Dolphin to Spend Additional $3 Million on Cape Ray

Dolphin Explorations (VSE) says it plans to spend an additional $3 million this year on its main asset, the Cape Ray gold property in southwestern Newfoundland.

“By the end of this year, we should be in position to carry out a feasibility study to assess the viability of this property,” said President Robert McCallum at the company’s annual meeting.

Corona Corporation (TSE), sharing in the vision of a possible new gold producer for Newfoundland, will contribute $1.32 million of the total $3 million, which will be raised in a flow-through share offering, to maintain its 44% equity interest in the company.

Dolphin says it has also expanded its land position in the immediate Cape Ray area this year, giving it a total of 25,000 ha of prospective ground.

And reflecting its emergence as a seasoned junior in the Corona fold, Dolphin will begin trading on the Toronto Stock Exchange in early September, although it will maintain its listing on the Vancouver Stock Exchange. The company recently moved its corporate offices to Toronto.

Some $2 million of the financing will be used to fund phase two of the Cape Ray exploration program while $500,00 will be spent to complete phase one and $500,000 has been allocated to build a 20-km gravel access road. All necessary government approvals to begin road construction are in hand and tenders have already been issued to local contractors, and the expectation is that work will be completed by mid-November.

The Cape Ray project is located about 60 km from the producing Hope Brook gold mine.

McCallum said a good portion of the new funds will go toward extending the current program by adding a further 30,000 ft of surface drilling. Two drills will have to be added to the two now in service in order to complete the Phase II program by the middle of November, he adds. Dolphin’s work to date a t Cape Ray gives the project geological probable and possible ore reserves of 1,138,000 tons with a grade of 0.28 oz gold per ton. These reserves were calculated using a minimum mining width of 5 ft and a cut-off grade of 0.15 oz gold.

Some of the better results from this year’s phase one drill program include: (from the A vein of the 04 zone) 51 ft grading 0.38 oz gold, which includes 9 ft grading 1.1 oz gold; 11 ft grading 0.30 oz gold; 17.3 ft grading 0.28 oz gold; and 7.5 ft grading 0.32 oz gold. Other results include: (from B vein) 11.3 ft grading 0.20 oz gold, and 9 ft grading 0.30 oz gold.

During 1987, a $6-million exploration program was concentrated on four zones; the 04, 41, 51 and the Windowglass Hill zone. The 04, 41 and 51 zones consist of gold- bearing quartz veins and together make up what is known as the main zone which lies within the Cape Ray fault zone, a major shear structure. Dolphin’s work traced the gold-bearing structure of the main zone for over a strike length of 6,000 ft and to a vertical depth of 870 ft. McCallum said present reserve figures are from these three zones, with the 04 and 51 having the greatest potential to date. No ore reserves have been delineated to date on the Windowglass Hill zone located to the southwest of the main zone, and no work is planned for this year.

“We will concentrate on doing in-fill work to increase the reserves to the 1.5-2 million tons range at a similar grade to what we have now,” McCallum told The Northern Miner. “If we accomplish this we have a good chance of coming up with a positive feasibility study.”

During 1987 Dolphin extended a decline previously developed on the 41 zone to a depth of 200 ft below surface. McCallum describes the ground conditions as “difficult”.

“We have a graphite schist that’s very friable and very incompetent which, depending on how extensive it is, could mean a problem with the mining or result in a more costly mining method,” he said.

A 332-ton bulk sample was taken underground from the A vein of the 41 zone late in 1987 and Dolphin announced earlier this year it indicated an average grade of 0.22 oz gold and 1.48 oz silver. (Silver is reported to be intimately mixed with gold.) Preliminary metallurgical studies indicate a 95% gold recovery rate, the company said.

While the Cape Ray property will remain the company’s main focus, it will also carry out exploration work on its Phillips Brook gold property in Newfoundland (adjoining the Hope Brook mine) and on its Black river gold project near Hemlo in Ontario.

Preliminary work is also planned for three claim blocks staked earlier this year to the north of the Cape Ray Property. This 2,570-ha claim group covers an ultramafic volcanic formation which Dolphin describes as holding potential for gold mineralization. Twelve claim blocks totalling 6,500 ha were also staked in the Codroy River area, about 15 km northwest of the Cape Ray Property. These claims cover the Codroy fault where gold anomalies have been found.

And John Thompson, Dolphin’s vice-president exploration, said the 12,064-ha Cape Ray property itself still holds “considerable exploration potential”.