Hot Plays STAGGERING POTENTIAL AT CARLIN

As the dominant property-owner and principal mine-finder along the Carlin gold trend, near Elko, Nev., Newmont Gold has never felt the need to boast about its activities. A portfolio of 15 deposits and reported reserves in excess of 20 million oz has given the New York subsidiary of Newmont Mining a sense of security that precludes the histrionics that usually accompany a major discovery. But when it came to announcing the latest deep drilling at Newmont’s Post deposit, in the heart of the Carlin trend, President Peter Philip didn’t mince words. Referring to a 470-ft intersection grading 0.93 oz gold per ton, Philip said it was “the richest assay over such a long intersection in the history of gold exploration.” Pulled from the northern area of Newmont’s Post mine at a depth of 1,275 ft, it was part of a 1,040-ft section that averaged 0.485 oz per ton. It came on the heels of another record- breaking intersection encountered during a 7-hole drill program at the Post mine, where Newmont is already mining low-grade ore from a huge open-pit operation. Announced on Jan 25, the program produced 520 ft grading 0.44 oz, which Philip described as “the highest average grade encountered over so great an interval on Newmont Gold property since the discovery of the original Carlin deposit more than 20 years ago.”

While the result from hole 8 is obviously a shoe-in for the Guinness Book of World Records, it comes as no surprise to investors and experts who have kept a close eye on this region. With similar discoveries having recently been reported along the 45-mile- long and 3-mile-wide stretch of land known as the Carlin trend, Carlin- watchers are wondering what resident mining companies like Newmont, American Barrick Resources and Galactic Resources will do for an encore. By 1991, production from Barrick’s Goldstrike property alone will outstrip production from the three big Hemlo mines, and industry- watchers are beginning to look to South Africa for relevant comparisons.

Back in March, 1987, Barrick startled the mining community when it pulled 620 ft grading 0.3 oz between 1,110 ft and 1,730 ft at the Goldstrike property, which is adjacent to Newmont’s Post mine. A relatively undistinguished open-pit operation, the 7,000-acre Goldstrike property had averaged around 40,000 oz annually when it and Toronto-based Pancana Minerals were picked up by Barrick in late 1986. Not only did that announcement send Barrick’s share price racing to $39.25 from $3.13 on the Toronto Stock Exchange, but it also focused attention on an area known mainly for its low-grade surface deposits and low-cost production methods.

Located 20 miles southeast of the Carlin exit on Insterstate 80 in Elko and Eureka Counties in northern Nevada, the Carlin gold trend is on a geological formation known as the Roberts Mountain Thrust. Just a short bus ride from the Elko airport and bounded by Newmont Gold’s Rain mine and Rayrock Yellowknife Resources’ Dee mine, the area is thought to host tens of millions of ounces in 21 known gold deposits.

Created by overthrust movements of deep rock plates that exposed windows of deep sedimentary limestone host rocks, the formation contains a number of epithermal gold deposits brought to surface by hot siliceous fluids. The first reported gold-mining activity within the Carlin trend occurred in the 1890s, but the discovery of major gold deposits in the area is recent. In fact, more than half the known reserves were discovered in the past 12 months. According to geological reports, that can be explained by the fact that the limestone host rocks occur in a number of layers which were only explored on the first two levels. Until American Barrick made its blockbuster discovery at the Goldstrike property in March, 1987, Carlin mining companies had literally been scratching the surface.

Newmont, for example, was so successful at mining low-grade surface deposits that no deep drilling had been done until 1985 when the New York company reported several high-grade gold intersections at depths of more than 1,000 ft. Typically, Newmont made no real effort to publicize the new discoveries and it was left to Barrick to alert the world to the vast treasure that appears to lie deep beneath the Nevada sage brush. Since it began its deep drilling program in early 1987, Barrick has produced a series of results that almost defy description. At about 1,000 ft below the company’s surface Post deposit, which contains 20 million tons of 0.053 oz, some aggressive exploration has encountered two new orebodies. As calculated from results released in October, the Deep Post has a possible reserve of 2.8 million tons at a grade of 0.39 oz and an additional possible reserve of 2.7 million tons averaging 0.40 oz. The Betze deposit was estimated to contain a probable reserve of 3.7 million tons at 0.22 oz and a possible reserve of 4.2 million tons at 0.21 oz.

