Road extension to benefit Toodoggone

The decision by Cheni Gold Mines (formerly Serem) to develop its Lawyers property north of Smithers, B.C., should benefit other operators in the region. While the exact impact is difficult to quantify, the 64.3-mile extension to the Ominca mine road will at least improve exploration logistics in the area. It could also have a favorable impact on the economics of several advanced-stage properties there as well. At the moment, the Lawyers property is accessible only by helicopter or fixed-wing aircraft using a 5,300-ft gravel airstrip at Sturdee Valley some 14 miles to the south. This same strip is also a staging area for regional exploration work by dozens of companies. The airstrip can handle Hercules aircraft, the type used by Du Pont to develop its now dormant Baker mine project.

Road construction is scheduled to begin this year prior to major on-site in summer to transport fuel and bulk supplies but it will be closed in winter. (At a recent information meeting held in conjunction with its prospectus A offering, Cheni said the road would be private. But given the fact the f provincial government has loaned the company $3.5 million to constructthe road this seems highly unlikely). Under certain conditions (if the access road is beneficial to other mining developments), the loan is forgivable.

Precious metal values were first discovered in the Toodoggone area in 1968 by Kennco Explorations. The company later optioned the Lawyers property to Semco Mining while retaining a carried interest. Shortly after, Serem entered the picture followed by minority interest holders Agnico-Eagle Mines and Sudbury Contact Mines, all of which declined to participate further after the 1981 work program.

This February under separate agreements Kennco, Semco, Agnico-Eagle and Sudbury Contact were bought out for an aggregate price of $3.2 million, tidying up the property ownership and making it a bankable situation for Cheni.

The gold-silver mineralization on the Lawyers property occurs in quartz-vein stockwork bodies with chalcedony breccia zones which appear to be controlled by fracture systems. This type of epithermal mineralization is typical of most other epithermal deposits in the Cordillera of western North America. Mineralization is found in the form of free gold, electrum (a natural alloy of gold and silver), native silver and argentite, a silver sulphide. The ore contains only minor parts of sulphide and is very clean.

Three mineralized deposits have been outlined on the property: the AGB zone, the Cliff Creek zone, and the Duke’s Ridge. All three deposits contain shoots of high grade gold- silver mineralization in a complex system of chalcedony breccia and quartz-vein stockwork bodies.

More than 47,930 ft of diamond drilling and 4,861 ft of underground development work have been completed to date on the AGB. This zone strikes north-south and extends for at least 1,800 ft with widths up to 40 ft. The Cliff Creek zone is parallel and lies approximately 1.2 miles to the west. It has a strike length of at least one mile. About 18,000 ft of diamond drilling has been carried out on the north end of this zone but only over a strike length of 680 ft and to a depth of 860 ft. No underground work has been carried out here.

The Duke’s Ridge zone, a cross structure between the Cliff Ridge and AGB, was discovered in 1982. Only preliminary drilling has been done on this zone which has a strike length of approximately 1,470 ft. Reserves for the three zones total some one million tons grading 7.6 oz silver, 0.21 oz gold or 0.317 oz gold equivalent. The company uses a gold/silver price ratio of 70 oz silver to one ounce gold which at the time did not appear to take into account the lower recoveries (75%) for silver.

Cheni has a $21.9-million writeoff available from previous mining exploration and development expenses which is deductible against taxable income in future years. Analysts agree that the writeoff probably weighed

Energex Minerals says a “modest high grade operation from three open pits” e may be feasible at its property in the Toodoggone area. The company notes f that significant cash flow may be achieved from a 5-year operation based on a 100-ton-per day milling rate with a payback period of less than 1.5 years. Energex expects to increase project life by blocking out additional reserves in 1987. Reserves in all categories at present are one million tons grading 0.2 oz gold, including proven and probable reserves of 262,242 tons grading l0.2 5 oz gold uncut and diluted.

The 1987 field program will consist of an initial $1-million expenditure to increase its reserve base. A second-phase program will be considered to more broadly test known structures with an emphasis on deep drilling. Energex says that design engineering, permitting and other preproduction activities will occur during the second phase which is estimated to cost a minimum of $2 million.

