Restrictions delay exploration in Toodoggone area

The British Columbia government has placed onerous environmental restrictions on the project and final approval will be contingent upon Energex meeting these requirements. It’s already completed an in-depth cost analysis and a comprehensive program of metallurgical testing to evaluate the leaching characteristics of Al project ores.

Efforts have been made to finalize government permitting and obtain road access approvals. But Arne Birkeland, president, confirmed the company’s production timetable no longer appears attainable. In order to develop the project on a larger, more economically favorable scale, Energex is now considering taking on a joint venture partner.

An earlier feasibility study considered the processing of higher grade ore at a rate of 200 tons per day and lower grade material by heap leaching on a seasonal basis. Capital costs for the combined operation were projected at $9.3 million.

“The study does not include payments in excess of $3 million demanded by Cheni Gold Mines (TSE) for use of the Omineca Mine Access Road extension during the production period,” Birkeland emphasized late last year. The heap leach operation is budgeted at $3 million and it would involve a production rate of 1,500-2,000 tons per day on a seasonal basis.

Because the province has not agreed to the company’s proposals to handle ore, waste, and tailings, Birkeland said this “may add substantially to operating costs and negatively affect the economics of the project.”

Before the 1988 program, open pit mineable reserves were 360,074 tons grading 0.29 oz gold (0.1 oz cut-off) in three deposits. Geological reserves stand at 1.9 million tons grading 0.16 oz.

Road access is a contentious issue in the region, particularly Cheni’s policy that all companies must sign a liability waiver and pay for road usage.

Multinational Resources (VSE) has been exploring the Baker mine property but its 1989 plans have been put on hold because of the road issue. William Clancy, president, noted that the company has some tentative plans but “they all depend on how quick the government can free up that road so we can get in there.” The Omineca mine road passes through the Baker mine property but Clancy contended the cost of using it is prohibitive. “The road is holding up three potential mines there,” he argued.

He said they would like to do some additional drilling at Baker and possibly go underground. Funds are in place for the work program which would cost $150,000-$200,000 for the next phase, he said.

International Shasta Resources (VSE), whose Toodoggone area property is under option to Esso Minerals, would also like to see the access dispute resolved. The property has been the subject of extensive exploration work over the years which outlined widespread gold-bearing mineralization. Homestake Mining has agreed to buy most of Esso’s exploration properties, subject to rights of first refusal by its joint venture partners. Shasta does not appear to be in a financial position to buy Esso’s share in the property, however. So it should fall into the Homestake fold.

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