Mount Polley highlight of Imperial group exploration

This bulk tonnage project is one of several diversified resource projects being managed by Imperial. The company in turn is part of an even more diversified group of companies called the Imperial group.

This diversity has been both a boon and bane for the Vancouver- based junior which just racked up its fifth consecutive year of profitable operations.

It’s not widely known, for example, that Imperial Metals manages an extensive resource portfolio on behalf of 14 limited partnerships and three public companies. Oil and gas operations also contribute to Imperial’s sound financial base.

At one time Imperial Metals held most of the assets of the three public companies that it now manages. This was found to be a good defence against the cyclical nature of the resource business, however the resulting complexity made it difficult for investors to evaluate the company.

Because Imperial’s net asset value was being discounted as a result, management moved to rationalize the asset base through the creation of “pure play” entities that have a more focused line of business.

Imperial launched Cathedral Gold Corp. (TSE) as a precious metals company in 1987, followed a year later by Anglesey Mining plc, a London-listed base metals company. Colony Pacific Explorations (TSE), which is 26.2% owned by Imperial, is active in an volcanogenic massive sulphide belt in California’s Sierra Nevada mountains.

Imperial Metals has an active uranium project portfolio, but much of the company’s recent efforts have been directed to the Mount Polley copper-gold project.

Imperial group companies own 62% of the project while gold producer Corona Corp. (TSE) holds a 38% interest. The 13,300-acre property is accessed by paved road to within 10 km, and by logging road for the remaining distance.

Previous work on the property established a porphyry copper-gold deposit with a geological reserve of 128.0 million tons grading 0.3% copper and 0.010 oz gold. The joint venture began to take a serious look at the project when copper prices began their upward trend.

After optioning the project, Imperial began a work program aimed at testing the property for a higher grade reserve within this large sub-economic deposit. This program led to the identification of some 53 million tons grading 0.44% copper and 0.017 oz gold per ton.

The first phase of a $1.5-million, 30,000-ft drill program was completed on the property this summer. Imperial said this 34-hole program increased grade and tonnage confidence levels. Ongoing work is expected to lead to the commissioning of a full-scale feasibility study later this year.

The deposit is contained within two adjacent zones; the nearly circular West Zone measuring 1,500 ft in diameter and the oblong Central zone, 3,600×1,500 ft.

The two zones are separated by a narrow region of low grade mineralization, however Imperial said the deposit can be mined from a single progressively expanding open pit

The southern half of the Central zone has a higher than average gold grade and a strip ratio of 0.9:1, so this would be mined first. As Imperial sees it, this pit would then extend north along the Central zone and then west into the West zone. The geometry of the deposit and the favorable topography is expected to allow for an average strip ratio of 2:1 over the entire life of the mine.

The company is envisioning a 5-million-ton-per-year mining operation that would yield about 100,000 oz gold annually for the first five years. Copper production would be relatively constant at 32 million lb per year throughout the 10-year mine life. Capital costs would be in the order of $135 mill ion.

Imperial’s metallurgical test work to date indicates recoveries of 73.8% for copper and 85.9% for gold at an optimum grind of 75% –200 mesh from the average estimated mill feed.

Last summer the company reviewed its development plans at a series of public information meetings in the towns of Williams Lake, Likely and 150 Mile House. According to President Pierre Lebel, audiences were receptive to the idea of a new mine and new jobs and spin-off benefits.

Environmental issues aren’t expected to crop up as the mining would take in place in an area that was recently logged. More importantly, Imperial said its test work to date indicates that mine tailings are not acid generating.

Next year Imperial is expecting revenue from its 1.8% net profits interest in the Ajax deposit which lies adjacent to the Afton mine in southern British Columbia The deposit, which is estimated to contain 27 million tons grading 0.46% copper and 0.010 oz gold, is being mined as a new source of feed at Afton.

If Imperial’s focus is Mount Polley, Cathedral Gold’s main exploration project is the 100%-owned Porcher Island property, a former gold produc er located near Prince Rupert, B.C.

Cathedral also has a 52% interest in the Stirling gold mine in Nevada which recently made a transition from an open pit to underground mining operation. Total gold production for the first six months of 1989 was 19,382 tons grading 0.26 oz gold which calls for the recovery of 10,000 oz.

At Porcher Island, the company has already started an underground exploration and development program that will be completed by year-end.

Work is to include a 360-ft long raise connecting the existing 1110 and 1015 level adits, and development of a 370-ft drift between these levels. The company said its objective is to test the main gold-bearing No 4 vein within the At zone “under live mining conditions”.

Cathedral is reporting reserves from surface to just below the 1015 level of 623,000 tons grading 0.20 oz gold (cut to 1.5 oz per ton and assuming mining dilution of 15%).

Total AT zone reserves are reported as 1.5 million tons grading 0.20 oz gold. The zone has been drilled along 1,000 ft of strike length to a depth of 1,800 ft, with the zone still open for extension along strike and at depth. The underground program is to be carried out from the 3,000-ft long 1015 adit which is tracked.

Cathedral cites a number of other positive factors it thinks will impact favorably on project development. Specifically, it mentions good metallurgy, infrastructure, rock conditions and environmental characteristics. The underground workings are also reported to be standing clean and in their original condition.

Gold recoveries, based on previous operating experience, are expected to exceed 95% from a simple pyrite concentrate. In addition, the company said tests to date indicate that tailings will not be acid-generating.

Cathedral has also been reporting promising exploration results from its Bronson Creek gold property bordering the east side of Skyline Gold’s Johnny Mountain mine. Cathedral and Imperial group companies hold an option to earn a 60% interest. The remaining 40% is held by Ecstall Mining.

Colony Pacific Exploration is also at the underground stage with the Blue Moon project located 125 miles east of San Francisco, Calif. Westmin Resources owns 32.9% of Colony Pacific and is operator of the work program.

An underground exploration program was approved for the copper-lead-zinc-silver-gold project, however that decision was appealed by opponents of the project. Colony Pacific expects that the appeal process will be resolved shortly, but in the meantime it is reviewing the proposed program which is expected to cost $10 million(US).

At last report the project had reserves of 3.8 million tons grading 1.09% copper, 0.46% lead, 7.87% zinc, 2.44 oz silver and 0.051 oz gold per ton.

Anglesey Mining is continuing work at its Parys Mountain property in Wales. The former producer is estimated to have a potentially mineable reserve of 5.2 million tons grading 6.04% zinc, 1.49% copper, 3.03% lead, 2.02% silver and 0.013 oz gold.

The company said the final evaluation of the deposit could lead to a production decision in 1990. A 1,100-ton-per-day mine a
nd mill are envisioned.

With this active agenda for growth, Hugh Morris, chairman, sees Imperial Metals and the Imperial group as an organization in transition.

“This company is one of the best examples of complex risk management that I know,” he said. “We are well equipped, have a strong board and good people and I see no problem in going forward and staffing and operating these new ventures.”

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