Latest results fuel SAR’s hopes in Sweden — Company plans re-evaluation of previous assays

The 39%-owned Swedish subsidiary of Vancouver-based South Atlantic Resources (SCQ-V) has received a pleasant surprise at its Vargbacken gold project in Sweden.

Results from drill hole 16 show a 7.3-metre interval (from 46.9 to 54.2 metres in depth) averaging 12.8 grams per tonne, based on a 1-kg sample.

The subsidiary, North Atlantic Natural Resources (NAN), in which Toronto-based major Boliden (BOL-T) holds a 62% interest, points out that all assays from previous holes were performed on 300-gram samples, and that these may not have been sufficient in volume and weight to represent the actual gold content. The misrepresentation reportedly stems from the nature of the coarse, free gold in the samples.

“We believe that all previous assay results may have been underestimated, as evidenced by erratic results that did not compare well with mineralization,” South Atlantic President Edward Posey stated. “Therefore, all previous drill-core samples will be re-analyzed using 1 kg of sample material.” The gold analyses are being performed by Chemex Labs using the metallic screen fire assay technique.

The gold at Vargbacken is coarse-grained and often visible to the eye.

Mineralization is related to a complex series of quartz veins in an elongated body of diorite near its contact with metamorphosed sedimentary rocks. The deposit is described as geologically similar to the operating Bjorkdal mine of Terra Mining; both deposits are in the Skellefte district.

NAN adds that visible gold has been observed in drill core obtained from holes collared along a continuous strike length of more than 800 metres.

An resource estimate for Vargbacken will be delayed until all mineralized drill core has been re-analyzed.

Elsewhere in the Skellefte district, NAN has reached an agreement with the French state-owned mining company Cogema to acquire a 15,000-ha exploration permit in exchange for a 1.5% net smelter return royalty on production from any deposit found. The agreement allows NAN to expand its exploration efforts in the district in pursuit of copper-zinc-gold deposits similar to the six currently being mined by Boliden in the district.

Farther north, in the Norbotten district, NAN recently completed the first phase of drilling on its Nautanen project. The program, results from which are pending, was aimed at evaluating the potential for large-tonnage copper-gold mineralization amenable to open-pit extraction (similar to the nearby Aitik mine operated by Boliden).

Meanwhile, at the Ekhult project in the southern province of Smaland, NAN is in the midst of a preliminary, 500-metre drill program to evaluate gold occurrences found in 1997. These yielded values ranging from 20 to 100 grams. Results from this program are pending as well.

In total, NAN is exploring more than 23 properties encompassing roughly 5,000 sq. km in three Swedish mining districts.

“In less than a year, NAN has mounted an aggressive exploration program in Sweden,” says Posey. “Metal markets may currently be depressed, but the historical cyclical nature of metal markets suggests that now is the time to explore for and discover new mines so that future production coincides with recovering prices.”

NAN, which is listed on the Stockholm Stock Exchange, was formed in 1996.

The company is focused exclusively on exploration in the Baltic Shield, which covers much of Sweden, Norway, Finland and northwestern Russia.

Interest in Sweden’s gold potential has been triggered by several recent discoveries, including one made by Boliden in Skelleftea. That region is also home to Boliden’s namesake mine, a gold-copper-zinc producer, which, until its closure in 1968, was the largest gold mine in Europe. It produced 120 tons of gold during its 43-year mine life from ore averaging 0.5 oz.

gold per ton.

South Atlantic says several of the properties it holds jointly with Boliden are also prospective for base metals. The latter will have the right to acquire at least a 51% ownership in any base metal deposits at market prices.

In June 1997, Boliden’s parent company, Trelleborg, sold 51% of Boliden in a public offering worth $772 million. Boliden subsequently sought a listing on the Toronto Stock Exchange and relocated its head office to Toronto.