THE GLOBAL SEARCH FOR GOLD SPECIAL — Underground work pans out at Eagle River

Underground development at the Eagle River mine near Wawa, Ont., has established sufficient reserves to replace 1996 production completely.

Calling the underground drill program mine “very rewarding,” River Gold Mines (RIV-T) reports there have been spectacular high-grade results below the 140-metre level in the No. 6 zone. Surface exploration drilling began in July in an effort to identify new reserves in the vicinity of existing underground workings. Results to date have been encouraging, with wide ore-grade intersections in the No. 7 zone, 250 metres north of existing workings. These results include intersections of 24.62 grams gold over 18.43 metres, 27.85 grams over 9.56 metres, 32.91 grams over 4.4 metres and 121.32 grams over 4.25 metres. River Gold management is confident a minable reserve can be developed in this area.

During the second quarter, the Eagle River mine extracted 16,854 oz. gold and 1,580 oz. silver from 44,392 tonnes of ore. While production did drop slightly from the first quarter, mill recoveries are averaging an impressive 97%, for a recovered grade of 13.4 grams gold, which ranks Eagle River among the highest-grade gold mines in the country. River Gold is estimating total 1996 gold production will be 60,000 oz., which is 10,000 oz. more than originally expected.

Slightly lower gold prices and production, as well as higher development expenses, reduced River Gold’s earnings in the second quarter somewhat, to $1.55 million, or 5 cents per share; revenue was $3.46 million. Cash costs were approximately US$239 per oz. gold.

The first half of the year involved substantial development expenditures, including roughly 2.9 km of drifting, raising and stope preparation. In addition, underground development of the nearby Edwards project, a second feed source for the Magnacon mill (which River Gold is using, and set to purchase) is well under way. Edwards is expected to boost River Gold’s gold production modestly in 1997.

River Gold has also announced plans to begin sinking a 700-metre shaft at Eagle River in 1997.

River Gold officials continue to look for exploration opportunities and possible acquistions in the vicinity of Eagle River

The property was first prospected in 1982 and subsequently sold to River Gold (then known as Central Crude). In 1986, Hemlo Gold acquired a 60% interest, and its parent, Noranda, spent the next eight years sampling and drilling the property, eventually starting underground development.

In 1994, Western Quebec Mines (WQM-T) bought both Hemlo’s 60% interest, and its 4 million shares (48%) of Central Crude, which then changed its name to River Gold Mines. Although the project is now wholly owned by River Gold, Western Quebec owns 41% of River Gold’s shares and is managing the mine. By October 1995, the mine was producing development ore; commercial production began in January 1996.