Surluga gold mine gets another look

The open pit potential of the mothballed Surluga gold project near Wawa, Ont., is going to be investigated, thanks to a recent agreement signed by Citadel Gold Mines (TSE) and Pan Orvana Resources, a private company funded by Rio Algom (TSE). Underground operations were suspended at the former Surluga mine property six months ago. Remaining reserves were estimated at 385,000 tons averaging 0.21 oz. gold per ton, according to Citadel.

The recent deal gives Pan Orvana the right to earn a 100% interest in the 30-claim property by spending $50,000 in the first six months, rising to $200,000 in the second year and $400,00 in the fourth year. Thereafter, $500,000 per year will be spent until Pan Orvana produces a feasibility study and starts construction of an open pit mine.

Pan Orvana is a privately owned international mineral exploration company formed by a group of industry professionals. The company has four major ongoing projects in North America. Rio Algom can earn one half of Pan Orvana’s interest in each property by funding feasibility studies and construction costs on the projects.

Citadel shelved the Surluga gold property last September, and a month later, its assets were bought by the Citabar Ltd. Partnership. Citadel retains a 50% net income interest in Citabar after the limited partner has recovered all operating losses and $7-million worth of capital costs, as well as a 6% annual return on its remaining capital contributions.

In the deal with Pan Orvana, Citabar will retain a 20% net profits royalty interest, except for one claim hosting the old Tom zone, in which Citabar has a 33.3% royalty interest. The Tom zone was the site of earlier test mining, and has preliminary reserves estimated at 810,500 tons averaging 0.114 oz.

Citabar also retains the right to conduct milling operations and explore the remaining 170 contiguous claims surrounding the Surluga property. The company is seeking custom mill feed sources for the 500-tons-per-day mill and will conduct a detailed exploration program in 1990.