But results from the latest round of drilling suggest the Post and Betze may be part of one huge deposit and, according to Barrick’s senior vice- president of operations, Brian Meikle, the area of known mineralization has now been extended to 4,200 ft along strike with a width of 800 ft. Merrill Lynch mining analyst Robert Cook believes that, with inferred reserves of 10 million oz on-site, production from Carlin and its other projects will make Barrick the first Canadian company to top one million ounces in annual output from purely North American production.

Cook says that if Barrick mines its Betze and Post deposits simultaneously with the Post surface orebody, the Toronto company could reach the 1-million-oz production mark by 1991. Meanwhile, Barrick engineers are attempting to figure out how those reserves will be recovered. Late last year, the company had opted to sink a 2,000-ft production shaft that would access both the Betze and Deep Post deposits. But results from a previously unexplored area between the deposits have put those plans on hold. A combination mega-pit and underground mine is being discussed, says Barrick’s senior vice-president, John Melville.

Nevertheless, with such an outspoken neighbor on its doorstep, Newmont suddenly has become much more aggressive. After it tentatively agreed to mine the huge Post deposit in a joint venture with Barrick, Newmont made a number of major announcements. These include a plan to spend $14 million over five years to boost its Carlin reserves — which, the company reports, stand at 20 million oz, with 14 million oz proven and probable — and a commitment to become North America’s largest gold- producer. The target figure is 930,000 oz by 1989. The plan also calls for annual production to reach 1.6 million oz in 1991, which would make Newmont Gold the third-largest producer in the non-communist world.

While not quite so ambitious, Carlin’s other major residents are considering their own positions within the unfolding story. With appetites whetted by a flurry of new drill results from Newmont and Barrick, Galactic Resources and Euro-Nevada Mining are testing the 1,500-ft levels beneath their own properties. In November, partners Galactic Resources and Cornucopia Resources elected to go ahead with a major deep drilling program at Ivanhoe. Located northwest of Rayrock Yellowknife’s Dee mine, the 100,000-acre property already includes the huge Hollister deposit, which hosts a reported 27-million-ton shallow deposit averaging 0.041 oz gold.

In a 50/50 joint venture, Galactic and Cornucopia are already planning to produce 50,000 to 100,000 oz at Ivanhoe this year, but their hopes for a major deep drilling success are riding on results of a drill hole south of the Rowena/Asby portion of the Hollister deposit. The 80-ft intercept, which encountered Paleozoic sediments at a depth of 1,150 ft, assayed 0.343 oz. According to Galactic Chairman Robert Friedland, the assay indicated that another high-grade deposit could be found.

As holder of a 4% net smelter return and 5% net profit interest in the Post and Betze deposits at Barrick’s Goldstrike mine, Franco-Nevada Mining of Toronto is waiting for more news from
Carlin before increasing the price tag on a piece of real estate which is already worth around $200 million (us). To prepare for the sale of its Goldstrike assets, Franco-Nevada recently spun off its Nevada exploration properties into a new sister company called Euro-Nevada Mining. With a mandate to position itself on the site of another major gold find, Euro-Nevada recently acquired a 4.9% net smelter return on about 320 acres covering Newmont’s Maggie Creek property and a portion of the Gold Quarry mine. Newmont’s Gold Quarry is the largest known deposit along the Carlin gold trend and, since the company has yet to drill below 800 ft at Maggie Creek, Euro-Nevada President Pierre Lassonde and Chairman Seymour Schulich believe the potential exists for a Goldstrike-style discovery.

