Placer Dome farms out QR deposit to junior

Eleven years ago a significant gold discovery was made near Quesnel, B.C., which later became known as the QR deposit. Dome Exploration, which has since been absorbed into Placer Dome (TSE), evaluated the find over the years and — given its conservative nature — released little information on QR.

But things are going to be different under Placer Dome and its aggressive exploration division which has farmed out the property to QPX Minerals. A private company, QPX will soon go public via a prospectus offering and QR will be its prime asset, certainly the one with the best defined production potential.

There are actually three gold deposits on the QR 1-8 claims, hosting drill-indicated reserves of up to 1.5 million tons grading 0.2 oz gold. One of these zones is apparently mineable by open pit, Lawrie Reinertson, senior vice-president exploration, tells The Northern Miner.

A company consultant reports that in each case the gold is hosted in propylitized carbonate — altered fragmental basalt near the outer extremity of the alteration front and below the base of the siltstone. Gold is present as fine disseminations along boundaries of sulphides, particularly pyrite and chalcopyrite. In general, the best grades are contained within 165 ft of the alteration front. There doesn’t appear to be a direct relationship between the amount of sulphide or intensity of alteration and gold content, his report concludes.

Approximately $8 million has been spent on the project to date which Placer Dome will recover from net proceeds if the deposit reaches production. Reinertson says the agreement on QR is completely separate and not subject to the over- all back-in arrangement on several other properties held by QPX which was agreed to earlier.

Under the QR agreement, QPX can earn a 50% interest for $6 million which is equal to Placer Dome’s cumulative cash costs. (The $8 million figure mentioned earlier represents 1988 dollars.) After those expenditures have been incurred, it becomes a true joint venture.

Fox Geological Consultants, which discovered QR and retains a 2.5% net profits interest through VSE-listed Orbex Industries, will manage the upcoming 2-phase exploration program which should cost about $2.2 million. The program is designed to firm up and hopefully double the existing reserve inventory on the property.

Almost 145,000 ft of drilling has been completed to date in 249 holes. The mineralized alteration zone responds to geophysics and several IP anomalies remain to be drilled, Reinertson claims.

Placer Dome has a 26% interest in QPX which would be diluted down if it does not participate in the upcoming prospectus offering. Last year, QPX raised $3.1 million via a private placement which has been spent exploring its initial portfolio of properties.

By farming out the QR property Reinertson says that Placer Dome can now “focus internal exploration efforts on a number of other major projects which are also in our portfolio. If, as and when the QR becomes a mine, we will profit from both our 50% share of production and through our shareholding in QPX.”