Having found a financial backer in Edmonton-based Echo Bay Mines (TSE), Flanagan McAdam Resources (TSE) considers itself in good shape for what should be a pivotal year in the company’s history.
Under a recent agreement, Echo Bay can earn a possible 22.4% interest in the Toronto company in exchange for $14 million which Flanagan McAdam will use to attain gold producer status by the first quarter of 1989.
The company’s first gold output will come from the Magnacon property at Mishibishu Lake, Ont., where Flanagan McAdam and partners Muscocho Explorations (TSE) and Windarra Minerals (VSE) are getting some outstanding results from a $13.2-million underground exploration program.
In preparation for mine start-up, Flanagan McAdam is pouring $1 million per month into the property and President Jack McAdam told shareholders at a recent annual meeting that power lines and a $7-million mill should be in place by January.
“Improvements are needed in sections of a 30-mile access road connecting the property to the main highway before a 600-ton-per- day operation can begin,” McAdam said. “The estimated cost of production is $165(US) per oz but we think we can do better than that because we are getting some excellent widths and grades from drilling,” McAdam told The Northern Miner. Reserve inventory
At year-end, drill-indicated geologically inferred reserves at Magnacon stood at 1,032,435 tons grading 0.156 oz gold per ton. That includes a proven and probable reserve inventory of 830,282 tons of grade 0.212 oz above the 850-ft level. But pending the release of more underground results, the 1987 reserve figures are likely to be upgraded.
As part of the development program, Flanagan McAdam has extended the main ramp by 1,500 ft to access four levels for lateral exploration of the Main and South zones.
A second ramp is also being driven from the main ramp to explore the West Extension zone 1,800 ft away.
As reported (N.M., Nov 23/87) gold grades encountered during raise and drift sampling are proving to be marginally higher than those determined by previous drilling.
So it came as no surprise when the partners pulled the widest and highest grade result so far at the Magnacon project in a drill hole located just below the 350-ft level. Hole No. U88-20 intersected 73.3 ft of 0.542 oz from 24.7 ft to 98 ft, said McAdam at the annual meeting.
Another exploration drill hole intersected 13 ft of grade 0.452 oz gold about 300 ft east of the Main zone at the 500 ft level and may add to current reserves, McAdam said. Gwillim Lake
While Magnacon is Flanagan’s most visible venture, the company is involved in a number of other projects including the Gwillim Lake MOP II at Chibougamau, Que. where the company spent over $550,800 last year.
As operator, Flanagan McAdam holds a 43 20/ 30 03 % interest while partners Muscocho Explorations and Noranda Explorations retain 43 20/ 30 03 % and 15 20/ 30 03 % respectively.
With a surface drill rig on site, the partners have defined three gold-bearing sulphide zones in a large sheared and altered quartz feldspar porphyry intrusive. The partners recently tested the continuity of the lower South zone in a bid to identify drill-indicated ore reserves.
Following the completion of a 43-hole, 22,792-ft surface drill program, preliminary reserves of 226,800 tons grading 0.31 oz gold will be recalculated, the company said.
Under an option agreement with Greenstone Resources (VSE) of Toronto, Flanagan McAdam is spending $2 million to earn a 50% interest in a former producer called the Gwillim gold property in Chibougamau.
About $1.9 million further on, reserves at Gwillim are estimated at 338,200 tons grading 0.30 oz gold. C zone
After pulling a number of good intersections including 23 ft of grade 0.962 oz gold in the C zone, the partners opted to extend a decline ramp by 500 ft.
The C zone is one of several gold bearing units in the KOD zone which lies about 1,500 ft southeast of the old mine. “When the ramp is completed, lateral exploration will be conducted on the B zone and later the A and C zones,” the company said recently. At Flanagan McAdam’s recent annual meeting, Echo Bay executive vice-president Richard Kraus and senior vice-president operations, Peter Clarke, were elected to the company’s board of directors.
The Flanagan McAdam issue traded recently on the Toronto Stock Exchange at $3.70 in a 52-week range of $4.95 and $1.80.
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