Production imminent, Royex eyes Hedley

With production from its Mascot gold mine scheduled for mid-1987, Royex Gold Mining has moved decisively to expand its land position around Hedley in south-central B.C. Royex will take a share positon in Golden North Resource Corp. and ultimately could end up in firm control of the company and its strategic Hedley holdings.

John Godfrey, Golden North’s president, was responsible for putting the properties into a nice tidy package for Royex which could get 22% of the company under the present agreement. The fragmented nature of the various land holdings in the region probably prevented such a rationalization in the past. Royex will take 500,000 flow- through common shares at $3 each and a similar amount of common shares at $2 a piece. The latter shares will have a warrant attached to purchase 250,000 shares at $2.25 each.

Senior officers of Royex, its parent International Corona and Mascot Gold Mines will join the Golden North board, which includes: Peter Sheen, Ned Goodman and Henry Ewanchuk. Mascot will supervise and develop programs on Golden North’s claims which incidentally adjoin the Mascot gold mining operation and are strategically located for eventual production.

Several weeks ago, Golden North announced the completion of a merger with Good Hope Resources with the former being the continuing company. It was done on a one- for-one basis, leaving Golden North with a hefty balance sheet of $2.7 million in cash and receivables with no debt. Mr Godfrey says the company’s oil and gas properties plus interest income are generating a cash flow of about $50,000 per month.

He says Mascot is now drilling the Horsefly Terrier claim group, which borders Mascot’s open pit to the south and west. Thirteen of these claims were sold earlier to Mascot for $500,000, but Golden North retained a 20% net profits interest.

Mr Godfrey believes the Mascot orebody extends onto ground held by Golden North and he confirms a “big drill program” is planned in the near future for the Canty property and possibly some underground drilling on the Mascot fraction. A number of other good targets exist as well.

The Canty property is about one- half mile from Mascot’s new gold mine and it hosts about 760,000 tons of reserves grading 0.12 oz gold. The gold is disseminated in arsenopyrite and associated with pyrrhotite and chalcopyrite. And the zone is believed to be open to the south, the east and also to depth.

The area from surface to a depth of 800 ft at the old Hedley Mascot has never been explored and the open pit potential there is thought to be around 600,000 tons at least, says Golden North.