INVESTMENT COMMENT Westley’s portfolio of Nevada properties adds

Just as the Nevada gold region is becoming the talk of the North American mining industry and the subject of a number of investment reports, Vancouver-based Continental Carlisle Douglas has published a research paper on one of the region’s major players.

In a detailed report, ccd recommends the shares of Vancouver- based Westley Mines as a speculative investment for aggressive individuals seeking equity participation in gold exploration projects.

Westley Mines is controlled by the Ventures West group, a private venture capital management group with offices in Vancouver and Toronto. Established in 1973, Ventures West now manages approximately $85 million in four separate pools of risk capital — Ventures West Resources, Ventures West Technologies, Ventures West III and Canada West Ventures.

According to ccd analyst Andrew Muir, the capital is provided by large pension funds and insurance companies. In 1980, Ventures West Resources took control of Westley to consolidate claims in an area known as the Santa Fe property.

Since then, Westley has amassed 30 gold exploration properties in and around Nevada. While they are all under active exploration, the company is concentrating on a number of projects in the Comstock, Battle Mountain and Independence gold belts in Nevada. They are known for their rich lode and open pit gold deposits. Independence property

The projects include the 2,580- acre Independence property in northeastern Nevada where Westley (15% carried through an additional $1,125,000 in exploration) is joint venturing with Radcliffe Resources of Vancouver and vse- listed Hycroft Resources.

Meridian Minerals recently agreed to spend $900,000(US) to earn a 35% interest from Westley, Radcliffe and Toronto-based Euro- Nevada Mining.

According to Muir’s report, results of 27 holes drilled by Westley in 1986 and 1987 confirmed geology similar to nearby orebodies and one of the holes contained a 20-ft intersection grading 0.10 oz gold per ton within a 100-ft section averaging 0.049 oz.

As reported (N.M., Jan 26/87), these results suggest that a large stratabound mineralized zone may occur in an untested area down-dip from the present drill holes in the direction of a major north-east trending fault.

“This is believed to be the feeder fault for the mineralization found in this area,” Westley President Victor Jones said recently. Marginal economics

Since the economics of the property were marginal at mid-1986 gold prices, Westley converted its interest in the Santa Fe heap leach project in western Nevada to a variable net smelter royalty interest.

At a gold price under $450 per oz, Westley retains 1.23%, at up to $600 per oz it retains 2.05% and at any price above $600 per oz, Westley holds 2.87%.

Now controlled by Toronto- based Lacana Mining, the Santa Fe property contains 13 million tons grading 0.037 oz gold and 0.33 oz silver proven and probable. In addition to near surface oxide reserves, there is a largely unexplored deep sulphide zone in which 21 holes over a 2,000-ft strike length have returned values ranging from over 0.1 oz gold to 0.4 oz.

Before optioning a 100% working interest in the property to Lacana, Westley conducted 75,000 ft of drilling at Santa Fe. While Lacana has deferred a decision to place the property into production, Westley recently converted a 40% net profit interest into a net smelter royalty interest plus cash and Lacana shares yielding $1.5 million in working capital.

Since International Corona Resources of Toronto acquired control of Lacana, additional work has attempted to confirm the results of the Lacana feasibility study but a production decision has not yet been made. Trending zone

Other Westley interests include the North Fork property in the northern Independence range, 12 miles north of the Jerritt Canyon mill where a northwesterly trending zone of alteration one mile long has returned surface assays of up to 0.31 oz gold. In another location 1,000 ft away, values of up to 0.20 oz have been encountered.

With Westley as operator, Amax Gold is currently earning a 50% interest by spending $3 million over four years. Under the agreement, Amax can increase its interest to 60% by providing 70% of the funding needed to bring the project to production and paying Westley $500,000 cash.

With this agreement, Westley’s interest would eventually be reduced to 40%.

Since Westley farms out most of its exploration parties to other parties, the company’s working capital requirements are limited and it has strong financial leverage, says Muir. As a result, Muir says an existing working capital balance of $578,000 on Sept 30, 1987, was more than adequate for active property acquisition and development until at least the latter half of 1988.

It is interesting to note that of the $1.5 million exploration funds spent on Westley’s properties between 1986 and 1987, $1.2 million was provided by other parties.

With 8.4 million shares issued, the Westley issue was trading recently on the Toronto Stock Exchange at 59 cents in a 52-week range of $1 and 35 cents .

“The shares of Westley Mines are an excellent alternative to high risk investments in single project exploration companies, particularly at a time when the direction of market and economic trends is uncertain,” Muir concludes.