Drift cuts 96 ft. of 0.31 oz. gold at Paymaster

Assay results from the Paymaster gold mine project near Timmins, Ont., have prompted mining executive Pat Sheridan to purchase an 18.5% stake in American Reserve Mining (ME), a partner on the project, from Tap Capital.

Placer Dome (TSE) and American Reserve announced recently that the first set of muck assays from an underground drifting and crosscutting program at the 6,025-ft. level returned 96 ft. of 0.31 oz. gold per ton (with a true width of about 90 ft.). The last 40 ft. of the crosscut assayed 0.44 oz.

“It’s all very encouraging,” said Bob Perry, general manager of Placer’s Dome mine here. “But, we’re being cautious because the area is not fully understood geologically at this point.”

Placer Dome, as operator, has a 64% interest in the Paymaster project. American Reserve retains a 36% interest.

American Reserve described the zone as 200% greater than the ore zone at the Paymaster’s previous party wall (property boundary). Widths intersected there average 30 ft. at an average grade of 0.30 oz. per ton.

American Reserve common shares, trading heavily, gained 42 cents in the two business days after the announcement was made, closing at 70 cents on June 4. Sheridan managed to scoop up his 2.62 million shares for 40 cents each.

Sheridan, who controls a number of junior mining companies including Madeleine Mines (TSE), has been invited to sit on the American Reserve board of directors.

His involvement in the Paymaster project is not something new. Through a company called Diepdaume Mines, he used to hold a 100% interest in all reserves below the 5,000-ft. level, including the area of the new discovery immediately east of the original Paymaster mine claims.

In 1989, American Reserve and Placer bought that interest for $2.1 million and has since spent over $30 million on dewatering, rehabilitation and exploration.

Perry said the zone in question is an extension of the Paymaster’s 36 and 37 zones. He added that the area abuts a talc zone, which causes some additional ground pressures.

At present, the two companies are logging and splitting core from six drill holes below the 6025 level.

American Reserve recently reported it is negotiating the sale of its interest in the Paymaster property. In light of the new discovery, the negotiations will likely be put on hold until the zone has been examined in grater detail, said a company spokesman.