MINERAL EXPLORATIOIN — Companies take search for buried deposits to new depths

With the aid of gravity geophysics, a large mineralizing system has been discovered at the Converse gold project near the Lone Tree gold mine in northern Nevada’s Battle Mountain trend.

The information has enabled exploration partners Uranerz USA, Romarco Minerals (R-T) and Newmont Gold (NGC-N) to see through deep alluvial cover for bedrock highs which contain mineralization.

The property is being evaluated by Uranerz under the Converse exploration agreement with Romarco and Newmont. Should the deposit prove economic, Newmont can opt to develop the property and would hold a 50% interest. In that scenario, Uranerz and Romarco would each hold a 25% interest.

Uranerz acquired the property (part of which was then known as the as Nike) from Nevada North Resources in August 1994. It is situated 4 miles south of the Lone Tree and Marigold mines. In early 1995, Romarco formed a joint venture with Uranerz and undertook to fund an exploration progam.

The 1995 program included a 789-station gravity survey, as well as an aeromagnetic survey. The partners then drilled 10 holes (totalling 4,760 ft.) in an attempt to target paleotopographic highs determined by the gravity survey. The data demonstrated a strong contrast between the alluvium and the underlying bedrock.

Hole NKM-14, which was drilled in Section 28 on the stronger of two paleotopographic highs, intersected strong calc-silicate alteration, a felsic dyke and gold mineralization over the entire bedrock interval (60 ft. grading 0.038 oz. gold per ton).

Hole NKM-10 hit anomalous gold values over 185 ft. on the second anomaly in Sections 20 and 21.

In 1996, drilling was concentrated around Hole NKM-14, along the western boundary of the property. The program included 11 holes totalling 7,185 ft., nine of which returned significant gold mineralization, including hole NK-20 which hit 250 ft. grading 0.029 oz.

The results were sufficiently encouraging to attract the attention of Santa Fe Pacific Gold, owner of the adjacent property. In September 1996, Santa Fe entered into the Converse exploration agreement, which covers 8 sq. miles in the northern part of Buffalo Valley. The company’s interest in the Converse agreement was later taken over by Newmont.

Highlights of the the most most recent round of drilling include: * hole NKC-43, which intercepted 577 ft. (from 307 to 884 ft. in depth) grading 0.03 oz. gold, including 117 ft. (from 307 to 424 ft.) of 0.048 oz.; * hole NK-54, which hit 210 ft. of 0.048 oz. gold starting from a depth of 565 ft.; and n hole NK-65, which intersected 250 ft. grading 0.04 oz. per ton.

(Farther down the hole, another mineralized zone was encountered, from 325 to 460 ft., grading 0.021 oz. gold.)

The property is estimated to contain 50 million tons grading 0.02 oz. per ton, equivalent to 1 million oz. gold. About 85% of that resource is in the Redline deposit, and it is in this deposit that the partners hope to discover higher-grade pockets of mineralization.

Uranerz’s decision to assemble gravity data was based on the fact that nearly 75% of Nevada is covered by late Cenozoic gravel, lava flows or lake beds. The information provided by gravity surveys offers a view into the region’s paleotopograghy.

Ken Cunningham, chief geologist for Uranerz, says the gravity data has proved more effective than aeromagnetic data.

The partners had gone looking for a relatively high-grade, shear zone-hosted gold deposit similar to the Lone Tree mine, 4 miles to the north. However, the drill holes encountered a more flat-lying, stratagraphically controlled, massive deposit, which, though much lower in grade, nonetheless represents a larger system.

The Redline deposit is hosted in the Havallah sequence, a thick package of Mississippian-to Permian-allochthonous rocks associated with the Golconda Thrust. Alteration has turned the rocks into a massive “sea of calc-silicates” insofar as much of the original bedding features and stratigraphy have been destroyed.

Cunningham believes mineralization is associated with a copper- and gold-bearing skarn system at depth, similar to the Fortitude gold skarn district at Battle Mountain, a few miles to the east. The drilling has encountered several intrusive bodies and alteration containing skarn mineralization.

The Redline differs from Fortitude in that it is hosted in the Havallah, whereas Fortitude is hosted in the more calcareous Antler sequence.

Uranerz intends to examine the mineral potential of the Antler sequence, which lies below the Havallah, though at this point no one knows how far below. The deepest hole drilled at the property is 1,500 ft., although the company has yet to intersect the Antler. Mineralization in the Antler tends to be higher-grade than in the Havallah.

David Groves, Newmont’s director of exploration in Nevada, says his company is encouraged by its activities at Converse. “We’re interested in the deposit and are evaluating further the checkerboard lands we gained through the Santa Fe merger,” he explains. “The Converse also has the advantage of being near our existing infrastructure at Lone Tree.”

The next step for the partners is to determine the economic viability of the Redline deposit. Uranerz has already begun metallurgical testing and baseline studies.