Construction at Cheni Gold Mines project on schedule

Construction work at the Cheni Gold project in the Toodoggone area of British Columbia is on schedule, but a switch from shrinkage to blast-hole stoping is expected to increase development costs over those originally forecast. Commercial production is scheduled to commence in the fourth quarter and the mine will be the first in the region since the Baker mine project closed several years ago.

A number of junior companies there are irate over Cheni Gold Mines (TSE) policy of charging for the use of its Ominica mine road which was partly funded by a loan from the B.C. Government. In addition to being charged $500 per truck load, companies are being asked to sign what many have described as an “onerous waiver of liability” which, among other things, gives Cheni the right to launch a law suit against them but not the reverse. Several companies have refused to sign it and the situation is reported to be in the hands of the government.

In any event, it’s been another busy year for companies there including Energex Minerals (VSE) which should complete over 20,000 ft of drilling this year on its property. A good portion of the program has been directed at the West Bonanza zone where additional reserves are being developed, the company confirms. This season’s program, which was expected to wind down by the end of September, will cost about $1.7 million, said Arne Birkeland, president.

Reserves have increased in the Thesis 2 zone and a large zone called the Bingo was found earlier this year on strike with the Thesis to the north. Birkeland said that copper values occur in this new zone but he noted that trenching yielded generally low gold values. “We are still searching to put together some fairly continuous high grade shoots within the lower grade material,” he pointed out.

The Bonanza West will be tested further along strike this year and several deep holes are planned on the Bonanza itself, he said, which will hopefully intersect the zone at about 1,000 ft vertical. Energex mounted a surface exploration program on the JD property this season which Birkeland said hadn’t been looked at since it was returned to Energex by Kidd Creek in 1984.

He confirmed that “some highly anomalous gold and silver soil anomalies” were outlined which will be targeted for drilling next year. Some of the mineralization is similar to Cheni Gold’s Lawyers deposit and he viewed it “as a major development on the property.”

Wright Engineers is preparing a feasibility study for the project and the final draft is expected shortly, he said. With board approval and adequate financing, the company could begin mill construction in Vancouver over the winter months, followed by project development this spring. The feasibility study will consider a 200-ton-per-day modular mill and a small heap leach operation in conjunction with conventional milling.

If market conditions are bad Birkeland said they might consider developing a small heap leach operation without having to secure financing. He said they could do it with the capital they have in the treasury which is about $3 million. “The capital requirements for the integrated operation would be around $10 million,” he estimated.

Rather than install a conventional mill right off, Birkeland argued they would go in with a seasonal heap leach operation and develop the conventional milling aspect from cash flow. All the zones are stripped and engineering and design work would get under way as soon as the company makes a producti on commitment, he claimed.

Nexus Resource Corp. (TSE) had a commitment of $600,000 this year for exploration work on Bond Gold Canada’s Silver Pond property in the Toodoggone. One of their main exploration targets was the on-strike projection at depth of Cheni Gold’s Cliff Creek orebody into the Silver Pond ground.

The results don’t appear to have been all that encouraging because the two partners had planned a $550,000 second phase program which never got under way. It’s still uncertain whether Nexus will maintain its option on the property.

Multinational Resources (VSE) is drilling its Baker mine property and reportedly has encountered gold- silver mineralization on strike with its A and B zones. The company initially planned 5,000 ft of drilling but that program has since been expanded to just under 7,000 ft The Northern Miner understands.

Esso Minerals completed about 12,000 ft of drilling on International Shasta Resources (VSE) Toodoggone area property this season. Its budget was about $700,000 and the company will have to spend $2 million within three years for a 28% interest. Esso doesn’t have a vested interest in the property at present; and with Imperial Oil’s announcement (N.M., Sept 26/88) that it planned to sell Esso Minerals there is a good chance that International Shasta will get the property back.