Starrex’s Star Lake mine sparks gold rush in Sask.

The Star Lake gold mine in northern Saskatchewan is one of the pleasant stories in recent Canadian mining. In commercial production since the beginning of 1987, its success has sparked somewhat of a gold rush into the hitherto little-known La Ronge area of the prairie province.

“Mine and mill operating profitably; all operating criteria and figures at or above projections,” says S D Moore, president of Starrex Mining Corp. (TSE), a 35% partner in the project.

A report like that can’t help but make shareholders smile.

Other partners in the project are provincial Crown corporation, Saskatchewan Mining Development Corp., which holds a 50% interest and Uranerz Exploration & Mining, a wholly-owned subsidiary of a German company, which holds the balance.

A total of $17 million has been spent on the Star Lake mine with Starrex putting up $2 million during the seven years it’s been involved in the project. Mine and mill financing was repaid 15 months after commercial production began. For the three months since it paid back the cost of financing, Starrex reports a profit of $1.1 million.

It’s not a large mine — reserves at the beginning of 1988 stood at 95,000 tons averaging 0.46 oz gold per ton. Still, it is profitable, and its success has been enough to draw a multitude of players into the area.

The second gold mine to start up here is likely to be Corona Corp.’s (TSE) Jolu mine right next door to the Star Lake mine. While Corona owns only 30% of the mine directly, it is operator. Mahogany Minerals (VSE), holds a 70% interest. Since becoming involved in the project in 1985, Corona has put up about $7 million of the $17-million spent on the project to date. Exploration, development and pre-production expenditures are expected to total about $40 million

Construction of a 400-ton-per- day mill is expected to be complete before the end of October. Mining from a decline, which has been driven to a vertical depth of 270 m, began in May. (Corona reports its information on the Jolu project in a combination of metric and imperial units.)

Project financing to put the property into production was secured through a 35,000 oz gold loan, enough to cover the anticipated $20-million capital cost. Annual production is expected to be 50,000 oz. Mine operating costs are estimated at $170(US) per oz.

Proven and probably reserves currently stand at 606,000 tonnes grading 0.40 oz gold per tonne.

Corona says it plans to put this property into production, then investigate other targets on the 180-ha property.

Those operating and close-to- operating mines make SMDC and Corona main players in this burgeoning camp, and both have several other prospects in the area on the go.

In 1988, SMDC will spend about $8.5 million on some 45 precious and base metals exploration projects in La ronge and Amisk Lake areas.Including two exploration declines, total expenditures in the area will be about $21.5 million.

Its 36%-owned project at Fork Lakes, also known as the Jasper project, is probably the most promising. With partners Golden Rule Resources (TSE), 30%, Mahogany Minerals, 19%, and Shore gold fund, 15%, SMDC is going underground in a $6-million program to examine three levels to a depth of 130 m as part of a feasibility study.

Preliminary geological reserves on the two properties were estimated at 175,000 tons grading 0.72 oz gold per ton.That underground program includes looking at the adjoining Transom Lake property held by SMDC, Golden Rule and Goldsil Resources (TSE).

At Laurel Lake, a 50-50 joint venture with Husky Oil (TSE), a decline is currently into ore on the 40-m level and appears to be confirming reserves of 282,000 tons grading 0.44 oz gold and 2.2 oz silver per ton.

Corona is working on three other properties in the La Ronge area other than Jolu: Madden Lake, Manawan Lake and Nataweuse Lake. All three were staked by Corona in 1987 and are 100% owned by the company.

Trenching at Manwan Lake has given some encouraging results, the company says, with the best being an assay of 0.33 oz gold per ton over 5 ft.

Another property that has been at the forefront of the La Ronge gold rush is Claude Resources (TSE) 100%-owned Seabee property about 70 miles northeast of La Ronge. Claude has held the property for four years and seen $9 million spent on it, but Claude has only put up $500,000 of that. Placer Dome (TSE) spent most of the balance under an option agreement that it dropped earlier this year. Claude says it now plans to do a final feasibility study leading to a production decision. Reserves stand at 813,000 tons averaging 0.36 oz gold per ton, enough to be considered economic the company says.

Claude is involved in several other projects in the area. One of the most promising is the Jojay gold property 60 miles northeast of La Ronge, in which SMDC has a 51% interest, Shore Gold Fund 15% and Claude 34%. Jojay has indicated reserves of 368,000 tons averaging 0.24 oz gold per ton.