Kasner companies study large deposit in Saskatchewan

Two Kasner Group companies, TSE-listed Lenora Explorations and VSE-listed Mary Ellen Resources, will put the finishing touches on a mine feasibility study late this month. The study is expected to show that two low-grade gold de posits in northern Saskatchewan are minable using low-cost open-pit mining methods.

The project, which would likely cost between $60 and $70 million, involves developing two separate pits — one on the Box and one on the Athona gold property. Both deposits are on the rocky, wind- swept, north shore of Lake Atha basca — the province’s biggest lake.

An all-weather road from Uranium City, a small community about 14 km to the north, provides access to the Box property. And a concrete air strip, constructed to service the Beaverlodge uranium mine (which was shut down in 1982), is about 6 km from the property. Equipment can also be brought in by barge from Fort McMurray, Alta., via the Athabaska River.

The two deposits, containing a total of 19.2 million tons of reserves, could be mined over a period of seven years, providing feed to a 5,000-7,000-ton-per-day mill. If a head grade of 0.056 oz per ton and recoveries of 94% could be achieved, such a mill could produce as much as 129,000 oz of the yellow metal per year.

According to metallurgical work by the Ontario Research Foundation, the metallurgy of the deposits is not complex. But conventional cyanidation may not be used to recover the gold.

Robert Kasner, is interested in the environmental advantages of a coal/gold agglomeration process developed by BP Resources in Mid dlesex, England (N.M., Jan 11/88). The process uses coal agglomerates to remove gold from a slurry of crushed and ground ore. Gold adheres to the coal which is then burned to recover the gold.

Total operating costs are expected to be about $14 per ton of ore milled, or about $200(US) per oz.

Lenora and Mary Ellen have an option agreement with Cominco Ltd. to earn a 60% interest in the Box property (split 30/30) and the Athona property is held 100% by Lenora with COATS-listed New Athona Mines retaining a 20% net profit royalty.

Indicated reserves of 13.7 million tons averaging 0.052 oz have been outlined on the Box property by Cominco. That work was done over the 46-year period since the underground mine last produced gold at a commercial rate; that was in 1942. It was only five years ago that the old, wooden headframe was burned down.

Lenora’s exploration work over the past year has been designed to confirm these reserves. That work included a 9,000-ton bulk sample. “I can guarantee there’s 0.033 oz gold per ton and we’re going to do everything we can to show there is as much as 0.058,” consulting geologist Dr Ian Mason told The Northern Miner on a site visit last fall. Mason has several years of exploration experience with Cominco and is now Lenora’s consultant on the project.

Reserves in the smaller, but higher-grade, Athona deposit total 5.5 million tons at 0.064 oz. That deposit was discovered in 1938.

Gold in the area is hosted by granitic feldspar porphyry and by quartz veins which cut the porphyry. The gold-bearing rocks form a syncline which plunges to the southwest and they are flanked by quartzites and schists. Other geological structures in the area are known to host platinum and uranium mineralization. Exploration programs are ongoing.

A pre-feasibility study, conducted in December, 1987, by milling consultants Orocon Inc. for Belmoral Mines, says power costs are very significant in the profitability of the remote project. (At one time, Belmoral Mines was interested in the property.)

A hydro-electric plant on the Charlot River northwest of Uranium City could easily supply all the power requirements of the mill, and a hydro line already exists to the Box property. But Kasner isn’t happy with the price the Saskatchewan Power Corp. (SPC) is asking for that electricity. Power Costs

The provincial Crown corporation has struck a deal with Eldorado Resources to extend the power line from Uranium City to that com- pany’s big mine development project at Rabbit Lake, about 350 km to the southeast. The transmission line would provide power to the northern settlements of Fond du Lac, Stony Rapids and Black Lake.

To help pay for the cost of that line, Eldorado has agreed to pay 12 cents per kW-hr.

Lenora does not want to pay the same price. “It costs them about 2 cents per kW-hr to generate that electricity, and I don’t think we should have to help pay for the line to Rabbit Lake,” says Kasner, who is trying to negotiate a better deal.

“I think we can get some help from the Saskatchewan govern ment,” Kasner says. “They’re very interested in seeing the gold mines here get developed and have been very co-operative.”

As at September 30, 1987, Lenora had $908,000 in cash and Mary Ellen had $1.026 million.

Lenora has 10.7 million shares outstanding, trading this week at about 75 cents ; Mary Ellen has 8.2 million shares, trading at about 56 cents .

Lenora and Mary Ellen also have exploration projects in the Harker/ Holloway area of northeastern Ontario (N.M., March 7/88).