Expatriate drops Kudz Ze Kayah

Vancouver — A 2-year effort to advance the Finlayson base metal project in the Yukon has come to a halt, with operator Expatriate Resources (EXR-V) failing to make the $1-million payment needed to secure the crucial Kudz Ze Kayah deposit.

Seeking to overcome come metallurgical problems with its 60%-owned Wolverine base metal deposit, Expatriate inked a deal with Cominco in March 2000 to pick up the nearby Kudz Ze Kayah deposit. Cominco subsequently merged with diversified miner Teck to form Teck-Cominco (TEK-T). The junior’s idea was to consolidate the two deposits and blend the ores to make them acceptable for sale to smelters.

In May, the major zinc producer granted the junior a payment extension for its $10-million purchase of the deposit and surrounding ground. According to the amended agreement, Expatriate had to make an initial $1-million payment by Sept. 5. In return for the extension, Expatriate agreed to pay Cominco $100,000 plus interest on the $1 million from May 24 until the date of payment.

Since first announcing the acquisition agreement in March 2000, Expatriate drill-tested several targets in the Kudz Ze Kayah area and advanced the permitting requirements for the overall project. Late in 2000, a prefeasibility study indicated good economics for the joint development of the deposits, with the blending of ores yielding concentrates of acceptable quality.

With termination of the acquisition agreement, Expatriate will not hold any interest in the Kudz Ze Kayah ground. However, the company intends to continue exploring for a new deposit in the area, its goal being to blend the mineralized material with that of the Wolverine deposit to reduce contaminant levels. Expatriate still holds 60% of the 884-claim Wolverine joint venture with Atna Resources (ATN-T). In addition, Expatriate wholly owns 3,361 mineral claims in the Finlayson district, which cover 920 sq. km of exploration territory.

Wolverine

The Wolverine deposit contains a resource of 5.4 million tonnes grading 13.06% zinc, 1.59% lead and 1.43% copper, plus 1.76 grams gold and 378.1 grams silver per tonne.

Kudz Ze Kayah hosts an indicated resource of 11.3 million tonnes grading 5.9% zinc, 1.5% lead, 0.9% copper, 1.3 grams gold and 133 grams silver. Discovered in 1993, the deposit is a gentle-to-flat-dipping, tabular, massive sulphide body. Mineralogically, it shares many similarities with the Wolverine deposit, including a high selenium content.

Recent stratigraphic drilling on the wholly owned Goal Net property cut low-grade stratiform zinc mineralization over a 16-metre interval within a felsic tuff horizon. The nearest hole, 480 metres away, failed to encounter any zinc mineralization at a similar stratigraphic horizon.

In total, nine holes have been drilled on the Goal Net property, and these have identified two altered and mineralized horizons that span an area measuring about 5 by 6 km. Expatriate plans to perform additional geophysical surveys over the next few weeks to evaluate the Goal Net property, as well as a similar sequence of rocks 2 km to the south.

In other news, Expatriate recently acquired a 100% interest in the Aurex property in the Keno Hill district of the Yukon. The vendor was Gtech International Resources (GCH-V), formerly YKR International Resources.

According to the terms of the original option agreement signed in January 1999, Expatriate could acquire a 100% interest in the Aurex property by paying a total of $180,000 plus exploration expenditures of $350,000 and granting Gtech a 1.5% net smelter return royalty on the property. Property payments of $80,000 and exploration expenditures of $180,000 were incurred. Expatriate has agreed to issue Gtech 600,000 Expatriate common shares in lieu of the remaining $100,000 in property payments and about $170,000 in work commitments. Each royalty can be purchased for $1 million.

The Aurex property consists of 155 claims that are contiguous with Expatriate’s Nis, Sin, Rex and Fisher claims, 34 km northeast of Mayo.

Previous work by Gtech on Aurex included 379 shallow rotary percussion holes and four diamond drill holes, completed between 1992 and 1994. The best intersection assayed 7.9 grams gold over 6.1 metres.

During 1998, trenching on the adjacent McQuesten property, held by NovaGold Resources (NRI-T), yielded up to 6 metres grading 8.7 grams gold or 3.2 grams gold over 21 metres. The gold occurs in shallow, south-dipping skarn and quartz- veined shear zones near the northern boundary of the Aurex property.

Newmont Mining (NEM-N) stepped in in November 1999 and continued evaluation of the gold targets, with additional systematic soil and augur sampling and trenching during the summer of 2000. Geochemical surveys defined a large area of anomalous gold and arsenic in soils. Augur drill sampling outlined a 900-metre-long anomaly in bedrock that ranged from 0.05 to 0.52 gram gold per tonne and 0.34-2.41 gram arsenic per tonne.

Also, Newmont drilled five widely spaced holes to test the McQuesten mineralized structural zone. The best holes intersected 11.5 metres grading 1.5 grams gold and 37 metres grading 1.4 grams gold. Newmont dropped its option in August this year. Expatriate says there are still many attractive drill-ready targets on the property, especially the shallow-dipping skarn horizon. The junior is looking for a new partner to drill these targets.