Latest results from War Eagle disappoint market

What had been touted as a major new gold discovery in southwestern Idaho appears to have fallen short of expectations. Indeed, investors greeted the latest results from War Eagle Mining (VSE) with a mass of sell orders as a sense of “deja vu” (we’ve seen this before) settled over the market.

Trading in the stock was halted Friday, Nov 11, at $8 and it plummeted to below $4 when trading resumed the following Tuesday. Several large blocks of shares were crossed on the Vancouver Stock Exchange when it re-opened.

Needless to say investors still haven’t forgotten the “bonanza” hole reported by Huntington Resources (N.M., June 13/88) near Revelstoke, B.C., which has not been duplicated, even with close- spaced drilling. And the same thing has happened with War Eagle which prompted one local pundit to comment that it was “quite an accomplishment to miss on a 100-ft step-out.”

The reverse circulation drill program did encounter some gold values but nothing comparable to earlier results which included 0.16 oz gold and 1.6 oz silver over 275 ft in hole 16-2A. This was a 10-ft step- out from 16-2 which yielded 75 ft of 0.11 oz gold.

Interestingly enough, at least one clue was available which suggested the gold distribution in the zone was erratic at best. Correlation between the two holes was very poor even though they were 10 ft apart. For example, the gold bearing mineralization in 16-2A (275 ft of 0.16 oz) began at a depth of 425 ft whereas gold values in 16-2 (75 ft grading 0.11 oz) started at 165 ft.

The latest drill results revealed the “same range of grades no matter what rock type they were drilling in,” one industry source noted.

War Eagle says the most significant mineralization in hole 16-3, which was drilled 100 ft west of the discovery hole, was 165 ft averaging 0.054 oz gold and 1.04 oz silver. This was a vertical hole with the mineralization beginning at 445 ft, hardly open pitable. The mineralized sequence included latite, volcanic sediments and granite, the company said.

Another 100-ft step-out (16-4) to the south returned variable results from 215 to 685 ft. These included 15 ft of 0.19 oz and 30 ft averaging 0.057 oz. The remaining intercepts ranged from 0.02 oz over 20 ft to 0.044 oz across 205 ft beginning at a depth of 480 ft.

Two other step-outs yielded gold values. No 16-5, drilled 100 ft to the east, yielded 10 ft grading 0.18 oz gold in the interval 320-330 ft and No 16-6, 100 ft to the north of the discovery hole, returned three narrow 5-ft intersections grading 0.09 oz, 1.6 oz, and 0.04 oz gold respectively between 190 and 605 ft.

Things weren’t much better in the 400-ft step-outs. No 16-10 yielded 10 ft of 0.12 oz and 10 ft of 0.059 oz. These intercepts occurred between 485 and 590 ft. Even more disappointing were the results from 16-7, 16-8 and 16-9. They didn’t contain any significant mineralization and were much longer step- outs. No 16-7 was drilled 400 ft north and 400 ft west of the discovery hole, No 16-8 was 500 ft north and 1300 ft west (the furthest to date) and No 16-9 was 800 ft north and 500 ft west.

The project has been promoted as an open pit situation despite the relatively deep-seated nature of the drill intercepts. Indeed, when the discovery hole step-out (16-2A) was announced, Tim Brock, president, was quoted in a Vancouver daily newspaper as saying: “We believe we have discovered a large tonnage, low grade, open pit gold and silver deposit.” He was unavailable for comment with The Northern Miner.

This theme was repeated in a news release from War Eagle which announced the latest results. “When considering these drill hole results, it should be noted that the DeLamar (Nerco Minerals) open pit mine located approximately four miles to the west of the War Eagle property, is producing a profit with remaining mineable reserves of 25.9 million tons of 0.022 oz gold and 1.15 oz silver per ton.”

DeLamar is a bulk tonnage situation which employs an agitated vat leach system to recover silver and gold. The company also runs a small heap leach operation on site and DeLamar is more a silver producer than a gold mine. The War Eagle property is also considerably higher at more than 7,500 ft above sea level.

Brock said another three holes remain to be reported and results should be available on or around Nov 24. He added that diamond drilling is planned near the discovery hole as well. Up until now, reverse circulation has been used which does not provide a core sample. Drilling is expected to resume Dec 1 and snowfall has already covered the property.