EXPLORATION ’93 — Holloway awaits feasibility study

A feasibility study expected early in the new year may determine the fate of the Holloway gold project in northeastern Ontario.

Hemlo Gold Mines (TSE), with a 58% direct and indirect ownership interest, says all physical activity related to a $12-million underground validation program has been completed. The operation is currently idle. “Although some final results are pending, management anticipates that a positive production decision will be made,” the company said in a release. Hemlo’s partners in the venture are Freewest Resources (TSE), with a 33.9% interest, and Teddy Bear Valley Mines (CDN), with a 15.3% interest. The project involves two adjacent properties lying 60 km east of Matheson and immediately north of the Holt-McDermott gold mine. A deposit straddling the boundary between the Holloway property of Hemlo and Freewest and the Teddy Bear property in which each of the three companies has an interest, was uncovered in 1988.

The direct interest of Hemlo in the project is 50.8%; the company’s indirect interest results from a 16.1% stake (as of the end of 1992) in Freewest and a 9.8% interest in Teddy Bear. Newmont Mines owns a small net profits interest in the Teddy Bear claims.

Exploration has outlined a preliminary reserve estimate of 5 million tonnes grading 8.4 grams gold per tonne, contained mainly in the Lightning zone which dips southward at 50-70.

Hemlo describes the zone as averaging 9 metres in width, extending along strike for 800 metres, with a vertical depth of 200-800 metres and open at depth. The deposit occurs within the Porcupine-Destor fault zone which hosts numerous area gold deposits.

According to Freewest, the Lightning zone is “a roughly tabular, broadly conformable zone of alteration and gold-pyrite mineralization that is hosted within volcanics at or near an east-trending, south-dipping footwall contact with ultramafic volcanics.”

An agreement among the companies will allow the owners of the Holloway and Teddy Bear properties access to the shaft and other infrastructure on the unitized block should they choose to mine outside of the block. The validation program began in August, 1992, with the installation of surface facilities, including a headframe and hoist room. A shaft was sunk to 441 metres and 1,100 metres of drifting was undertaken on the 400-metre level, as well as about 26,000 metres of underground drilling. In addition, two bulk samples of 4,000 tonnes each were extracted.

The objective of the work was to confirm the grade, continuity and minability of the deposit and update an earlier feasibility study. That 1991 study projected capital costs of about $60 million to develop a 1,500-tonne-per-day operation. The ore would be custom milled. “There are no plans for constructing a mill,” said Ian Atkinson, Hemlo’s vice-president exploration. Assuming a positive feasibility study, Hemlo anticipates a possible production startup in 1995, with its share of output totaling about 80,000 oz. per year at an operating cost below US$200 per oz.

Hemlo is 45.6% owned by Noranda (TSE). Teddy Bear, a junior mining company recently reorganized through the help of the courts, grew out of a syndicate created during the first half of this century. Freewest, also a junior, is based in Montreal.