Dessir faces uphill battle at Gibbs project in California

The land package controlled by A.T.& E. Enterprises measures over 10,000 acres, or roughly five square miles of heavily forested mountain ridges and valleys near this small town located about 100 road miles north of Fresno.

Dessir Resources (VSE) is earning a 50% interest in a small portion of the property covering the Gibbs and Williams 2 and 3 claims (about 40 acres). The claims are on the south side of a very steep ridge accessible from the north up a 9-mile-long road barely wide enough for one vehicle. The Northern Miner joined a number of analysts to tour the gold property, where recent drilling has returned encouraging assay results.

In what could be described as something of a white-knuckle ascent, the track snakes straight up the more than 45 slope in a series of 58 switch-backs for an elevation gain of about 3,000 ft.

Dessir has paid A.T.& E. 200,000 shares and US$1.4 million in cash to date, and must issue the company an additional 2.8 million free-trading shares in order to become vested for a 50% interest in the two claims. Prior to receiving acceptance from the Vancouver Stock Exchange for the issuance of the stock, A.T.& E. must demonstrate that a 50% portion of the property is worth a minimum of US$4.5 million.

The Vancouver Stock Exchange has not yet given approval for the issuance of the stock, and is currently reviewing a report on the property by Marshall Smith, a consultant for A.T.& E.

A number of analysts from various Vancouver brokerage firms were on the trip, and all remain skeptical of the project. Primary questions relate to the nature of the mineralization described by Marshall as a combination of an epithermal vein system at the top of the mineralized zone, and a mesothermal system at the bottom of the zone.

A.T.& E., operator of the joint venture, drilled a total of 15 diamond drill holes a few hundred feet up the hillside from the old Gibbs mine portal. The Gibbs mine was worked from 1952 to 1964, milling about 100,000 tons grading an estimated one ounce gold per ton.

Operations at the Gibbs were mining a flat-lying quartz system in the order of 10 ft. high with the workings extending about 400 ft. into the hillside and to the east of the recent drilling.

A.T.& E. did some test mining from the old workings and milled about 6,500 tons of material using a 10-ton-per-day mill south of the portal. Production from the run totalled about 6,000 oz. gold.

A.T.& E.’s recent drilling intersected what is believed to be a flat-lying zone of mineralization extending about 400 ft. in an east-west direction and about 300-400 ft. in a north-south direction. The zone ranges from about 10 ft. in thickness in the east up to over 100 ft. in the west, with an average thickness of about 80 ft.

Smith estimates proven and probable reserves at about 826,000 tons grading 0.86 oz. gold per ton. His estimate is based on the 15 holes, which were spaced between 50 and 100 ft. apart. The reserve lies under 50-100 ft. of overburden and remains open to the south and west.

Mike Garoogian, president of A.T.& E., noted that the property was permitted for drilling and trenching as well as the operation of a 10-ton-per-day pilot mill. He added that the company’s continuing operating permit allowed for test pitting to a maximum area of 400×300 ft.

Garoogian said his top priority will be to widen the access road from the highway to a width suitable for 2-way traffic. A former heavy equipment broker, he plans to do the road widening himself. He owns two small front-end loaders as well as a backhoe and plans to purchase a D8 shortly. Garoogian estimated the road widening would cost in the order of US$500,000, half of which, he noted, Dessir would have to put up. Much of the road work will require blasting and he said permits are in place.

On completion of the road work, expected to take about six months, Garoogian said the operating permit will be expanded for a 500-ton-per-day operation. He also expects to have his entire 10,000 acres patented giving him clear title to the land.

A.T.& E. has a permanent workforce of 14 people and the company is currently building an office and owner-residence on the edge of its property where the access road joins with the main highway. The company is also constructing a substantial building to cover its portable sawmill at the summit of the access road.

A.T.& E. is cutting trees from the property and is milling virtually all its own lumber for the two buildings. The entire property including the Gibbs claims is covered in wide-spaced mature forest with pine, Douglas fir, white oak and black walnut.

The company is allowed to cut lumber for use on the property but cannot take any wood off the ground. Once patented, A.T.& E. will own the timber, although Garoogian said he did not plan to operate a commercial logging operation.

Garoogian’s priorities may clash somewhat with Dessir’s. Barry Whelan, a consultant for Dessir, said the company is more concerned with spending funds directly on the Gibbs claims, noting that the horse may be a little ahead of the cart right now.

Whelan said Dessir is reviewing the possibility of re-logging the core as well as re-assaying on a smaller interval. Most of the assay intervals were 5-8 ft. and he said they may bring this down to two feet.

Whelan would also like to drill some angle holes through the zone since all the recent drilling was vertical. He also wants to drill some closer-spaced holes and extend drilling to depth to test for parallel zones. Further holes are also warranted to test for the extension of the zone to the west and south of the zone.

Epithermal veining was not obvious on inspection of core from a number of the holes. In addition, sections reported in the drill core logs as containing visible gold were difficult to identify, prompting one member of the tour to comment: “if you have to ask if that speck of color is visible gold, it probably isn’t.” Vertical banding in some of the core was also questioned in light of the theory that the zone was flat lying.

These questions would likely be addressed by Whelan’s proposed work program, but analysts’ skepticism will leave Dessir with an uphill battle in the new year when it must raise additional funds for further work on the property.