Samatosum may have new zone below known reserves

Underground drilling at the Samatosum mine has intersected high-grade mineralization 10 metres below the known extent of reserves. The Samatosum mine, near Kamloops, B.C., is a 70-30 joint venture between Minnova (TSE) and Rea Gold (TSE). Rea also holds a 5% net smelter royalty. The intersects were made on two adjacent sections about 20 metres apart. Hole U1330-38 cut 2.1 metres from 54.8 to 56.9 metres grading 0.82% copper, 3.36% lead, 4.43% zinc, plus 87 grams silver and 37.08 grams gold per tonne.

Hole U1330-43 intersected 2.3 metres from 67.6 to 69.9 metres grading 0.79% copper, 4.02% lead, 8.27% zinc, plus 165 grams silver and 11.16 grams gold. The hole cut a further 11 metres from 77.9 to 88.9 metres grading 0.43% copper, 2% lead, 3.23% zinc, plus 67 grams silver and 7.29 grams gold.

Fred Sveinson, vice-president of Rea, noted the higher gold grades indicate the intersections represent a different mineralized zone than that presently being mined.

As of Dec. 31, 1990, the mine had reserves of 483,000 tonnes grading 1% copper, 2.5% zinc, 1.5% lead, 685 grams silver and 1.4 grams gold giving the mine sufficient reserves to the end of 1993.

The drilling was part of a program designed to better define underground reserves before operations move from open pit mining to underground next year.

Previous surface drilling in the same area failed to intersect the high-grade mineralization which would indicate the extent of the zone is limited and possibly steeply plunging.

Further drilling is planned to better define the zone, although Sveinson said additional underground development may be required before drilling can begin.

Rea reported earnings of $278,000 for the year ended Dec. 31, compared with a loss of $2 million in 1989. The Samatosum mine did not start commercial production until July 1, 1989, and the year-earlier period included an extraordinary loss of $1.3 million.

Cash flow from operations for 1990 was $3.8 million.