MINING MARKET & INVESTMENT NEWS – INVESTMENT COMMENTARY — Mining analyst puts spotlight on Atna, Northair, Pacific Rim, Valerie

In a report titled Cash, Projects and Expertise: More Opportunities in a Down Market, Tracy Hurley of Wolverton Securities recommends four junior exploration companies on the basis of their promising projects, strong technical management and solid cash position.

“All of the companies are suffering low share prices that are in part due to low metal prices,” writes Hurley. “As with the major producers, a share price turnaround in conjunction with eventual rising metal prices is expected. With exploration programs in progress, there is the added potential of near-term price gains through upcoming favorable results.”

• Atna Resources (ATN-T) — With $15 million in working capital, this volcanogenic massive sulphide (VMS) explorer is awaiting the outcome of a summary trial. At issue is the proposed sale of Boliden‘s (BOL-T) 60% interest in the Wolverine deposit in southeastern Yukon to Expatriate Resources (EXR-V). Atna holds the remaining 40% interest in the project. The court will determine if Boliden’s intended sale has triggered the right-of-first-refusal provision in the Wolverine joint-venture agreement.

  The Wolverine deposit is host to a 6.2-million-tonne resource grading 12.7% zinc, 1.3% copper and 1.5% lead, plus 1.76 grams gold and 130 grams silver per tonne. The deposit, however, contains high levels of selenium, a contaminate, and this has raised concerns about the marketability of the metal concentrates.

  Summer drilling on the Wolf property, situated 65 km from the Wolverine, expanded on the Wolf deposit and made a new discovery on the East Slope zone, where hole 45 intersected 4.6 metres of 5.7% zinc, 2.1% lead and 42.6 grams gold. Additional drilling is planned for next season.

  Meanwhile, Atna has formed an option joint-venture agreement with Energold Mining (EGD-V) to earn a majority interest in the San Antonio concession in the Dominican Republic. The target is a precious-metals-rich VMS prospect. Atna is expected to begin geological mapping and geophysical surveys in preparation for drilling in the new year.

  With 20.2 million shares outstanding (23.6 million fully diluted), Atna has been trading in the 67-75 cents range.

• International Northair Mines (INM-V) — With 5.1 million shares outstanding (6.7 million fully diluted) and $1.25 million in cash, Northair, too, is recommended as a buy.

  The junior is in the midst of a 10-hole reverse-circulation drill program at its Venturina gold-silver property in Mexico’s Chihuahua state. The company is exploring Venturina for its bulk-tonnage potential, the main target having been traced over a strike length of 1,500 metres and a width ranging from 15 to 100 metres. More than 400 chip and channel samples returned an average grade of 1.67 grams gold and 39 grams silver per tonne. More recently, 124 samples collected from historic underground workings in the zone averaged 3.03 grams gold and 59 grams silver.

  Hurley points out that Northair is the first company to conduct modern exploration at Venturina and that no prior drilling was carried out. Northair’s drill results are expected in December.

  In recent weeks, Northair’s stock has been trading in the range of 60-70 cents.

• Pacific Rim Mining (PFG-T) — With $9 million in working capital and several properties in Argentina and Peru, Pacific Rim is led by Catherine McLeod-Seltzer of Arequipa Resources fame. The company’s projects range from grassroots to the more advanced-stage Diablillos silver-gold property.

  Situated in northwestern Argentina and operated by 70%-owner Barrick Gold (ABX-T), Diablillos is host to numerous precious metal showings. These include the Oculto zone, which was estimated in 1997 to contain a resource of 26.1 million tonnes grading 109 grams silver and 0.34 gram gold. An updated resource estimate is pending.

  Northwestern Argentina is also the location of Pacific Rim’s La Colorada zinc-lead-silver VMS property, where a 1,000-metre drill program is testing two massive sulphide horizons that were delineated by geological mapping and geophysics.

  The company has 20.1 million shares outstanding (24.7 million fully diluted) and is trading in the 75-81 cents range.

• Valerie Gold Resources (VLG-V) — One of the Lang Mining Group of companies, Valerie is currently sitting with $15 million in cash and 12 million shares outstanding (13.3 million fully diluted). The junior has been trading in the range of 73-77 cents, at a discount to cash value.

  Exploration efforts are focused on the past-producing Estrella property, in the western Mexican state of Nayarit, which is prized for its low-grade, bulk-tonnage potential around high-grade quartz-veins.

  Initial chip sampling over a 100-metre-long area of quartz veining and alteration averaged 1.3 grams gold and 9.64 grams silver for 41 samples. A US$250,000 program of surface work is aimed at outlining areas for drill testing in early 1999.