McFinley finds new zone at Bateman Twp. project

Dogged by development problems at the Bateman, Twp., gold project near Cochenour, Ont., McFinley Red Lake Mines (TSE) finally had some good news in its recent interim report to shareholders.

The company says it has encountered a new sulphide zone 1,050-ft below surface at Bateman Twp., where a bulk test program was interrupted in November after the company ran out of money.

Preliminary assays from the 25-ft- wide zone include 15 ft of grade 1.772 oz gold per ton. McFinley is drilling from the 400-ft level in an area approximately 1,200 ft south of the shaft.

At a depth of 620 ft in the same drill hole, the company also pulled 2 ft grading 0.127 oz and 3.4 ft of 1.057 oz at the 220-ft level.

“You can’t make a mine out of one drill hole but the latest result is the best assay section ever encountered on the property,” President Bill Cummins told The Northern Miner.

After spending $25 million, McFinley has outlined geologically inferred reserves of 890,000 tons of grade 0.21 oz but the nugget like nature of the Bateman gold mineralization has made the bulk sample a crucial factor in any evaluation of the orebody.

That is why a ball mill’s poor performance and a legal dispute with contractor Dominion Bridge have been such a major hurdle for the Toronto company. McFinley won’t know until the 15,000-ton bulk sample is complete whether known reserves will support a viable mining operation.

Alleged cost over-runs in the mill construction phase have nothing to do with the property’s potential, according to Cummins who has been encouraged by the absence of coarse gold in the latest intersections.

Their discovery coincides with a planned rights offering which the company hopes will raise $4.6 million to complete the bulk sample program and pay Dominion Bridge. Under the terms of the proposed offering, shareholders can purchase $100 a value 4% convertible debentures for every 200 shares held.

Kleinwort Benson Ltd. of London, England, has been hired by McFinley to execute the offering.

While Cummins says there is an outstanding account of $2.3 million in connection with mill construction costs, it disputes the amount on several grounds. Dominion Bridge has filed a lien against the property under the provisions of the Construction Lien Act in which is claims a lien on all gold in the property.

During the first nine months of 1988, McFinley’s cash position decreased to $157,982 from $420,909 at the same time last year. The company says Kleinwort has arranged for two institutional investors to advance $697,200 for interim working capital.