McChip exploration to continue in 87

Despite a drop in international oil prices which reduced the company’s revenues from $589,745 or 20 cents per share in 1985, to $215,598 or 7 cents per share during fiscal 1986, McChip Resources plans to continue its mineral exploration activities this year.

The Toronto company is involved in two joint venture projects with Noranda Exploration. They include the Garrison Twp. project east of Kirkland Lake, Ont., where four diamond drill holes were drilled in March, 1987, on the west-central part of the 42 claims.

McChip will earn a 50% interest in Noranda’s 70% share of the property by spending $100,000 in 1987 and an optional $300,000 in 1988. After that, expenses will be shared on a 50-50 basis.

In late 1986 Noranda offered McChip 50% of 72 contiguous claims in Stock, Macklem and German Twps., Ont., where Noranda’s ownership varies from 60% to 100%.

As part of the agreement McChip must spend $300,000 during 1987 and an optional $400,000 in 1988 after which expenses will be shared on a 50-50 basis.

According to President Paul McCloskey, past diamond drilling on the joint venture ground in Macklem Twp. obtained notable gold-bearing quartz veins in the feldspar porphyry. The best intersections included 0.328 oz gold per ton across a 43-ft section, 0.19 oz gold per ton across a 5.3-ft section and 0.16 oz gold per ton across 26 ft.

While exploration continues on these properties, McChip continues to hold a 7% working interest in a heap leaching project in Nevada where production of open pit ore in 1986 was 4,300 oz.

To prepare for mining of 5,500 oz of higher grade ore in 1987, an inclined opening was started during 1986. At $400(US) per oz of gold, cash flows to McChip in Canadian funds are expected to be $60,000 in 1987 and $100,000 in 1988.

The company’s cash flow from its oil and gas ventures in Canada and the U.S. decreased 25% in 1986 to $669,920 from $924,401 in 1985. It expects cash flow from the Signalta Joint Venture in Leduc, Alta., (McChip 2%) and wholly- owned subsidiary — McChip Resources U.S.A. — to stabilize at around $700,000.

McChip shares were trading recently on the Toronto Stock Exchange at $2, just below their 52-week high of $2.30 but well above their low of $1.05.