Newmont resumes search at Limousine Butte

In preparation for a third round of drilling on the Limousine Butte gold property in east-central Nevada, a field crew from Newmont Mining (NEM-N) has begun soil sampling and ground geophysics prior to final selection of drill holes.

Newmont can earn up to a 70% interest in the project from Nevada Pacific Gold (NPG-V). Situated in White Pine Cty., 40 miles northwest of Ely, the property covers 15 sq. miles on the eastern portion of Butte Valley, along the western edge of the Cherry Creek range. It is accessible by gravel road from the townsite of Cherry Creek.

Newmont can earn an initial half-interest by spending US$1 million on exploration over four years. A further 20% can be earned by spending an additional US$2 million in years five and six. Newmont is just completing year two of the option agreement and, to date, has spent about US$750,000 on the property.

Exploration for copper in the 1960s led to the discovery of a deep-seated porphyry system in the southwestern portion of the property. The buried intrusive has extensively altered and mineralized the surrounding calcareous sandstone and shale units of the Pilot, Joana and Chainman formations. During the 1980s, a joint venture between Alta Gold and Echo Bay Mines recovered just under 93,000 oz. gold in a heap-leach operation at the Golden Butte mine, along the northeastern corner of the property. The average grade of the heap-leached material was 0.029 oz. gold per tonne.

Gold mineralization at Golden Butte occurred mainly in the Chainman shale in association with both low-angle and high-angle faults, and a large body of jasperoid.

The discovery of the Golden Butte mineralization prompted exploration along the western flank of the Cherry Creek range. In the mid-1980s, Kerradamex drilled 51 shallow holes along the eastern margin of the Limousine Butte property in areas of outcropping jasperoid.

The project area is underlain by a Mississippian sequence of sediments consisting of calcareous shale, siltstone, sandstone and massive carbonate. The Pilot shale, Joana limestone and Chainman shale units outcrop on the eastern border of the Limousine Butte property and gently dip to the west. The beds are cut by several ages of normal and thrust faults, and commonly host jasperoid-type alteration. Deep drilling in the area of the Butte Valley quartz porphyry intrusive intersected a 394-ft.-thick interval of jasperoid.

Black Metals fault

A large basin-bounded fault, referred to as the Black Metals fault, cuts the property in a northeast-southwest orientation. The buried intrusive appears to lie at the intersection of the Black Metals fault and a north-striking range front fault zone. Alluvium cover masks a large portion of the southern claims.

Nevada Pacific considers the property prospective for several styles of bulk-tonnage gold mineralization, including:

– disseminated and structurally controlled mineralization occurring within the Pilot shale, Joana limestone and possibly the Chainman shale; and

– gold skarn mineralization within, or adjacent to, an intrusive.

Since optioning the property, Newmont has completed geological mapping, chip and soil sampling, airborne magnetic and ground gravity geophysical surveys, and two rounds of reverse-circulation drilling totalling 28,565 ft. This work has resulted in the identification of a 7-mile-long corridor of alteration.

The first round of drilling, completed in November 1999, consisted of 20 widely spaced holes in an area measuring 3 miles by 0.5 mile. Drilling confirmed the presence of a major hydrothermal system. Silicification, clay alteration and hydrothermal brecciation were encountered over a large area. The alteration zones are near the surface and completely oxidized. Pathfinder geochemistry present in the alteration includes arsenic, antimony, mercury, barium and tungsten. Anomalous intervals of gold were encountered in 13 of the 20 holes, with four of the holes yielding 20- to 50-ft. intercepts ranging from 0.016 to 0.061 oz.

In a second phase of drilling, completed a year ago, Newmont drilled a further 36 holes, following-up on known areas of mineralization and new targets in a 6-by-1-mile segment of the project area. Twenty-one of the 36 holes returned gold intercepts of greater than 0.01 oz. Highlights of the better results included 150 ft. of 0.041 oz. in hole 40, 85 ft. of 0.056 oz. in hole 45, 70 ft. of 0.14 oz. in hole 46 (including 30 ft. of 0.26 oz.), and 100 ft. of 0.041 oz. in hole 48.

The next round of drilling will follow-up on significant gold intercepts, as well as newly identified exploration targets. At least eight significant targets have been identified along the 7-mile-long zone of continuous alteration.

Nevada Pacific is a Vancouver-based junior and was founded in March 1997. It is focused on the grassroots search for large, bulk-tonnage gold projects, primarily in Nevada. The company currently owns or controls the mineral rights to more than 120 sq. miles in that state.

Earlier this year, the junior ended a two-and-a-half-year alliance with Kennecott Exploration on the Carlin trend, where the pair controlled 18 sq. miles of properties. Nevada Pacific was able to retain all the properties, except Dixie Flat, which was brought to the alliance by Kennecott. The company has since shopped the package around to several major companies in an attempt to form a new joint venture.

Nevada Pacific has arranged a private placement of 1.5 million units priced at 20 per unit, for proceeds of $300,000. Each unit will consist of one share and one warrant exercisable into one additional share at 25 for 12 months. The junior has 11.5 million shares outstanding, or 15.2 million on a fully diluted basis.