New high-grade zone drilled next to 3-million ton orebody

The Northwest Territories’ premier gold producer, Echo Bay Mines, has intersected some high grade gold values on the Cass zone near Indin Lake.

Although results from some 27 holes put down on the zone since May have not been released, 21 of the holes contained visible gold. The market anticipates the results will be favorable. Trading in Toronto, the shares of Petromet Resources, one of the property vendors have taken a steady upward climb in the past week, closing at $2.45, up 65 cents from two weeks ago.

Once freezeup is complete the drill program will likely be extended, The Northern Miner has learned. The zone remains open along strike and at depth.

The Cass zone is located just two miles southwest of the main 3-million-ton orebody grading 0.24 oz gold per ton that has already been delineated by Echo Bay. Both zones are on what are known as the Kim claims held by Petromet and Comaplex Resources Int’l., both of Calgary.

Before the three companies could make a decision to go underground on the main Kim zone (which by itself could probably support a 1,000-ton-per-day, 80,000- oz-per-year mine-mill) in 1985, the higher grade Cass showing was located by basic prospecting. Subsequent drilling on the showing has taken precedence over work on the main zone.

Nigel Cawthorn, project geologist for Echo Bay, told The Northern Miner at the Gold ’86 conference in Toronto that assay results have not been released due to discrepancies in preliminary core assays to visible gold content. All the mineralized core will soon be crushed and assayed to avoid the nugget effect and give a true assay of the drilling so far.

The gold mineralization occurs in a series of quartz veins, veinlets and stockwork systems with associated sulphides within a gabbro unit. The zone has been delineated for 985 ft so far and has been investigated to a depth of 220 ft. True widths range from a few feet to 50 ft. The average is 16 ft.

Petromet, which is debt-free and has $1.3 million in working capital, should have no trouble meeting its commitment to pay 30% of the cost of the expanded program to retain its interest in the ground. In fact, corporate management would very much like to see exploration on the property pick up at an even brisker pace.

“We feel the Kim claims will be in the very senior category in the near future,” President Donald A. Sawyer told shareholders at Petromet’s annual meeting in Toronto in July.

The property is located midway between Echo Bay’s Lupin mine and Yellowknife. To provide road access a new ice road would have to be established from the northern capital. An existing ice road that supplies the Lupin mine is routed northeast from Yellowknife. In the second quarter of this year, 45,915 oz of gold were produced at the Lupin mine.

Some Petromet shareholders believe, however, that Echo Bay is dragging its heels a bit in developing a mine on the Kim claims. They speculate it could be because of a disagreement with the federal government over taxes on the Lupin mine. Since the mine came into production, Echo Bay has moved its supply base from Yellowknife to Edmonton and has farmed out a lot of its ground around the mine to junior mining companies instead of spending money on exploration itself — two moves which could be interpreted as being political actions against the federal government’s taxing policies.

In the second quarter, Echo Bay had net earnings of $6.3 million on revenues of $34.3 million compared to earnings of $5 million on revenues of $20.5 million in the same year-ago period.