New B.C. mining projects in works

Despite the much publicized move of exploration and development dollars to more southern climes, a number of companies are working to bring new mines into production in British Columbia.

Originally discovered in 1988, the Eskay Creek property north of Stewart has come a long way in four and a half years. The “discovery hole” (No. 88-6) returned 0.73 oz. gold and 1.1 oz. silver per ton over 96.5 ft.; to date, drilling and underground exploration have outlined a probable reserve of 1.19 million tons grading 1.91 oz. gold and 85.5 oz. silver (based on a 0.4 oz. gold-equivalent cutoff grade and a mining dilution level of about 27%). Control of the rich deposit has passed from the two juniors originally involved to major mining companies Placer Dome (TSE) and Homestake Mining (NYSE).

Placer Dome holds a 22% direct working interest in the project while Homestake holds a 28% direct interest and a 27% indirect interest through its ownership of 54% of the outstanding shares of Prime Resources Group (VSE). Prime Resources has a 50% working interest in the Eskay Creek property. Feasibility work on the project is proceeding and the company expects to file a mine development application permit by mid-year. If all goes smoothly on the permitting front, Homestake could begin construction as early as spring, 1994.

Proving that the best place to look for a new mine is next to an old one, Gibraltar Mines (TSE) is in the process of reviewing the possibility of mining a newly discovered copper zone to the northwest of its existing Gibraltar open pit copper mine near McLeese Lake.

An estimated 95% of the deposit is subject to a 30% net profits interest (NPI) in favor of Newcoast Silver Mines (VSE). The interest is calculated after deductions for capital and financing costs as well as operating costs. Since its discovery in mid-1990, Gibraltar has completed more than 50 drill holes into the deposit, returning average grades in the order of 0.45% copper. Placer Dome, which owns 68.1% of Gibraltar, has not yet released a reserve estimate for the deposit.

Placer expects to complete a feasibility on the project by the end of March and if positive, the company could change its mining schedule to include the North zone.

In 1991, Gibraltar mined about 11.9 million tons grading an average of 0.31% copper at an average strip ratio of 1.72-to-1.

Curragh (TSE) recently received a mine development certificate for its Stronsay zinc-lead project about 180 miles northwest of Fort St. John, B.C. The project hosts an estimated preliminary reserve of 57.5 million tons grading 8% zinc and 2% lead.

Before development of the project can proceed, however, the company will have to arrange financing. The capital cost of a 3,900 ton-per-day operation is estimated at about $140 million plus $37 million for off-site infrastructure. Feasibility work is continuing at the Fish Lake project southwest of Williams Lake. The most recent estimates put reserves at about 1.265 billion tons grading 0.22% copper and 0.012 oz. gold (based on a copper-equivalent cutoff grade of 0.3%).

While feasibility and permitting work continue, Taseko Mines (VSE) is working to find a buyer for the project before May 31, 1995, when management of the property reverts back to Cominco (TSE).

If a sale can be arranged, Cominco will receive 40% of the proceeds up to a maximum of $48 million. If a buyer cannot be found, Taseko’s interest reverts to a 20% NPI.

El Condor Resources (VSE), under the same management as Taseko, is also proceeding with feasibility and permitting work, on the South Kemess copper-gold project in north-central British Columbia.

The South Kemess property is owned 60% by El Condor and 40% by St. Philips Resources (VSE) and contains open pit minable reserves estimated at 204 million tons grading 0.23% copper and 0.019 oz. gold.

The joint venture is following the same strategy as Taseko, hoping to attract a buyer while it proceeds with development.

Imperial Metals (TSE) received development permits for its Mt. Polley project last year and is now attempting to raise the estimated $131 million capital cost to bring the project into production.

Mt. Polley, located near Williams Lake, hosts an estimated preliminary reserve of 250 million tons grading 0.26% copper and 0.010 oz. gold. Plans call for a 15,000 ton-per-day open-pit operation producing about 30 million lb. of copper per year from an initial 10-year reserve of 54 million tons grading 0.38% copper and 0.016 oz. gold. Gold production would gradually decline from about 100,000 oz. per year initially to about 50,000 oz. by the tenth year.

Noramco Mining (TSE) holds a 22% NPI in the project after pay-back of all exploration and development costs.

Development of the proposed Crystal Creek garnet project near Hedley remains up in the air as owner Polestar Exploration (VSE) awaits government approval. The company hopes to develop a quarrying and processing facility to produce about 66,000 tons of clean garnet per year.

Western Garnet Company (VSE) has an option to earn a 70% interest in the project by funding it to production and paying Polestar a total of $5 million over a five year period.