U.S. REPORT (October 28, 1991)

Drilling on the Gibbs property in Mariposa Cty., Calif., continues to return high-grade gold intersections for owners Dessir Resources (VSE) and A.T.& E. Mining.

Dessir is earning a 50% interest in the property by spending a total of US$1.4 million by Nov. 18.

The results included a 104.5-ft. intersection grading 0.48 oz. gold per ton and a 59.5-ft. intersection grading 0.50 oz. gold.

Dessir has drilled a series of holes on three lines about 100 ft. apart to intersect a pod-like structure of quartz-gold mineralization. Assay results have been received for two of the lines while drilling on the third line is reported to have intersected mineralized vein material over widths ranging from 117 to 147 ft.

The pod lies up-slope from the old workings at the Gibbs mine which operated in the early 1900s. Historic production from the mine is estimated at 50,000 tons grading about one oz. gold per ton. The property, more than three miles from the nearest community, lies on National Forest lands, and Dessir does not anticipate any extraordinary permitting problems.

The pod of mineralization pinches out on all sides for a diameter of about 400 ft., ranges up to 150 ft. in thickness, and is thought to be an extension of the Gibbs mine.

Barry Whelan, a consultant for Dessir, estimated the pod contains in the order of 500,000 tons grading close to 0.5 oz. gold but added that a more accurate figure will be released shortly when the company completes a preliminary reserve estimate.

Whelan said geochemical work further up the hillside indicates that the pod-like structure may be repeated a number of times along strike in a series of connected pinching and swelling units similar to the mineralization in the Gibbs and recently drilled area.

Increased production costs coupled with a drop in the price of gold had a negative impact on financial results for Atlas (NYSE).

Atlas reported a loss of US$6.4 million for the fiscal year ended June 30, compared with net income of US$5.3 million in 1990. Total revenues for the year were US$31.2 million, down from US$34.7 million in the previous year. Atlas produced 80,727 oz. gold during the year at its Gold Bar operations in Nevada, off slightly from the 81,263 oz. produced in 1990.

Cash production costs averaged US$207 per oz. for the year compared with US$161 in 1990.

Non-cash costs also increased over the period, jumping to US$98 per oz. from US$73 in fiscal 1990. The increase is related to the amortization of development and preproduction expenses at the satellite deposits as well as costs associated with mill modifications.

Atlas received an average price of US$379 per oz. for its gold production compared with US$397 per oz. in 1990. Atlas has sold forward 30% of its planned production to Dec. 31 at a price of US$414 per oz.

The company is in the process of permitting its Grassy Mountain gold project in Oregon and expects to receive the necessary permits by the spring of 1993. Atlas anticipates production of 100,000 oz. gold and 100,000 oz. silver per year at a cash cost of US$128 per oz. gold when the mine goes into production. Losses from discontinued operations also had a negative impact on earnings. Atlas reported a loss of US$3.9 million from discontinued operations including a US$3-million charge for a reserve to cover potential costs relating to the cleanup of asbestos properties in California. The properties were sold by the company in 1967 and although Atlas is seeking reimbursement from insurance, there is no assurance that it will be obtained.

Hol-Lac Gold Mines (CDN) has entered into a letter of intent to purchase a 50% interest in White Plains Resource (U.S.), a subsidiary of White Plains Resources (VSE), for $1 million.

White Plains has a 100% leasehold interest in the Gilbert property in Esmeralda Cty., Nev., a wollastonite deposit estimated to contain reserves of 56,770 tons grading 50% wollastonite per vertical ft. Extrapolated to 100 ft., the estimated reserve totals five million tons.

The leasehold is subject to a 5% net production royalty payable to the original property vendors and a $1.5-million payment to former owner Sikaman Gold Resources (TSE), two years after the deposit enters into production. Hol-Lac’s purchase is conditional upon the junior obtaining the necessary financing and regulatory approvals within 60 days of the letter. The purchase price will be used to partially finance a 20-ton-per-day pilot plant. Hol-Lac says preliminary milling tests show that commercial wollastonite can be produced from the deposit.