Companies zeroing in on Stewart area

Once again, the historic mining district of Stewart in the Coastal Mountain Range of northwestern British Columbia is abuzz with activity.

By far the most comprehensive initiative under way is a $9-million development program by Royal Oak Mines (RYO-T) on its Red Mountain gold project, 10 km east of the town of Stewart.

The Washington state-based company acquired the property in September 1995 from Barrick Gold in exchange for a $3-million work commitment over three years.

More than US$30 million was spent between 1991 and 1994 defining and developing the Marc, AV and JW zones. Minable reserves stand at just under 3.1 million tons grading 0.26 oz. gold per ton. An additional 525,000 tons of mineralized material averages 0.2 oz.

Gold mineralization occurs in structurally controlled lenses of pyritic replacements and breccias hosted by volcaniclastics and intrusives.

Royal Oak’s objective for 1996 is to expand minable reserves by 500,000 oz.

to 1.3 million contained ounces through underground and surface drilling of the down-plunge extension of the deposit. The existing decline is being extended 1,000 ft.

A total of 13,500 ft. of surface drilling and 250 ft. of drifting have been completed to date. In recent drilling, hole 236 intersected the down-plunge of the deposit some 1,650 ft. vertically and 650 ft. horizontally from the last intersection. The hole returned a 10.5-ft. interval averaging 0.18 oz., including a 3.6-ft. section grading 0.3 oz.

Royal Oak now believes the plunge of the deposit may be steeper, placing it closer to the valley bottom, which would make it more accessible and economic to mine.

The company is looking at putting the Red Mountain project into production by the fourth quarter of 1999 at an annual rate of 150,000 oz. over a mine life of 10-15 years. Operating cash costs are projected at US$150 per oz. An updated feasibility study will be completed this year.

In the second quarter of 1996, Royal Oak earned $3.7 million (or 3 cents per share) on revenue of $54.8 million, compared with $9.7 million (8 cents per share) on $53.5 million for the same period in the previous year.

For the first half, net income totalled $5.1 million (or 4 cents per share) on revenue of $105.8 million, compared with $13.3 million (11 cents per share) on $100.8 million in the first half of 1995.

The drop in earnings is due to lower interest-related income following the acquisition of the Kemess gold-copper project and Consolidated Professor Mines.

Gold production of 91,447 oz. in the second quarter brought first-half production to 179,643 oz. — a 2% reduction from the year-earlier period.

Cash costs for the 3- and 6-month periods were lower than in the same periods in 1995, declining to US$315 and US$331 per oz., respectively.

At the nearby Willoughby gold project, 3.7 miles east of the Red Mountain project, partners Camnor Resources (CMB-V) and Gold Giant Minerals (GNR-V) have begun a $1.3-million program consisting of 8,000 ft. of underground drilling on the North zone, and a further 6,000 ft. of surface drilling on the Wilby and other zones of interest.

The Willoughby project comprises 12 mineral claims totalling 186 units and is in a geological setting similar to that of the Red Mountain property.

Exploration work over recent years identified 12 mineralized vein zones occurring in both altered Hazelton Group vocaniclastics and Goldslide intrusive rocks. Of these zones, the North and Wilby zones offer the best potential to host significant gold-silver tonnages.

The North zone occurs in a 200-by-1,000-ft., northwest-trending, altered feldspar-porphyry intrusive. Previous drilling has tested 330 ft. of strike length and a downdip length of up to 250 ft. The zone is extensively faulted, with both vertical and horizontal offsets.

Select results from past drilling include 9.5 ft. of 11.17 oz. gold and 6.23 oz. silver per ton from the 1995 exploration program, and 38.4 ft. of 1.17 oz. gold and 3.2 oz. silver from 1994.

The zone is open along strike and to depth, and to drill-test it systematically the joint-venture team began constructing a 330-ft.-long adit in the fall of 1995 and completed 180 ft. prior to winter shutdown.

The remaining portion of the adit will be finished after the first phase of underground drilling.

The Wilby zone is a series of northwest-striking, semi-massive-to-massive, pyrite-pyrrhotite lenses. One of the lenses is traced along a strike length of 213 ft. and a downdip length of up to 130 ft. The zone ranges from 10 to 26 ft. in width.

During the 1995 program, the northernmost hole intersected 42.6 ft. grading 0.39 oz. gold and 1.85 oz. silver, while a second hole returned 19.3 ft. of 0.46 oz. gold and 1.57 oz. silver. At least 3,000 ft. of surface drilling are planned for the Wilby zone.

An agreement whereby Royal Oak could acquire up to a 35% interest in the Willoughby project from Gold Giant is currently in dispute, and the latter has requested an arbitrator be appointed to settle the matter. In the meantime, Gold Giant is meeting all cash requirements to maintain a half interest in the joint venture.

On the jointly held Clone property in the Red Mountain area, Teuton Resources (TUO-V) and Minvita Enterprises (MVE-V) have, to date, completed more than 12,000 ft. of diamond drilling.

The partners are testing a series of sub-parallel, shear-controlled, high-grade veins and stockworks identified late last year by trenching and shallow drilling. Surface exploration work is also under way on other areas of the property.