San Andreas focuses on reserves

With a 1,200-ton-per-day mill almost ready to turn over and two million tons of ore reserves, San Andreas Resources (VSE) could have a mine operating at the Prairie Creek mine project in the Northwest Territories in months. But that’s not the way President Peter Tsaparas wants it.

“The property has far greater potential than the previous owners realized and we want the reserves for running a 2,000-ton-per-day mill,” he said in Toronto recently.

Five million tons of reserves is the threshold Tsaparas is seeking, and drilling, set to resume in January, could reach that figure in a matter of months if the results are as dramatic as they were this year. Prior to San Andreas moving on to the property in early 1992, proven, probable and possible reserves were two million tons grading 11.75% zinc, 10.8% lead, 0.42% copper and 5.3 oz. silver per ton. Since then, an additional 1.5 million tons of preliminary reserves have been outlined. The year’s dramatic discovery was the location of flat-lying Mississippi Valley type (MVT) zinc and lead sulphides. Until then, exploration was directed toward proving out a steeply dipping vein structure with an average width of 12 ft.

Now the picture has changed. MVT sulphides are the target. They are the type of deposits worked at Nanisivik, Polaris and until recently, Pine Point, in Canada’s North. They have major tonnage implications, and if the structure is there, the separate orebodies can take the form of beads on a string. Pine Point’s MVT orebodies extended 30 miles, with the largest carrying five million tons of ore. San Andreas’ vein structure is intermittently traceable for 12 miles.

So far, the company has 11 holes in the MVT mineralization. Thicknesses range from six feet to 78 ft. and average about 30 ft. Combined zinc and lead content is in the 20-25% range, with a zinc-to-lead ratio of 2-to-1. Copper is negligible and silver values are about half that of vein material. The Prairie Creek project is 186 miles north of Fort Nelson, B.C., and 310 miles west of Yellowknife, N.W.T. Road access is from Watson Lake, with the last 62 miles by winter road (to be upgraded to all-weather status prior to production).

Prairie Creek, known formerly as the Cadillac property, was financed to within two months of production largely by the Hunt brothers of Texas. Silver almost reached US$50 per oz. in 1980. The silver market collapsed during the following months and the property was put on hold in 1982. Litigation stymied any resumption of work until September, 1991, when San Andreas signed an agreement to acquire 60% of the property and 60% of the plant. The agreement requires San Andreas to spend $1.8 million on development by August, 1995, to make a cash payment of $100,000 in 1995 and to issue 100,000 shares to the present owners between 1994 and 1995.

If the owners decide not to pursue their 40% working interest, San Andreas can buy 100% less a 10% net profit interest by spending an additional $700,000 on development and making cash payments totalling $900,000 by August, 1998.