Before the Maggie Creek and Gold Quarry acquisitions, Euro-Nevada had drilled four deep holes on its 6-claim Chicago property, south of Newmont’s Blue Star mine. But results so far have been disappointing. BP SELCO BP Selco, the mining division of BP Canada has set an exploration budget of $10.5 million, about the same amount spent last year, the company reports. A portion of the 1988 budget will be contributed by joint ventures. In addition to the grassroots programs, the company manages exploration programs at the Selbaie mine in northwestern Quebec and Hope Brook Gold on the southwest coast of Newfoundland.

In British Columbia, the major effort is for gold and polymetallic massive sulphide deposits. In the Precambrian Shield, there are gold programs in the Abitibi Greenstone Belt, as well as several platinum projects. The company is involved in joint-venture projects for platinum at Fox River in Manitoba, and Entwine Lake in northwestern Ontario. There is also a strong program for platinum in the Sudbury, Ont. region.

A major portion of the budget is devoted to programs in the Appalachians, mainly Newfoundland. At its Victoria Lake project, in Newfoundland, the company is exploring some 600,000 ha of land for base and precious metal deposits. Targets include new orebodies in the vicinity of the old Buchans mine, and both base and precious metal deposits in the Tulks volcanic belt.

Elsewhere in Newfoundland, the company has gold projects under way in the Sop’s Arm/Jackson’s Arm area, and is managing a major diamond drill program at the Hope Brook mine.

At the advanced stage, the most promising prospect is in the Tally Pond joint venture in Newfoundland. Bp holds a 40% interest in this project with Noranda Exploration. The latter is the operator and is managing an intensive drilling program on the Duck Pond polymetallic/ precious metal, massive sulphide body. Results to date have been very encouraging, the company says.

Besides a strong exploration effort across Canada, bp Selco is also interested in acquisition or farm-in opportunities in advanced projects. It is well-funded to pursue such opportunities. Bp Canada’s minerals exploration group is active across Canada and includes a total of 28 geoscientists. Exploration offices are maintained in Vancouver, B.C.; Winnipeg, Man.; Thunder Bay, Toronto and Kirkland Lake, Ont.; Halifax, N.S.; and Corner Brook, Nfld. The company maintains active programs for gold, platinum, polymetallic massive sulphide deposits and diamonds. CANAMAX As busy as Canamax Resources is in building new mines this year, it will not neglect the activity that brought it success. The company has budgeted $5 million for exploration. But Fred Johnston, the executive in charge of finding new mines, says several deals that warrant serious work have been made.

“Based on our proven track record, I am sure that, by year-end, expenditures will be well over $5 million,” he told The Northern Miner Magazine. Last year, the company spent $12 million searching for minerals. Much of the funding this year will support work near the five key properties – – the producing Bell Creek mine, near Timmins, Ont.; the Ketza project, in the Yukon, and the Kremzar project, in Ontario (both of which are coming on-stream); and the Matheson and Clavos projects, in Ontario.

At Bell Creek, $250,000 will be spent testing surface extensions of the Marlhill zone. Underground work on the zone is also planned. East of Bell Creek, Canamax has leased the Vogel property. This property, west of Falconbridge Ltd.’s Owl Creek deposit, has been virtually untouched by earlier exploration, Johnston says. A total of $500,000 is earmarked for initial diamond drilling to test for Owl Creek-type mineralizations.

Another $800,000 has been budgeted for the Matheson project, in nearby Harker-Holloway Twp. Drilling will probe along the Porcupine- Destor Fault to the east and west of the East zone. An underground program is testing the deeper part of the zone. Canamax hopes to make a production announcement on this deposit by mid-year.

In Barnet Twp., southwest of Harker-Holloway, the company recently optioned a large, 132-claim property from Glimmer Resources. Glimmer has discovered a new, high-grade gold showing in a highly silicied and altered zone intermittently exposed over 120 m along strike and up to 5 m wide. About $700,000 will be spent on the project.

At the Kremzar project, near Wawa, Ont., Canamax is building a 500-ton- per-day mill and driving a spiral ramp another 100 m to the 175-m level. The mine should be operating by the third quarter at an annual rate of 32,000 oz. About $200,000 has been set aside for surface drilling to test other known gold showings on the Kremzar property outside the deposit under development.

