$1 million program set for Southlands

Southlands Mining plans to spend at least $1 million this year on Eureka Resources’ Frasergold project, 62 miles east of Williams Lake, B.C.

The program will be partly financed by a flow-through share issue with First Exploration Fund 1987. Altogether, some 370,370 shares will be issued at a price of $2.70 per share.

Southlands has also arranged a private placement through a Vancouver brokerage firm for 250,000 shares at $2, with an option for a similar amount at $2.50 each within a 1-year period.

The Frasergold property consists of 27 claims or about 8,000 acres. It was previously explored by Amoco Canada, which had difficulty establishing the grade and continuity of the mineralized zones.

Last year Eureka continued a program of trenching and bulk sampling which it says established gold grades that were much higher than previously announced. Reverse circulation drilling in the Jay zone also demonstrated that larger volume samples yielded higher grades than NQ drill core, the size used by Amoco.

Southlands, the new operator, says the continuity of high grade surface and underground mineralization in closely spaced holes has been “clearly demonstrated.” The company notes that grades up to 0.5 oz gold per ton over 2-3 m mining widths can now be expected, compared to previous averages of 0.2 to 0.3 oz. Wider zones up to 30m suggest open pit potential in the range of 0.06 to 0.1 oz gold.

The company says 20 million tons of open pit reserves are indicated thus far grading 0.06 oz, 1.2 million tons of higher grade underground reserves averaging 0.4 oz.