Gunnar, Pan East, Mill City on Fifteen Mile Creek bet

Wayne Benham of MPH Consulting reported on the Fifteen Mile Stream property of Calgary-based Pan East Resources (ASE). Gunnar Gold (TSE) and Mill City Gold also of Calgary, have the right to earn a 37.5% interest in the property by contributing up to $5 million in property expenditures — to date, $2.5 million have been spent — and thereafter, 75% of further expenditures to production. Petromet Resources (TSE) would then have a 12 1/2% interest in the property, with Pan East retaining a 50% interest. Greenstrike Gold (ASE), a 50%- owned subsidiary of Petromet, previously earned an interest in the property which will be exchanged for about 1.5 million shares of Pan East, 27% of the issued common shares.

Fifteen Mile Stream differs from the typical Meguma gold district in that instead of having very thin argillite units, there are thick packages of gold-bearing argillite on the order of 100 ft thick. Most gold production in the past came from the Mother Siegel argillite zone.

In 1987, the property was covered with IP and magnetic surveys. Last winter, exploration shifted to outside the area of the workings. Forty-seven holes totalling 32,000 ft were drilled. Twenty-one of the holes were on the Novamin option ground east of the mine. This work located a new gold discovery in the central part of the Novamin claims, where gold was intersected along a strike length of 300 m drilled-off at 100-m intervals. It differs from known mineralization in the Egerton-Maclean workings in that there is a general lack of veining, but there is an increase of pyrrhotite in the argillites, usually aligned along cleavage planes. Several sights of visible gold have been encountered in each hole, not associated with quartz but in the argillites themselves.

Another 14 holes were drilled to test an argillite unit in the Egerton- Maclean workings where veins are fairly narrow, only 1-2 mm wide. There are occasional sights of gold in this area, but no real concentration of gold mineralization, said Benham.

Gunnar now plans to drill the “known” zone on 25-m centres in preparation for going underground later this year. Environmental engineering studies have been done and plans are being readied to protect the area from flooding. Gunnar intends to dewater and rehabilitate the Maclean shaft and then drift out along favorable vein structures and take a bulk sample for testing mineability. Diamond drilling has started, dewatering will commence in August and the company should be underground by October, with sampling done next winter. The estimated cost of the program is $4 million.