Drilling is expected to resume sometime this month but this could be delayed somewhat because of heavy snowfall in parts of the Toodoggone this year. Route selection, surveying and road design will also be required for a spur road linking the Energex property to the extended Omenica mine road.

Energex believes that another season of exploration will substantially increase the property’s reserve base, adding that future exploration will be financed from mine cash flow.

Multinational Resources is another active participant in the area. With milling facilities in place, the company could be in production before Cheni, assuming sufficient reserves are blocked out to justify reactivating Du Pont’s Baker mill. Multinational acquired the mineral rights to the 170-claim Chappelle property in 1985 and carried out a program of geochemistry, trenching and 2,000 ft of drilling. The work focused on several mineralized zones in the vicinity of the former producer which closed several years ago.

The 1986 program followed up on the good results obtained a year earlier on the B zone which, as originally defined on the Chappelle property, is situated 1,200 ft northeast of the A vein mined by Du Pont from 1981-83. The surface expression of the zone includes several 1-2-ft-wide, west-northwest striking quartz veins which dip 50 degrees to 60 degrees to the northeast and contain low gold and silver values.

The alteration zone was tested by Du Pont in one hole in 1981 which yielded no significant values. Multinational drilled two holes in 1985, one of which returned 14 ft of 0.327 oz gold. A well-mineralized blind quartz vein structure was defined by subsequent work. This structure has an apparent true width of 8-25 ft with better gold and silver grades occurring over a 7-ft average true width. These values are in an oreshoot over a 200-ft vertical interval within the plane of the vein.

The B zone has been drill tested over a strike length of 450 ft and to a depth of 425 ft below surface. Significant drill intersections include 11.3 ft and 7.5 ft in hole M86-19 grading 1.2 oz gold per ton with 3.1 oz silver and 1.4 oz gold and 0.87 oz silver respectively. The last hole drilled intersected 16.8 ft of 1.7 oz gold and 21.3 oz silver including a section averaging 10 ft of 2.8 oz gold and 32.5 oz silver.

Indicated reserves in the B zone are 40,000-50,000 tons ranging from 0.52 c oz to 0.66 oz gold and 4.2 and 6.1 oz silver per ton. The zone is open to o depth and along strike, particularly to the northeast. The B zone is thought to be an extension of the A vein structure.n

Multinational’s 1987 program of exploration and development will include an initial 5,000 ft of drilling to further define the B zone prior to a proposed underground drifting program to assess the continuity of grades and ground u conditions.

One of the almost overnight successes in the region has been the Golden Rule/Manson Creek Mets project. Although the property has been workedfor several years, it really began to blossom in 1986 following a carefully planned and well structured program that delivered results. Manson Creek has earned a 50% interest in the Mets proper
ty from Golden Rule by funding $675,000 in exploration work on the property. Last year, diamond drilling outlined a high grade gold- bearing oreshoot that contains about 92,000 tons grading approximately 0.334 oz gold. The epithermal gold zone has not been fully delineated by drilling and is open along strike, down dip, and along plunge. The mineralization is structurally controlled and is locally offset by post mineralization faulting.

Besides diamond drilling, further backhoe trenching, geophysical sampling and geochemical survey work was undertaken on the property to test anomalous gold-bearing breccia zones and to establish diamond drill targets.

Plans for this year include a $1.1-million diamond drilling program on the A zone to outline and delineate the high grade gold mineralization. Further trenching and drilling will be conducted on other anomalies on the Mets property.

Esso Resources Canada has optioned International Shasta Resources’ gold/silver property in the Toodoggone and a minimum $500,000 work program is planned this season. Initial work will involve extending and filling in existing grids on the property, completing detailed geological mapping, and filling in soil geochemistry at 25-m centres. This will be followed by 2,000 m of trenching and 1,600 m of diamond drilling this season. The work will be focused on extending known mineralization and exploring new target areas on the approximately 4,400-acre property.

International Shasta successfully appealed an earlier court decision which awarded Vancouver-listed Arctic Red Resources the right to earn an interest in the property under an agreement with Newmont Mines.