Serem Inc. could be first to produce in Toodoggone area

Exactly when Serem Inc. will make a production decision on its Lawyers property is still uncertain. What is known, however, is the fact the company must decide by March 31 in order to qualify for government assistance to construct a road into the property.

Serem is rumored to have purchased the residual interests of minority interest holders in the project, overcoming a major obstacle to securing production financing. Apparently the company has been looking for a joint venture partner and is also said to be contemplating some form of public offering to finance the development, possibly in Toronto.

Other companies in the Toodoggone area, which is 170 air miles north of Smithers, B.C., have anxiously been awaiting a production decision; Serem’s deal with the government is contingent upon it announcing the decision first.

All operators in the region stand to benefit when the Omenica mine road is extended into the Toodoggone area. Energex Minerals, which believes it has sufficient reserves to commence production, says the economics of its situation would be enhanced significantly by good road access.

Energex President Arne Birkeland says his company wants to step up the timetable for production, adding that an exploration budget of $3 million has been proposed for this year. At least $1 million (flow-through) will be budgeted for a deep drilling program and he confirms a $2-million private placement is being secured for additional work. This would include $1 million for more deep drilling and a similar amount for road access into the property. Trunk road needed

The company would have to build a trunk road into its property from the main Omenica road. Presumably some of the cost would be financed by other operators whose properties were in close proximity to the road.

Concentrate from the company’s pilot plant operation is being tested to determine actual recoveries. In any event, they are expected to be equal to, or better than, the industry average. The plant will probably operate this year and its crushing capacity will be expanded. The production rate will be 6-10 tons per day, he adds.

Shallow open pit reserves in three deposits now stand at 262,242 tons grading 0.25 oz gold using a 0.03-oz cutoff grade. There are 60,100 tons of drill-proven reserves averaging 0.56 oz gold which could be mined to reduce the payback period.

Noting they had good success in the Bonanza Ridge zone last year (which appears to be getting stronger with depth) he confirms it is still wide open and will be tested to depth. Drilling in the BV zone will also include testing the rake of the mineralization. New vein discovered

Multinational Resources has been exploring the Chappelle property and has opened negotiations for the Baker mill which was operated previously by Du Pont Canada. Multinational acquired the mineral rights to the 170-claim property in 1985 and successfully located a significant gold-silver-bearing quartz vein structure in 1986.

The B zone discovery is approximately 1,200 ft northeast of the A vein which was mined by Du Pont from 1981-83. Multinational consultant Dr N. C. Carter says the surface expression of the zone includes several 1-2-ft-wide quartz veins which contain low gold and silver values. Du Pont tested the alteration zone in 1981 but the hole yielded no significant values.

One of Multinational’s 1985 drill holes intersected 14 ft of 0.33 oz gold and 5.2 oz silver which alerted them to the potential. Last year, further drilling defined a well mineralized quartz vein structure with an apparent true width of 8-25 ft. The highest gold and silver values occurred over a 7-ft average true width and occupy a gently northeast-raking shoot over a 200-ft vertical interval with the plane of the vein. Significant intersections

The B zone has been drill-tested over a strike length of 450 ft and to a depth of 425 ft below surface. Two significant intersections were reported in hole M86-19, one of which averaged 1.2 oz gold and 3.1 oz silver over 11.3 ft and the other 1.4 oz gold and 0.87 oz silver over 7.5 ft. The last hole drilled in the season intersected a 16.8-ft section assaying 1.7 oz gold and 21.3 oz silver. Within that interval was a 10-ft section grading 2.7 oz gold and 32.5 oz silver. The zone is open to depth and along strike, particularly to the northeast, says Mr Carter.

He interprets the B zone as being an extension of the A vein structure, although the former doesn’t appear to have the same structural complexity. The Baker mine had a big dilution problem which was related to extensive cross-faulting underground.

The 1987 program will include an initial 5,000 ft of drilling to further define the B zone before commencing underground drifting. Mr Carter confirms they will attempt to get back into the property this April to complete the drilling so there will be adequate time for the underground program.

Golden Rule Resources and Manson Creek Resources reported some impressive results late last year from their Toodoggone area property. Golden Rule is the controlling shareholder in Manson with a 65% equity interest. The project is a 50/50 joint venture and Manson has proposed a $1.1-million program for 1987. An initial 10,000-ft drill contract is being tendered to further delineate the high grade gold mineralization discovered in the A zone last fall.

Besides this work, a second drill rig will be contracted to test several other structures on the Mets property and elsewhere in the region. Their total budget for the area is $1.4 million.

Last year’s program established a reserve of 92,000 tons grading 0.33 oz gold in the A zone; the structure hosting that zone extends for several thousand metres along strike. The structure has the potential to host several high grade epithermal gold deposits in the 200,000- to one- million-ton range, the companies conclude.