Omni active exploring major Yukon gold find

The most significant gold discovery in the Yukon’s Wheaton River Valley in many years has been made by Vancouver-based Omni Resources. The importance of the find has been known for at least a year because an agip Canada official expressed considerable interest in the Omni property at the agip — Erickson Mt. Skukum mine opening last summer.

Omni acquired the adjoining ground in early 1985 and has since expanded its land position to approximately 311 claims. A number of associated companies are also involved in the region so the land position controlled by the Omni Group is formidable to say the least. In terms of infrastructure and accessibility, the Omni property is well located by Yukon standards which will be a key element in determining project feasibility. It’s about 55 miles from the territorial capital or an hour’s drive.

Two geochemical anomalies were drilled in 1985 which led to the discovery of the Rainbow and Road zones. A year later, the Kuhn zone was found which, combined with the Rainbow, represents approximately 600,000 tons grading 0.4 oz gold equivalent, says Vance Thornsberry, project manager. This compares to 418,000 tons of similar grade material at the end of last year’s program. Incidentally, the zones are still open at depth and along strike.

The vein structures dip vertically and strike into the mountainside which has made drilling difficult. So Omni drove an adit into the main zone which, together with crosscutting and drifting, comprises about 2,700 ft of underground development. The adit is sized for production and the company is considering a lower level adit as well. Mr Thornsberry classifies the reserves as drill-indicated but he emphasizes there is some proven tonnage within that inventory.

Drill hole spacing is approximately 100 ft and he is confident the system will contain at least one million tons which The Northern Miner believes to be realistic. Mineralization has been outlined over a vertical extent of 1,600 ft and the company expects that approximately 50% of the vein material would be classified as ore. If this holds true, it will be better than the industry average.

At this stage of exploration, the Road and Rainbow zones are thought to be the same structure. The Kuhn on the other hand is sub-parallel and it joins up with the Rainbow. Reaching the company’s one-million-ton target would probably involve blocking out additional reserves in the Kuhn and Rainbow zones.

Vein material consists of quartz sulphide and The Northern Miner was told that the gold seems to be associated more with pyrite than with arsenopyrite. But one high grade core sample we examined was laced with arsenopyrite, so obviously some detailed metallurgical work will have to be done. Indeed, the company is planning just that. The $2.6-million 1987 exploration program is being funded largely by flow-through and a private placement of common shares in Europe.

The reserve is broken down as follows: 235,000 tons grading 0.25 oz gold and 5.1 oz silver in the Kuhn and 365,000 tons averaging 0.24 oz gold and 10 oz silver in the Rainbow, all undiluted. A rich ore shoot has been discovered in the Rainbow zone and Mr Thornsberry concludes they have 250,000 tons of higher grade material “well within sight.” Two holes in particular returned good values. Hole No 87-17 averaged 0.74 oz gold and 18.4 oz silver over 31.2 ft while 87-15 returned 0.39 oz gold and 50 oz silver across 5.7 ft. Ground conditions are excellent with little rock bolting so dilution should be minor.

Omni expects to work through the winter, possibly with two drills. That being the case, sumps would have to be installed and the workings pumped out to prevent freezing. Sufficient water exists underground for their drilling purposes, they anticipate.

Richardson Greenshields’ mining analyst, David R. James, believes the project could see production sometime in 1989. He feels the target reserve of one million tons would support a 500-ton-per- day milling operation. Production would probably start at 300 tons per day, increasing to 500 tons out of cash flow. This would be one way of avoiding unnecessary dilution. At $450(US) gold and $6 silver he estimates a net profit of $7.6 million per year or 76 cents per share. This assumes a diluted grade of 0.2 oz gold and 8.6 oz silver.

“The definition by underground drilling of a significantly higher grade ore shoot in the Rainbow will likely dramatically enhance the initial year’s production and earnings picture,” he concludes.