On the wholly-owned Lochalsh project, south of Kremzar, and on the Goudreau joint venture (Canamax, 51% and Algoma Steel, 49%), the company will spend more than $1 million on exploration and definition drilling along the gold-bearing shear zone extending across both properties.

The Clavos property also ranks high among the company’s prime properties. Roughly $350,000 has been budgeted to test areas outside the known mineralized portions of the Pipestone Fault. This is a joint venture between Canamax and its 36%-owned affiliate, Bruneau Mining.

In the Yukon, Ketza River should be producing at an annual rate of about 50,000 oz by this summer. However, the search for new mineralized areas will be the focus of a $1.2-million program underground at the the Break zone. The zone, 2,000 ft east of the Peel and Ridge zones which are being developed for production, has drill-indicated reserves of 70,000 tons grading 0.46 oz gold per ton. Ketza River is a joint venture with Pacific Trans-Ocean Resources. Surface drilling is also slated for several other known oxide and sulphide targets and on an adjacent property.

Canamax has not restricted itself to gold plays. The Mt. Hundere zinc/ lead/silver project, 80 km north of Watson Lake, Y.T., will be examined through a 3,000-m drill program. Current drill-indicated reserves stand at 2.5 million tonnes grading 12.9% zinc, 8.4% lead and 66 g per tonne silver.

In the Northwest Territories, the company has four gold prospects. At Clan Lake, where 1987 samples returned good gold values, drilling will resume this winter. At Sophia Lake, drilling will test a stratigraphic contact zone where grab samples returned up to 0.71 oz gold per ton. The Viking Yellowknife property, under option from Viking Yellowknife Gold Mines, will also be evaluated. A shaft excavation in the 1940s reportedly cut a 60-ft section grading 0.65 oz gold per ton across a width of 8.8 ft. A modest drill program is also in the works for the Discovery property, under option from Newmont Mines and Discovery West Corp. All four plays are situated 30 to 50 miles north of Yellowknife, N.W.T. COMINCO Cominco Group had yet to see its 1988 budget by the time our presses were rolling, but the company says it expects to nearly match the $30 million that was earmarked for exploration in 1987. The figure includes all the expenditures made by Cominco Ltd. and its subsidiaries and affiliates, as well as about $7 million from the Group’s joint-venture partners.

Gold was the predominant mineral target in 1987 and that won’t cha
nge much this year. In 1987, Cominco Group’s biggest success was the snip project, 125 km northwest of Stewart, B.C. Diamond drilling on this property over the past two years has identified a zone estimated to contain 1.1 million tonnes grading 24 g gold per tonne (about 0.70 oz per ton). The calculation reflects a cut in assays to 150 g and allows for 20% dilution. The zone is open below the 200-m depth tested by surface drilling and is not delimited on trend. This year, underground access was begun. Snip is a joint venture between Delaware Resources (40%) and Cominco (60%).

Cominco also scored at the Contwoyto project, 60 km southeast of Echo Bay’s Lupin mine in the Northwest Territories. This joint venture with Cogema Ltd. involves exploration on several adjoining properties optioned from a number of junior companies.

In Quebec, a large tract of ground extending from the Casa Berardi camp to the Agnico-Eagle mine is under active exploration with project partner Agnico-Eagle. The Garrcon project, north of Kirkland Lake, Ont., will also be a prime target for Cominco’s drills this year. Jonpol Exploration is the partner on that play.

Of the 23 different properties Cominco and its joint venturers drilled last year, most were gold plays, although several sizeable programs were probing occurrences of base metals and industrial minerals. Of special note is a wollastonite prospect near Madoc, Ont. Platinova Resources is the joint venture partner on that play. Cominco Resources

Cominco Resources International was formed in May, 1987 to serve as Cominco Group’s vehicle for world- wide exploration and mine development outside of Canada, Alaska and Australia. The company’s activities are primarily directed at finding gold and it has important copper, silver, beryllium and zinc prospects. Cominco Ltd. owns 58.6% of Cominco Resources.

