Nexus spending to soar on St. Joe Red Lake bet

Mine finding — like development — is capital intensive and the availability of exploration funding has always been a key ingredient in discovering new mines. Today that funding is often provided by a junior partner and Vancouver-based Nexus Resource Corp. is playing such a role in St. Joe Canada’s Birch Lake property.

Nexus shouldn’t have any problems financing its portion of ongoing exploration expenditures at Birch Lake. Indeed, the company expects to raise $8 million through First Exploration Fund 1987, about $3 million of which will be directed towards several gold properties on Vancouver Island. Companies in the so-called Nexus Group will raise about $11.5 million this year, the majority of which will go into the ground, so they should be a force to be reckoned with.

In the past, Nexus has been funded by private placements, primarily in Europe and Toronto. The company has funded about $11 million in work by this means and only has 3.6 million shares outstanding, according to James MacNeil, chairman and chief executive officer.

The Birch Lake property is located about 65 miles from this major gold mining centre and Nexus will have provided $3.2 million in exploration funding by the end of February. Mr MacNeil predicted another $4 million to $5 million will be spent there in the upcoming flow-through year. St. Joe will have to match Nexus’ expenditures dollar for dollar after the February program or be diluted down, he pointed out.

St. Joe staked the claims based on gold showings on Horseshoe Island which were noted in a report by the exploration arm of Asbestos Corp. About 600 claims are in the joint venture and about 30% of the main property is covered by water.

Work to date has yielded some extremely encouraging results which are subject to further upgrading by a $1.6-million second- phase program that is currently under way. That program will include some 29,500 ft of diamond drilling and 185 line miles of geophysics.

Approximately 775,000 tonnes grading 0.13 oz gold per tonne has been outlined in the A-B alteration zones and the potential in the C zone, where several significant gold intersections were reported, has not been included in that calculation. That zone, which has been hit in several deep holes, is becoming more and more important in terms of tonnage, admitted St. Joe.

Jim Brisco, project geologist for St. Joe, noted that the A and B ore zones are well defined but not the C zone. They extend from surface, are partly under Birch Lake and possess “bulk tonnage potential,” he explained to The Northern Miner.

The first two occur in a large alteration feature with the A zone mineralization covering a strike length of 885 ft and reaching a depth of 1,260 ft. The strike of the B zone is about 230 ft and it extends to a vertical depth of about 500 ft. The mineralized C zone is “more erratic” and occurs 325 ft north of the A zone, he added.

Most of the A zone is under water so it has been drilled from the shoreline. But it will be tested from south to north from the ice surface this winter, he said. The A and B zones are part of the same alternation structure and the mineralization lies within a major linear magnetic anomaly some 3.5 miles long which marks the contact of the sedimentary and volcanic domains on the property. The gold potential of this structure will be investigated in the current program and several other areas where gold was found in first pass drill programs and geophysical work.

Mineralization at Birch Lake occurs within broad alteration zones associated with felsic intrusives and is also associated with shear zones and vein systems.

Describing initial exploration on the property as “good old-fashioned prospecting,” Mr Brisco said that a number of mineralized showings and gold workings have been assessed and prioritized with respect to association with magnetic structures, favorable lithology and geophysical results. St. Joe has been drilling surface indicators and IP targets in which some extremely encouraging gold values have been found. Sulphide content in the ore zone appears to average 1%-2% and he said there is not much graphite, so they have not had problems with false conductors.

The property is 30 miles from the road going into the old South Bay mine and an abandoned power line crosses the northwest corner of the property. Logging operations are proposed for the area in the near future which will improve access further.