Prime exploring possible extension to 21B zone at Eskay Creek mine

Exploration work at the Eskay Creek property in northwestern British Columbia may have identified a stratigraphic extension of the main 21B ore zone being mined by Prime Resources Group (TSE).

The Eskay Creek mine, which officially opened in August of this year, is one of the highest grade gold-silver mines in North America, and Prime is understandably keen to expand reserves.

The new zone, called the NEX, has been intersected by ten surface holes on roughly 25-metre centres over widths ranging from 1.5 to 9.6 metres. One of the most significant intersections returned 4.8 metres grading 74.45 grams gold and 3,128.6 grams silver per tonne.

Prime recently completed an additional seven holes on the NEX zone in an effort to estimate a geological resource and gain a better understanding of the new zone. Assay results from the new drilling are pending.

Ron Britten, regional exploration manager for Homestake Canada (which owns 50.6% of Prime’s outstanding shares), says it is too early to calculate a tonnage. However, he does not hesitate to say that the NEX zone has the potential to add to the known ore reserves.

At the end of 1994, diluted minable reserves at Eskay Creek were estimated at 1.1 million tonnes grading 65.41 grams gold and 2,928.1 grams silver.

Prime President Ronald Parker says the mineralization in the new zone is somewhat different from the main ore body in that it appears to contain only small amounts of the deleterious elements such as mercury, arsenic and antimony.

The zone also appears to have an east-west strike, with a dip of over 40 degrees to the north. The main ore body, on the other hand, strikes north-south and dips 30 to 35 degrees to the west.

Located towards the northern end of the original claims, the new zone is well positioned for access from the Eskay Creek mine’s current underground workings.

The success of the 1995 exploration program has prompted Prime to increase its 1996 exploration budget to $1.8 million from the $600,000 which the company had planned to spend this year.

At full production (300 tonnes per day), gold and gold-equivalent output from Eskay Creek is projected at 320,000 oz. per year, at a cash cost in the US$185-per-oz. range. The ore is shipped directly to smelters for processing.

Significant intercepts from the ten-hole program on the NEX zone are as follows:

Hole Interval(m) Width(m) Gold(gm/tonne) Silver(gm/tonne0 95-1 58.0-59.5 1.5 17.67 744.1

and 75.8-80.9 5.1 10.49 437.1

95-2 60.7-62.4 1.7 6.60 502.7

95-3 58.6-62.5 3.9 11.55 2518.4

and 107.7-109.8 2.1 69.12 2826.5

95-4 63.6-65.8 2.2 4.33 274.1

95-5 63.8-73.1 9.3 45.92 2212.9

95-6 095.1-100.9 5.8 7.27 591.7

95-8 39.2-41.2 2.0 35.23 1267.6

and 76.0-80.8 4.8 74.45 3128.6

95-9 099.5-101.0 1.5 21.07 47.1

95-10 79.3-87.9 9.6 8.75 10.1