Queenston stymied at Kirkland claims

About a year after Queenston and LAC Minerals (TSE) signed an exploration agreement to look for a deep extension of a geological structure known as the Kirkland Lake Main break which has produced 23 million oz gold, the partners are still searching for a legitimate target.

The Main or 04 Break, is known to extend from LAC’s Macassa mine onto the Kirkland West claims, held by Queenston at a depth of about 6,000 ft. LAC has accessed the 04 structure via the 7,000-ft No. 3 shaft on its Macassa mine, which produced 70,000 oz gold last year.

To determine if there is an economic gold deposit on Queenston ground, LAC agreed last April to conduct 5,000 ft of drifting and 15,000 ft of diamond drilling on the 04 structure using the underground workings of its own mine. LAC planned to drift west on three levels from the Macassa mine and into the 04 system where it hopes to find an economic gold deposit.

In return, LAC is earning a 65% share in the first 400,000 oz of gold production before the two companies embark on a 50/50 joint venture. Gerald Gauthier, LAC’s senior vice-president of operations, said his company is currently drifting in the 04 system and with one hole already completed, he plans to drill at 500 ft spacings.

“We are trying to hit a good target. Once that is done the space between drill holes will be reduced,” said Gerald Gauthier.

LAC’s failure so far to come up with economic results at Kirkland West is contributing to what has been a frustrating year for Queenston. With the price of gold down to about $360(US), Queenston is having to play a game of wait and see with a couple of key exploration properties.

While Inco Ltd. (TSE) subsidiary Inco Gold has prepared a feasibility report at the Anoki project near Kirkland Lake, a $65(US) increase in the current price of gold is needed before the project could be considered economic.

After spending $7 million, Inco Gold holds a 65% stake at Anoki while Queenston retains 35%. Mineable reserves now stand at 650,000 tons grading 0.136 oz gold per ton.

Until gold prices rise substantially, joint venture partner American Barrick Resources is unlikely to conduct an underground exploration program at the Pandora property near Cadillac, Que.

After completing 91,000 ft of diamond drilling, operator Barrick has outlined drill-indicated reserves of 2.3 million tons of grade 0.13 oz in three zones. Barrick now holds a 75% interest while Queenston retains 25%.

“When the price of gold bumps up there will be substantial potential in that property,” said Paul Kavanagh, Barrick’s senior vice- president, exploration.

“We have ore quality mineralization for a strike length of 4,000 ft and the deposit hasn’t been tested below 750 ft,” said Kavanagh who noted that the Pandora property is within trucking distance of Barrick’s Camflo mill.

Better news for Queenston, now a 36%-owned affiliate of HSK Minerals (TSE), was a reserve and grade increase on the St. Joseph and Gracie East properties which generated $230,832 in royalty revenues last year compared to $206,156 in 1987. Situated on LAC’s Macassa mine, the two properties now host 337,400 tons of grade 0.64 oz gold per ton.

Queenston is also in a good financial position with more than $2 million in working capital and no debt.

For the year ended Dec 31, 1988, Queenston reported an operating loss of $184,868 compared to a 1987 profit of $570,627. Chairman Hugh Harbinson attributed the loss to a reduction of custom milling revenues from the company’s McBean mill near Kirkland Lake.

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