Viceroy launches global exploration initiatives

With the Castle gold mine churning out more gold and healthier profits, Viceroy Resource (TSE) is setting its sights on opportunities farther afield.

The company has joined Gwalia Consolidated, an Australian company, to explore for gold and other precious metals in the Asian Pacific region. This follows an earlier initiative to gain exposure to promising gold targets in the West African countries of Mali and Burkina Faso.

“The bottom line for all this activity is that we are looking to grow,” said Gordon Fitzpatrick, Viceroy’s vice-president of corporate relations. “We hope to add another operation or two to Viceroy over the next few years.” The cornerstone of this growth strategy is the Castle Mountain mine in California, operated and 75%-owned by Viceroy. Between April 1 and Dec. 31, 1993, the heap-leach operation produced 104,400 oz. gold at US$208 per oz. This compares favorably with the 75,342 oz. produced at US$207 per oz. during the same period a year earlier. More important is that profits of $7.9 million were realized on sales of $40.8 million for the 9-month period, an increase of 125% from the same period a year earlier.

The open pit has produced more than 220,000 oz. gold since startup in April, 1992. Fitzpatrick said reserves are sufficient for another eight years, exclusive of exploration targets, which have yet to be fully tested. “We plan to spend $2 million exploring the property this year,” he added. With Castle Mountain on track, Viceroy initially began looking at North American prospects. But the company found acquisition costs to be high, compared with opportunities emerging in foreign nations.

Two years ago, the company optioned a gold project in Mali from Mink Mineral Resources (VSE). Twenty-one holes were drilled last year and encouraging results were returned. This year, Viceroy is planning at least 5,000 metres of reverse circulation drilling.

Through Channel Resources (VSE), Viceroy has exposure to four large gold concessions covering more than 7,000 sq. km in Burkina Faso (formerly part of French West Africa). The concessions are underlain by Birimian Formation volcanics.

As a result of a recent private placement, Viceroy will own 26.5% of Channel, and more than $4 million is now available to carry out exploration, which will include 5,000 metres of reverse circulation drilling on known targets. Fitzpatrick said these ventures meet Viceroy’s objective of participating in projects so that funds go into the ground, rather than toward hefty payments to property vendors (as has happened in some parts of South America). “We feel Burkina Faso is a good exploration bet,” Fitzpatrick said. “There are lots of diggings and shafts by local miners, indicating the presence of gold. We are encouraged by the lateral extent and number of these workings.” Burkina Faso, formerly heavily influenced by Moscow, is one of several African nations seeking foreign investment to revive its stalled economy. To do so, it has introduced incentives such as tax concessions and a mining code. But that does not mean it is giving away the store.

“The rule of thumb is that the government will want to participate as to 10-15%,” Fitzpatrick said. “We don’t think that is onerous.” Bulk-tonnage gold targets are the focus in West Africa, and the same holds true in the Asian Pacific.

Viceroy and Gwalia, for example, each agreed to acquire a 26.5% share position in Vancouver-listed Wildcat Trading (through a $1.2-million combined private placement). Wildcat intends to acquire semi-developed precious metal properties, as well as obtain other concessions in the region. The scope is broad and will include investigating opportunities in Indonesia and elsewhere. “Our teaming up with Gwalia means we will have a strong relationship with a mining group already based in the region,” Fitzpatrick explained. “We are similarly sized companies and the synergy is good.”