Major firms big players on Newfoundland scene

Gold has lost its lustre for junior exploration companies on the Newfoundland mining scene, and base metals are rapidly becoming a play for only some of the bigger prospectors.

About $12 million will be spent on mineral exploration in the province this year, provincial officials estimate, but most of it will come from the coffers of major firms such as BP Canada (TSE), Noranda (TSE) and Rio Algom (TSE). It’s a staggering drop from just three years ago when companies spent over $40 million on exploration.

Officials in the province’s department of mines and energy have heard from only a half dozen or so junior firms planning on working ground this summer. Last year, dozens of Calgary and Vancouver-based juniors carried out programs, much of it concentrated on the province’s Baie Verte peninsula.

The recession and the elimination last year of federal exploration incentive programs are being blamed as the chief reasons for the drop in activity.

“This is the worst economy I’ve been in since I’ve been in the mining business, and you can print that,” said James Wade, president of Bitech (ASE). “It’s going to get better, it’s a matter of when.”

His feelings on the state of the economy aside, Wade’s company is still one of the few junior outfits willing to risk any money this season. Bitech is trying to raise financing for a $15.5 million gold mine at Nugget Pond in central Newfoundland. National Mineral, which has agreed to put up $4.75 million, has been taken on as a joint-venture partner. Nugget Pond has reserves of 499,000 tonnes with a grade of about 0.37 ounces of gold per ton. Bitech hopes to start production by early 1993.

Long Range Resources (ASE) of Calgary is another junior with definite exploration plans this year. The company is currently negotiating a major deal with BP Resources to work an unidentified claim on the island, but no details are being released until the agreement is signed.

Meanwhile, Long Range will spend up to $50,000 this summer on its wholly owned Pasadena property.

“We had some pretty good discoveries there last summer in terms of geology,” said Long Range President Charlie Dearin. “No fantastic gold discoveries yet, but we do have some fairly extensive alteration zones that are gold bearing. The best way to sum it up is that we’re in the right church, but wrong pew, and we’re hoping to get shifted around to the right pew this summer.”

Long Range, along with 25% partner Canadian Gold- mines (ASE), is also budgeting $25,000 for a grassroots prospecting project on the Burin Peninsula, a largely unexplored region of the province.

The company spent $250,000 at its Chetwynd property in central Newfoundland last summer where “we got some interesting results, but not good enough for this kind of climate,” Dearin said. Only a nominal amount will be spent on the property this year, he said.

Manor Resources (ASE) recently let a drilling contract for the testing of 10 target areas at its Virginia gold property in the Grubline play west of Gander. Plans by other junior companies seem less definite. Privately-owned Newfoundland Goldbar Limited is trying to raise money for further exploration of the Glover Island gold play in western Newfoundland. Goldbar optioned the property from Calgary-based Varna Gold two years ago.

Other juniors said to be readying modest exploration programs include Dawson Geological, Bay Roberts Resources, Gander River Resources and possibly Eastern Goldfields (CDN) which worked ground on Long Island off the province’s northeast coast last year.

Fortune Bay Resources has auctioned a property north of the Isle aux Morts River on the southwest coast to Placer Dome (TSE), which will pay for a drilling program and some follow-up work this summer. The property is located close to ground where Dolphin Explorations (TSE) has been trying to raise money for a small mine the last several years, and in the same region as the gold mine owned by Hope Brook Gold (TSE).

On the base metals side, only the big players appear to be active this season, and even their exploration budgets appear modest compared to what was spent last year.

Noranda Exploration and BP Resources are said to be still searching for enough reserves to open a copper, lead and zinc mine at Tally Pond in the central region of the province. Noranda officials have said the main deposit at Duck Pond is “very close” to being minable but more reserves or a change in metal prices is still needed to make a mine feasible. Craig Westcott is a freelance writer in St. John’s, Nfld.