High River to deep-drill Snow Lake gold property

Having encountered significant gold mineralization in a deep drill hole earlier this year on its Snow Lake property in northern Manitoba, High River Gold Mines (TSE) is gearing up for an additional drill program.

The deep hole, drilled in February to test the Dick zone about 500 ft. down-plunge from previous drilling, intersected two mineralized zones. One zone graded 0.304 oz. gold per ton over 33 ft. and included abundant visible gold. A second, newly discovered zone contained 70 ft. of anomalous gold values and included several narrow intersections grading up to 0.207 oz. gold over 2.7 ft.

The upcoming program, consisting of three to five holes, will test for deep extensions of the Dick and Ruttan zones and the newly identified mineralization.

High River President David Mosher told The Northern Miner he believes the program has the potential to add an additional 2.9 million tons to reserves. He says the presence of visible gold in some of the deeper holes suggests that ore grades improve with depth. A significant increase in reserves coupled with a higher gold price could ultimately lead to a production decision, he said.

The 438-hectare property covers the old Nor Acme mine which produced 620,000 oz. gold over 10 years. Its closure in 1958 was due to poor gold prices, as well as thinning ore shoots in the deeper (1,530- and 1,780-ft.) levels of the mine.

High River Resources optioned the property from Nor Acme Gold Mines in 1987 and carried out a $3-million underground program to define reserves in the old mine workings and below the deepest (1,780-ft.) level. A short time later, the two companies merged to form High River Gold Mines. Late in 1988, Inco Gold concluded an agreement with High River to earn a 50% interest by placing the mine in production.

Inco spent more than $6 million on underground exploration and delineated 4.2 million tons grading 0.19 oz. gold per ton in five zones: Dick, Ruttan, Upper Toots, Lower Toots and Hogg. Work by Inco confirmed the continuity of the mineralization and indicated the five zones were open at depth. Mineralization occurs in quartz-carbonate replacement zones in a sequence of intercalated mafic and felsic volcanic rocks. Much of the mineralization is preferentially concentrated in mafic pyroclastic rocks and appears to be related to the Howe Sound Fault.

The ore zones contain abundant arsenopyrite and, as a result, previous recoveries averaged only 80%. Stockpiled on the property are 274,000 tons of arsenic-rich concentrates grading 0.377 oz. gold. These concentrates have been optioned to Sikaman Gold Resources (TSE) in return for a 5% net profits interest and a 5% net smelter return on any gold recovered.

A feasibility study by Inco envisioned a 450,000-ton-per-year operation with an estimated capital cost (including mill construction) of $50 million. Assuming an 87% metallurgical recovery, Inco calculated the project would produce 68,000 oz. gold per year at an estimated cash cost of US$250 per oz. No production decision was made, however, and Inco Gold’s interest was transferred to TVX Gold (TSE) when the two companies merged in 1990. TVX decided not to earn a direct interest and now holds a 33% equity interest in High River.

Hudson Bay Mining & Smelting (TSE) also carried out a development study which estimated capital costs at only $20 million since it would modify an existing mill at Snow Lake rather than construct one.

Mosher says High River is exploring financing alternatives for the upcoming drill program with TVX and several other parties.

The Snow Lake property was recently declared eligible for Manitoba’s new Mining Tax Holiday. The tax holiday allows a new mine to be exempt from paying mining tax until profits exceed capital investment.

High River has an issued capital of 16.7 million shares and is trading at 81 cents, just off its 52-week high of 90 cents.