American Bullion drilling Red Chris copper-gold deposit

In one of the largest exploration programs under way in British Columbia, American Bullion Minerals (VSE) is endeavoring to develop an open-pit resource at its Red Chris copper-gold project near this mountainous, northwestern community.

Supported by a 25-man camp, two drills are turning ’round the clock. The current phase, consisting of roughly 22,000 metres, began May 1 and is scheduled to be completed by the end of August. And during a recent site visit to the bustling camp, The Northern Miner learned that American Bullion has entered discussions with its partner, Teck (TSE), to extend the drilling program by an additional 15,000 metres.

Teck holds a 10% participating and a 10% carried interest in Red Chris, with American Bullion holding the remaining 80%. A 1.8% net smelter return royalty, reducible to 1%, is held by Falconbridge (TSE).

American Bullion President John Brock wants to advance the project as quickly as possible, believing it more economical to complete the drilling this season rather than spread it over another year. With an average yearly snowfall of 0.6 metre, weather conditions are not expected to hamper drilling.

A prefeasibility study is due by year-end.

Teck can increase its interest to 55% by funding the project through to production, in which case American Bullion would retain a 45% carried interest.

Red Chris consists of 396 claim units covering a 100-sq.-km area, 12 km east of the Stewart-Cassiar Highway. The area is 300 km, by road, from the port of Stewart, and 10 km west of B.C. Rail’s graded right-of-way to Dease Lake. The finished railhead is about 120 km to the south. An existing 7-km access road to the site is said to require upgrading. A review of the B.C. Hydro grid upgrade along the Stewart-Cassiar corridor is under review.

The exodus of both junior and senior exploration companies from the province in the early 1990s created a good opportunity for American Bullion to concentrate its efforts in the province, Brock says. In late 1993, the company capitalized on a weak domestic mining market by reaching an agreement with Falconbridge and Norcen Energy Resources to acquire their combined 80% stake in Red Chris.

The property rests on a plateau within a 5-km-long, porphyry copper-gold system. Prospecting in the late 1960s and early 1970s uncovered copper stainings along the cuttings of two dredges. The area now known as the Yellow Chris zone was subsequently staked by Great Plains Development, while the adjacent area to the east, which overlies the Red Chris zone, was staked by Silver Standard Mines.

Past exploration

In the late 1970s, Texas Gulf Sulphur Co. explored the central portion of a geochemical-geophysical target, and by 1981, a total of 74 holes had been drilled. Reserves at the Red Chris zone were reported to be 29.9 million tonnes grading 0.73% copper and 0.48 gram gold per tonne within an overall, wide-open resource of 135 million tonnes grading 0.38% copper and 0.25 gram gold.

In 1994, American Bullion drilled 58 holes totalling more than 21,000 metres in a program designed to expand reserves. At the end of last year’s field season, Red Chris was defined along a strike length of 1,300 metres, a width of 150 to 500 metres, and to an average depth of 300 metres.

A preliminary scoping study by consultant Fluor Daniel Wright calculated mining reserves within a 300-metre-deep open pit. Based on 129 holes and using a copper cutoff grade of 0.3%, reserves are estimated at 157 million tonnes grading 0.48% copper and 0.37 gram gold, with an overall stripping ratio of 3.22-to-1. Unique to the deposit are two near-surface, high-grade, stockwork copper-gold zones containing a geological resource of 100 million tonnes grading 0.58% copper and 0.46 gram gold.

Based on a 50,000-tonne-per-day operation, the project, as currently defined, has a mine life of nine years. Brock would like to see at least 220 million tonnes of reserves outlined, which he believes would be sufficient to sustain a mine life of 14 to 15 years.

Using a less conservative, lower cutoff of 0.2% copper, reserves are estimated at 263 million tonnes averaging 0.39% copper and 0.3 gram gold at a stripping ratio of 1.52-to-1. However, management of American Bullion believes the copper cutoff of 0.3% should be used, as this would establish a reserve grading in the order of 0.5% copper and 0.4 gram gold.

Fluor Daniel Wright is assessing the possibility of mining the Red Chris deposit beyond open-pit limits, specifi- cally by underground, block-caving methods. A grade of 0.7% copper and gold-equivalent is required before such a program can be implemented.

Standard flotation advised

Metallurgical tests indicate the ore can be processed by standard flotation. Recoveries of 87% copper and 69% gold resulted in concentrates grading 28.3% copper and 15.6 grams gold.

Mineralization at Red Chris is subvertical and occurs as both fracture-controlled and disseminated chalcopyrite and pyrite within a host-intrusive, plagioclase-hornblende, monzodiorite porphyry, referred to as the “Red stock.” Higher-grade values are associated with a central quartz stockwork that extends to a depth approaching 750 metres below surface. Potassic alteration increases with depth, and mineralization becomes increasingly bornite-rich. Gold-to-copper ratios tend to increase as well, from 0.8-to-1 at surface to 1-to-1 at depth.

Exploration in 1994 targeted the entire mineralized system within the intrusive Red stock. Grid-controlled, induced-polarization (IP) surveys, combined with soil sampling, outlined an anomalous area 3 km long by 600 metres wide. Drilling prior to the 1995 season had defined about 35% of the potential target area.

A 1-sq.-km IP anomaly, along with coincident geochemical values, was also outlined to the west of the Red Chris deposit in the area known as the Yellow Chris zone.

Seventeen widely spaced drill holes have tested the Yellow Chris area during the current 1995 field program, confirming the existence of copper-gold mineralization to a depth of 350 metres in host rock similar to Red Chris. Brian Thurston, a geologist of American Bullion, is hard-pressed to tell the difference between the quartz stockwork-sericite alteration encountered at Yellow Chris and the main central zone at Red Chris.

Advancing Yellow Chris

One objective of an expanded drilling program would be to advance the Yellow Chris zone to the proven and probable category, rather than have the reserves categorized as possible. Exploratory holes would also be drilled to check for continuity between the Yellow Chris and Red Chris zones.

To date in 1995, American Bullion has spent $2 million and drilled 43 holes, representing 15,250 metres of the budgeted 22,000 metres. This year’s drilling on Red Chris has succeeded in extending the mineralization to a depth of 750 metres, and has also extended the southern boundary, where elevated gold values were encountered.

Drilling is currently stepping out along the northern and western extensions of the deposit, and the company expects to update reserve calculations, based on 170 holes, within the next couple of weeks.

A series of shallow, geotechnical holes are also being drilled, the intention being to assess the rock mechanics of the proposed pit wall. If the quality of the rock is such that it enables a steeper slope to the pit, the stripping ratio could be decreased and a deeper pit created.

At the end of the current phase of drilling, Brock wants to have $1 million remaining in the company’s treasury. If the drilling is to be extended by another 15,000 metres, he says the company will look to raise about $3 million through additional financing. When all is said and done, American Bullion expects to have spent $11 million on the Red Chris project, from acquisition through to the prefeasibility study.

The company has 10.1 million shares outstanding (12.1 million fully diluted).