In addition to owning more than 50 properties, Cominco Resources owns 76.4% of the Buckhorn gold mine in Nevada. The open-pit heap- leach mine, which produces gold and silver, has been operating since 1984. Although Buckhorn has limited defined reserves sufficient to support gold production through 1988, an aggressive exploration program is under way.

The company’s total estimated 1988 expenditures on exploration should reach $10 million. This compares with $8.5 million for nine months in 1987. A breakdown of 1988 expenditures, expressed as percentages of the total budget, is as follows:

Latin

U.S. America Europe Gold 30% 25% 20% Base Metals 10 — 5 Other 10 — —

Among the company’s key exploration targets, Kinsley Mountain, Nev., rates among the most promising. Cominco Resources’ interest in this gold property is 60% and its share of expenditures will total $540,000. This year, work will include additional drilling in an attempt to advance the property towards a production decision. Near Topaz, Utah, a 51%-owned beryllium deposit is another prime target. In 1988, $400,000 will be spent on drilling and feasibility work. In Lobo, Chile, Cominco Resources holds a 50% interest in a gold property. At least $250,000 will be spent on the property in 1988, the company says.

In El Zapote, Mexico, results from preliminary drilling in 1986 revealed about 500,000 tons grading 0.1 oz gold per ton, with the potential for an open- pit mine. More drilling will be done in 1988 to define the deposit.

At another Mexican play (this one in Maria), underground work on a copper-molybdenum-silver property is scheduled in 1988 with Cominco Resources’ Mexican partners. The work is aimed at a production decision.

Cominco Resources International has field offices in Spokane, Wash., Reno, Nev., and Brussels, Belgium. The head office is in Vancouver, B.C. The staff, numbering between 30 and 40, has a broad range of experience and a good track record. The company’s employees are among those directly responsible for the discovery by Cominco Ltd. of the Magmont mine, Polaris mine, Rubiales and Troya mines, and the Red Dog deposit.

Cominco Resources’ strategy is to discover and develop small- or medium-sized mines with or without partners, while looking for opportunities for larger projects on the scale of the parent company’s Red Dog deposit. Cambior Last year, Cambior acquired all the assets and exploration properties of Aiguebelle Resources and Sullivan Mines. In total, it inherited about 52 properties and participation in 37 joint ventures. The company’s chief of exploration, Jean Boissonnault, says a narrower field of some 15 properties and seven joint ventures is planned this year. However, there’s nothing meagre about its planned exploration budget, which will come in at $39 million (more than a $10-million increase over the 1987 budget).

The bulk of the money, about $30 million, will be spent on exploring underground at Cambior’s more advanced projects. The remainder will be employed testing targets from surface in the Noranda/Val d’Or gold belt in northwestern Quebec. In the Cadillac area of the belt, about $2 million will be spent on surface exploration at the Doyon mine, a 50/50 project with Lac Minerals. Another $1 million will be used to explore the 100%-owned Mouska property.

In Noranda, the Forbex and Flavrian properties, which surround the Eldrich mine, will be the target of a $1-million program. The balance of the funds will be parcelled out among 12 exploration properties and six joint ventures.

The aggressive Cambior has plans to expand into the U.S., specifically in Virginia where a $400,000 program will be undertaken this year.

Nearly $12 million of its underground budget will be used to sink a shaft and conduct development work underground on the Mouska property, adjacent to the Doyon mine. Drill-indicated reserves to a depth of 400 m total 1.6 million tons grading 0.18 oz gold per ton. This includes a 20% dilution factor.

The New Pascalis project, east of Val d’Or, Que., will require a budget of $8.2 million. Shaft-sinking, drifting into ore on the 550 and 800 levels, as well as the test milling of a 30,000ton bulk sample are scheduled. Cambior will also contribute $4.3 million as part of its 25% participation in the Noranda-operated Silidor project. And finally, some $4.8 million will be spent on completing the Eldrich underground program. A production decision is expected in April. Current diluted reserves stand at 1.6 million tons grading 0.15 oz gold per ton.

Cambior operates out of offices in Noranda and Val d’Or. Fifteen geologists and 22 support staff work in the exploration department.