Umex sells claims for $500,000

Vancouver-based Major General Resources (VSE) is poised to pick up a large portfolio of exploration properties from Umex, a subsidiary of Belgium-based Union Miniere SA.

The two companies recently signed a letter of intent which will see Major General acquire all of Umex’s Canadian exploration holdings — about 1,904 claims — for $500,000 in cash and various royalty interests on each property. Umex has been winding down its Canadian operations for a number of years.

The deal, which excludes Umex’s shutdown copper-nickel mine at Pickle Lake, Ont., is subject to the completion of a final agreement and regulatory approvals. The package to be acquired consists of 32 properties, mainly precious metal prospects, totalling about 85,000 acres, nearly 71% of which are in the Pickle Lake gold mining region of northwestern Ontario.

A spokesman for Umex in Toronto told The Northern Miner the deal represents “a real coup” for a junior company like Major General Resources.

Byard MacLean, president of Major General, said “the acquisition of an exploration property portfolio of this calibre is an extraordinary opportunity” for his company. He said it will enable the junior to accelerate its growth through a single acquisition, rather than spend years building a portfolio from scratch.

The Vancouver company will purchase Umex’s properties for an initial cash payment of $250,000, along with a 2-year promissory note for another $250,000 and capped net smelter return royalties on each of the properties.

“It’s a very clean deal for Major General,” says Umex’s Fred Felder. “Most of the properties are wholly owned with only a few encumbered in joint ventures.”

The UMEX portfolio contains 23 properties that are wholly owned. Another seven are in joint ventures with various senior mining companies such as Noranda (TSE), Inco (TSE) and AGIP Canada Ltd.

Up until 1982, Umex had operated an underground copper-nickel producer at Pickle Lake known as the Thierry mine. The low-grade operation was forced to close down due to high operating costs and low metal prices. The Thierry mine is excluded from the current deal, as are Umex’s real estate assets which will be sold separately.

Included in the proposed acquisition are 18-claim groups in Ontario, eight in British Columbia, and six others in Quebec, New Brunswick and the Yukon Territory. Seven of the properties are at the drilling stage, while the others are described as having “significant exploration potential.”

MacLean says Major General will spend $5 million to explore the properties over the next five years. The company currently has about $1.5 million in working capital, and plans to finance the work from internal sources and joint venture ar- rangements. Umex spent about $8 million on the properties between 1983 and 1988.

The most advanced gold project in the package is the Dorothy Lake property, nine miles west of Bond International Gold’s (TSE) Golden Patricia mine near Pickle Lake. Since 1986, Umex has drilled 47 holes totalling 27,500 ft. at Dorothy Lake. Of this total, 32 holes tested the Main zone where preliminary reserves are estimated at 284,000 tons grading 0.18 oz. gold per ton. The estimate is based on 18 drill intercepts to a vertical depth of 500 ft.

Meanwhile, quartz-carbonate zones on the Rendell-Jackman property north of Springdale, Nfld., are yielding interesting gold results for Major General and its 50% joint venture partner Noranda (TSE).

Two drills are at work on the western end of the 87-claim property as part of a 13,000-ft. drill program operated by Noranda. Major General is earning a 50% interest in the claims.

The program, comprising 21 holes, is focusing on four gold zones where encouraging assays were reported previously from surface trenching and drilling. The deepest hole completed to date has tested the 450 ft. horizon.

Among the better results reported from the recently drilled Rumbullion zone are 7.5 ft. grading 0.69 oz. gold, 9.5 ft. of 0.30 oz. gold, 14.1 ft. of 0.25 oz. and 8.2 ft. grading 0.12 oz. per ton. Those intersections came from four different holes spaced about 300 ft. apart along a 1,000-ft. strike length. Surface trench results included 2.1 oz. gold per ton across 8.5 ft. 0.96 oz. gold across 9.8 ft. and 0.52 oz. gold over 8.2 ft.

The Rumbullion zone is about 200 ft. south of an earlier discovery, called the Hammerdown zone, which yielded drill intersections of up to 0.35 oz. across 21.3 ft. Trenching and drilling to date have established a strike length of about 1,150 ft. for the Rumbullion zone. Several parallel quartz veins carry most of the gold.

There are at least four different quartz-carbonate zones with gold- bearing quartz veins over a length of roughly 1,500 ft. near the western boundary of the property. The veins are associated with felsic dykes in sheared mafic volcanic and sedimentary rocks.

The ground surrounding the Rendell-Jackman property is also controlled by Noranda with Springer Resources (VSE) as its junior partner.