mineable reserves were previously reported by Golden Group and Golden Hope as 1,252,000 tons grading 0.15 oz gold, 4.15 oz silver, 0.92% copper and 8.93% zinc to the 1,300-ft level. These reserves are based on the feasibility of mining probable and possible reserves diluted to a minimum mining width of 6.5 ft with a cut-off net smelter value of $69 per ton.

Total geological reserves as calculated by Noramco Mining engineers are 2,268,000 tons grading 0.12 oz gold, 3.59 oz silver, 1.02% copper and 7.71% zinc contained in three separate zones called the West, Central and East.

William Diment, Breakwater’s vice-president operations, said 13 holes of a 22-hole delineation program and a 10-mile section of an all-weather road to access the property from Joutel have been completed.

Engineering studies are also underway to form the data base for the final feasibility study scheduled to be completed in October. Depending upon the results of the study, Diment said underground access would be by shaft, ramp or a combination of both.

Some 33,000 ft of exploration drilling will also be carried out along trend and to depth at Estrades with the hope of increasing reserves. So far the deposit has been explored by surface drilling to a depth of about 2,000 ft.

“We believe the existing reserves are sufficient to support a limited sized mining operation,” said Diment, adding that the exploration program is designed to enhance the present reserve level.

Breakwater is also currently reviewing all aspects of the metallurgy.

“It is a polymetallic which does create some problems,” Diment said, “but at this stage I don’t think the metallurgy is as complex as indicated by some of the earlier tests.”

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