Holmer confirms Timmins mineralization (June 28, 2002)

The first eight holes of an ongoing drill program have confirmed previous results at the Timmins gold project of Holmer Gold Mines (HGM-V).

Between 1996 and 1998, Holmer outlined five near-surface parallel zones, dubbed Upper, Hangingwall, Main, Footwall and Ultramafic. Except for Ultramafic, the zones are associated with a 200-metre-wide corridor of intense deformation and alteration thought to represent the western extension of the prolific Destor-Porcupine fault.

In 1999, consulting firm Watts, Griffis and McOuat pegged resources at 1.4 million tonnes averaging over 9 grams per tonne. The resource is based on a cutoff grade of 5 grams and includes material in the inferred and indicated categories.

Holmer notes that most of the indicated resource lies within 350 metres of surface and carries the highest grades of mineralization encountered. For instance, using a 10-gram cutoff, a portion of the Main zone carries 176,000 tonnes at a grade of 28 grams.

The objective of the current campaign is to confirm and possibly extend the known gold zones to a depth of 350 metres and to test the western extension of the high-grade portion of the Main zone. Most of the indicated resource outlined by the engineering firm sits within 350 metres of surface.

The first three holes of the current program were drilled on the same gride line and each cut the Main zone. Hole 1 returned 27.65 metres (starting at about 124 metrs down-hole) averaging 2.46 grams, including five narrow, high-grade sub-intervals that account for a quarter of the overall section but 69% of its grade, on a weighted basis.

Results from hole 2 were similar, in that, 14% of the 20.65-metre length of mineralization intersected accounted for a third of its weighted average of 2.88 grams. Visible gold was seen in 2.1 metres of the core that ran 13.87 grams.

Hole 3 cut two separate intervals: 5.3 metres grading 1.96 grams (at 173 metres down-hole) and 0.47 metre (at 229 metres) grading 9.4 grams.

Holes 4 and 6 also were collared on the same grid line, which begins 50 metres from the line used for holes 1-3. The former hole pierced 16.3 metres (at 151 metres) of Main zone averaging 1.62 grams, including 15.61 grams over the first 0.83 metre and 13.73 grams over 0.45 metre, starting at 167 metres.Visible gold was noted in the smaller of the two sub-intervals.

Hole 6 cut two separate intervals of 4 metres (at 16 metres) grading 1.11 grams and 0.4 metre (at 24 metres) grading 3.64 grams. The intervals sit on the margin of the Main zone.

Another 50 metres to the east, hole 7 passed through the Vein 1, Vein 2, Hangingwall, Footwall and Ultramafic zones. Following are the significant results:

• 0.96 metre of Vein 1 (at 158 metres) grading 10.48 grams;
• 1.77 metres of Vein 1 (at 160 metres) grading 19.74 grams, including 0.6 metre grading 52.04 grams (including visible gold);
• 0.8 metre of Vein 2 (at 193 metres) grading 81.4 grams (including visible gold);
• 3.62 metres of Hangingwall (at 206 metres) grading 3.91 grams;
• 4.78 metres of Footwall (at 277 metres) grading 2.68 grams, including 0.45 metre grading 17.6 grams (including visible gold);
• 0.68 metre of Ultramafic (at 290 metres) grading 2.82 grams; and
• 1.9 metres of Ultramafic (at 294 metres) grading 1.41 grams.

Hole 8 was collared 20 metres west of holes 1-3 and passed through the Main zone. Thirty-five metres (at 186 metres) averaged 1.38 grams, including 0.47 metre grading 5.94 grams and 2.95 metres grading 7.87 grams. The smaller of the two sub-intervals carried visible gold.

About 4,000 metres of drilling are planned in all. Once complete, Holmer will assess the feasibility of driving a decline into the high-grade portion of the Main zone, with an eye to mining it.

Additionally, the company is carrying out down-hole geophysical surveys in the Ultramafic zone to determine its depth potential. In 1997, four of five widely spaced holes collared overtop of that zone cut mineralization between 550 and 850 metres below surface, with the deepest one, 97-56, returning between 6 and 20 grams from about 800 metres down.

In related news, TCC Ventures 1 has completed its due diligence regarding a US$6-million loan to Holmer. A definitive document is still in the works.

The loan would carry an annual interest rate of 8% and be repayable within 5 years. A closing fee of 6% is required as well, and, assuming regulators agree, Holmer will issue one million warrants to TCC Ventures. The warrants are exercisable for common shares at 30 apiece within the first year of the deal’s closing and at 35 in the following year.

Holmer recently raised $500,000 (less a 10% commission) by privately placing 2.5 million units at 20 apiece. A unit consists of a share and a warrant that can be exercised at 30 over the next year and at 35 in the following one.