EXPLORATION 1998 — Fairbanks district home — to promising projects Barrick, Newmont among explorers

The Fairbanks district in central Alaska is in no danger of losing its reputation for being a hotbed of mineral exploration and production.

The Fort Knox gold mine is up and running, and the True North project appears to be the next in line. In the meantime, several properties in the area have changed hands, reflecting a greater contribution from senior gold producers.

* Fort Knox — Operator Amax Gold (AU-N) produced 320,522 oz. gold during this mine’s first year of operation, representing 44% of the company’s 1997 production. Cash costs for the year averaged US$170 per oz.

In an exploration program, Amax drilled 12 holes on an adjacent property, in which Teryl Resources (TRC-V) owns a 20% interest. In the 12th hole, Amax hit 170 ft. of mineralization grading 0.048 oz. gold per ton starting from the surface.

By the end of the year, exploration by Amax had added 450,000 oz. to Fort Knox’s proven and probable reserves, which now stand at 4.1 million oz. gold (170 million tons grading 0.024 oz. per ton). Reserves were calculated at a gold price of US$375 per oz., though the company expects no material change if the price were to settle at US$350 per oz.

The company has 137 million tons of additional mineralized material grading 0.022 oz. per ton.

Meanwhile, Amax has announced plans to merge with Kinross Gold (K-T). The deal calls for each Amax share to be converted to 0.8 share of Kinross.

Cyprus Amax Minerals (CYM-N), 59%-owner of Amax, has already approved the proposal, which is expected to close in May.

* True North — Newmont Mining (nem-n) plans to spend US$3.6 million exploring the project this year. The major is earning a 65% interest from La Teko Resources (LAO-V), having paid US$6 million to La Teko and spent US$11 million through the end of last year.

The True North joint venture recently added more than 4,000 acres to the project’s dimensions by acquiring land to the northeast and southwest controlled by Placer Dome (PDG-N).

Resources for the deposit decreased slightly to just under 800,000 contained oz. (10.2 million tons grading 0.078 oz. per ton), within a total geological resource of 1.3 million oz. This is Newmont’s first published resource on the deposit, based on a gold price of US$350 per oz. The previous estimate, published by La Teko, used a price of US$400 per oz.

* Golden Summit — Down the road, Barrick Gold (ABX-N) has committed to a second year at the Golden Summit project. The company agreed to make an equity investment in International Freegold Mineral Development (ITF-V), which controls the 22,000-acre property.

Barrick agreed to buy 1.2 million shares of Freegold at $1.25 per share.

This represents the second stage in a US$10-million equity investment to earn a 70% interest in Golden Summit.

The two anticipate spending US$1.5 million on exploration in 1998. In total, 35,000 to 40,000 ft. of drilling are planned.

In addition, Freegold acquired from Placer more than 18,000 acres of land situated immediately north of the Golden Summit property, which Freegold now calls the Vanguard project. The company plans to spend US$300,000 in 1998 and is looking for a joint-venture partner. Placer retains a 1.5% net smelter return royalty interest.

Placer Dome left the main part of the district north of the town of Fairbanks, dealing off more than 20,000 acres of ground to Newmont and Freegold. However, Placer remains in the district by optioning to buy a 20-sq.-mile land package situated west of town and owned by Silverado Gold Mines (GODF-Q).

Silverado chose not to include the Ryan Lode deposit in the deal with Placer. The junior is purchasing the property from La Teko; it contains reserves of 822,000 oz. gold (14.5 million tons grading 0.054 oz. per ton).

Silverado still owns 51 sq. miles in the Chatinika property, situated 15 miles northwest of Fairbanks, whereas La Teko holds 28,000 acres in the Twin Buttes and Juniper projects, just northeast of the district.

* Elsewhere — Outside the Fairbanks district, in the southeastern portion of Alaska, Teck (TEK-T)and Sumitomo Metal Mining of Japan have produced a preliminary resource estimate for the Pogo gold deposit.

The resource totals 10.9 million tons grading 0.41 oz. gold (or 4.5 million oz. gold). Mineralization occurs as flat-lying veins up to 24 ft. thick buried at a depth of about 350 ft.

To ensure easier access to the site, Teck is constructing a winter road up the Goodpaster River.