Eagle River Hemlo’s future `cornerstone’

(Harvey, who also heads Noranda Exploration Co., was primarily responsible for bringing the Golden Giant mine at Hemlo, now one of the largest and lowest cost gold producers in the western world, into the Noranda fold six years ago).

Quick to grasp the potential of this new area, the Hemlo-Noranda team is now the largest claim holder (more than 45,000 acres), as well as holding substantial equity investments in some of the camp’s main players — Central Crude (TSE), Windarra Minerals (TSE) and Granges Exploration (TSE). It has also negotiated option agreements with a host of the junior companies including Joutel Resources (TSE), Dominion Explorers (TSE), San Paulo Explorations (ASE), Caribbean Resources (VSE) and Oil City Lubricants Ltd. (VSE), giving it a stake in most of the known favorable structures. Ext ensive exploratory drill commitments will be carried out this year.

But it is the Eagle River joint venture project (60% Hemlo; 40% Central Crude) now looming as the camp’s darling, The Northern Miner gathered following a site visit. While underground work is just getting started, close to 250,000 ft of surface drilling has been completed indicating a very promising ore picture. Furthermore, recent bulk sampling results strongly suggest there will have to be a significant upgrading in both grade and tonnage over and above the reported 1.77 million tons of 0.51 oz uncut or 0.25 oz cut.

With a full scale feasibility study now under way, a production decision could come by year-end. “We could now be looking at a 1,000 ton mill rate” says Harvey, who is seldom prone to overstatement.

Somewhat less reticent was Central Crude’s affable president, Toronto lawyer Richard Nemis who already sees this project as a “cash cow for Hemlo Gold.”

Certainly Nemis has every reason to be happy these days, for he has a unique and very comfortable financing deal now firmed up with cash-rich Hemlo Gold that will provide all funds required to maintain his 40% interest right through to production. It has underwritten a private placement of l.5 million treasury shares — half already taken at $6 to provide the Crude treasury with $4.5 million — with the other half to be taken down within a year at $7 per share. In addition, Hemlo has agreed to provide Crude with a loan of up to $18 million repayable from production.

For providing this loan financing, Hemlo will receive warrants to purchase an additional 1.5 million shares at $7. This would give that company 45% of the 8.5 million Crude shares then outstanding, a figure that will likely be raised to 51% through additional purchases on the open market.

This year’s budget for the Eagle River project is estimated at $7.8 million of which Central Crude’s share will be $3.1 million.

Although no diamond drilling was under way at the time of our visit, the site was a hive of activity. A 20-km road has now been completed from the Magnacon mine, with the finishing touches being put to construction of a first class 50-man permanent camp (already full and likely to be expanded).

A heavy program of road construction continues, with some 30 trucks on the job, together with backhoes, dozers and other equipment.

Two diamond drills are ready to move in, with another three or four machines to follow as roads make established drill targets accessible. This year, $1.5-$2 million will be spent on exploratory drilling at the Eagle River project, with another $1 million earmarked for drilling on other associated properties. Underground crews move in

A contract for the underground work has been let to J. S. Redpath Ltd. which already has crews on the job, starting a 1,750-ft access ramp into the main No 8 zone. Spectacular as seen from a helicopter, this is a strong quartz vein structure within a granodiorite intrusive that has been cleared and drilled for a strike length of 6,400 ft. It is still open at both ends.

Two levels will be established initially, with some 3,000 ft of drifting called for in this year’s program, with crosscuts to drill test parallel structures. Also, a small test stope will be established to provide 20,000 tons of ore that will likely be trucked 75 km north to the Hemlo mill for grade determination.

“We should be into the ore by the end of August,” project manager David Powers told The Northern Miner.

It is obvious that Noranda Exploration, the operator, is going to do a very methodical and thorough job.

Because of the very nature of this particular gold occurrence, management has maintained from the start that over-all grade determination would be difficult. For example, five bulk samples totalling 100 tons were recently taken from surface exposures on the main vein and shipped to the Lakeview Laboratory for grade and metallurgical determination. Only three of these were taken from areas originally included in the drill-indicated ore reserves, the other two being taken from locations previously thought barren. Officials were therefore both surprised and pleased that these so-called barren bulks assayed 0.34 oz and 0.53 oz gold per ton respectively.

There are a number of other known vein occurrences on which limited work has returned some promising gold values and on which exploratory surface drilling will soon be resumed. Of particular interest is a discovery made late last year. Known as the Forks vein, it is five km southeast of the main No 8 zone and apparently along this same structure. Stripping has exposed much free gold, returning assay values up to 6.7 oz. Drilling here will get under way shortly. $2.9 million for Noront drilling

Central Crude has a big stake in Noront Resources (VSE), a junior company under the same management and wing. With five properties under option from parent Crude in the Mishibishu area, it too is financed for a sizeable drill program. It has $1.7 million in its treasury now, and has just arranged for an additional $1.1 million, President Nemis points out.

Nemis is particularly excited about a soon to be drilled copper- gold discovery Noront recently optioned from Noranda Exploration in the Lake of the Woods area of northwestern Ontario. Exploratory drilling, too, is soon to resume on a large spread of ground it holds under option from Noranda in Newfoundland.

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