U.S. MINING REPORT — Exploration revival on Battle-Eureka

The southern portion of the Battle Mountain-Eureka Trend in eastern Nevada has heated up since Homestake Mining (NYSE) announced an impressive gold discovery there late last year.

Since the discovery was made (in the Ruby Hill district), at least 125 holes have been drilled. Up to now, the historic camp was better known for its silver and base metal deposits than for its gold mining potential. This year, Homestake plans to spend US$4 million on delineation drilling, and only after the work is completed will a reserve estimate be made. Nevertheless, the significance of the discovery has been confirmed by results from individual holes which returned highly encouraging values over impressive widths. A recent hole encountered 0.147 oz. gold per ton over 435 ft.; others returned gold grades and intersected widths ranging from 0.066 oz. over 180 ft. to 0.51 oz. over 120 ft. Of the 125 holes drilled, more than 50 intersected mineralization grading better than 0.03 oz. over a minimum thickness of 30 ft.

The mineralized area is now known to extend for more than 3,000 ft. of strike. The zone is largely oxidized and covered by alluvium ranging in thickness from 50 to 500 ft.

Homestake has staked additional claims, thereby securing a large ground position around the discovery. Meanwhile, Canadian juniors such as Cathedral Gold (TSE) and X-Cal Resources (TSE) have wasted no time staking their own claims in the region. Also active in the Trend is Atlas (NYSE), which has stepped up the pace of exploration on ground encompassing its producing gold mine.

The Battle Mountain Trend is best known for the impressive discoveries made in recent years by a unit of Placer Dome (TSE). These include the Pipeline gold project and the nearby South Pipeline deposit. Both joint-venture projects are southwest of, and parallel to, the even more famous Carlin Trend. In the next few years, the 60%-owned Pipeline deposit is expected to begin contributing to Placer Dome’s gold output. A feasibility study indicates that 3.7 million oz. are recoverable during a 12-year life, at 4,500 tons per day. Including royalties, the average cash cost is projected to be US$110 per oz., which would make it Placer Dome’s lowest-cost mine.

Permits are being sought to develop a US$250-million operation based on 35.2 million minable tons grading 0.12 oz. A major obstacle exists, however, as about 40% of the deposit is the subject of a legal dispute between Placer Dome and Gold Fields Mining.

Last year, Placer Dome began a US$6-million program to explore further the South Pipeline deposit, which already has a drill-indicated resource of more than 2 million oz. The work involves 140,000 ft. of expansion and infill drilling.

Adjacent to Pipeline, Amax Gold (NYSE) is planning more work to test targets on a land package held by Coral Gold (VSE). So far, a geological resource of more than 20 million tons grading 0.036 oz. has been identified. In August, 1993, Amax notified Coral that it intends to enter the third phase of exploration under their option agreement. The major is committed to completing a bankable feasibility study, enabling it to earn a 60% interest in the Robertson property.

Several juniors have acquired ground near Pipeline and South Pipeline, although nothing major has been discovered. Exploration nevertheless continues, lending credence to the adage that the best place to find an elephant is in elephant country.