Cove doubles Echo Bay’s reserves

Luck is a valuable asset in the mining business. And Echo Bay Mines of Edmonton got a liberal dose of it in 1987.

When Chairman Robert Calman and President John Zigarlick struck a $130-million deal with Tenneco Inc. late in ’86 for all of that company’s precious metals properties south of the border, Echo Bay had about 5.5 million oz of proven and probable gold reserves.

Today, after drilling 205 holes on just one of those former Tenneco properties — by former Tenneco geologist David Emmons no less — Echo Bay estimates it has 12.5 million oz of the yellow metal in reserve.

The property which has single- handedly shot the company’s reserves into the stratisphere is the Cove property, located just one mile from the McCoy mine in north- central Nevada which Echo Bay picked up in that same deal.

As of Nov 15, the cut-off date for information contained in a special report to shareholders mailed this week, Echo Bay says the deposit contains four million oz of gold and 250 million oz of silver.

If you convert the silver to gold at current market prices for both metals, the silver is equal to over 3.5 million oz of gold, giving a total of about 7.5 million oz.

Only five of the 205 holes reached depths of 1,500 ft. The majority are less than 1,000 ft deep.

The deposit, hosted in gently dipping Triassic sedimentary rock units consists of two zones. The upper zone is in limestone and shale where gold and silver, averaging as high as 0.185 oz gold and 1.8 oz silver per ton, are associated with clay. This zone extends to a depth of about 300 ft and accounts for about 500,000 oz of gold and 15 million oz of silver included in the total reserve.

“By the end of 1988, we expect to have an open pit, heap leach operation using the top portion of the Cove orebody,” Zigarlick says. “Based on current plans, our initial pit should produce about 225,000 oz of gold annually and about 2.5 millon oz of silver.”

Production costs are tentatively estimated to be in the order of $150(US) per oz.

About 100-300-ft of barren rock separates this upper zone from the lower zone.

Free gold and silver sulphides associated with abundant iron sulphides are hosted in the underlying conglomerates and sandstones.

Assays in this zone reach as high as 2.2 oz gold and 36.3 oz silver over thicknesses up to 20 ft, according to the company.

Many of these deep holes bottomed out while still in mineralization. So the deposit is still open at depth. The company has just obtained two rigs capable of drilling to depths of 1,500 ft.

Large diameter core drilling for metallurgical test samples has just started.

There is enough information to begin a feasibility study on the planned 5,000-ton-per-day mill.