NEVADA AND THE WESTERN STATES — Diehard Abitibi explorer gets its feet wet in Nevada — Boreal picks up option on property north of Round Mountain

Leaving the swamps and black flies of the Canadian Shield behind, Boreal Exploration (BOR-M) has inked a deal with a private company to take over an advanced gold exploration property in west-central Nevada.

The 12-sq.-km Gold Hill property surrounds a former gold mine that has produced off and on since 1930 and lies about 7 km north of the Round Mountain gold mine, operated by Echo Bay Mines in joint venture with Homestake Mining and private company Case Pomeroy.

As is the case at Round Mountain, the gold prospects at Gold Hill sit at a point on the margin of a volcanic caldera where a set of radial fractures cross-cuts the ring fractures of the caldera. This pattern of structural control is characteristic of many epithermal gold deposits in the southwestern U.S., and reflects the good “plumbing” found wherever the two fracture types intersect.

Veins opened by strike-slip motion along the ring fractures carry quartz and chalcedony with gold and silver mineralization. Mining, mainly from 1930 to 1938, exploited a series of these veins, producing a total of 41,200 oz.

gold and 248,000 oz. silver from about 107,000 tonnes of ore — implying a grade of roughly 12 grams gold and 72 grams silver per tonne.

The pattern of mineralization is typical, with high-grade “bonanza” veins surrounded by lower-grade disseminated and veinlet mineralization. Equally typical is the pattern of mining, with the high-grade having been worked by the old-timers and the disseminated gold now being assessed by modern explorationists.

The wall rocks are a thick sequence of tuffs with disseminated gold in altered rock surrounding the veins. The most recent resource estimate shows about 9 million tonnes grading 1.1 grams gold and 8.9 grams silver. At Round Mountain, by comparison, Echo Bay is currently mining ore grading 0.65 gram gold, and has reserves of 238 million tonnes.

Under an agreement between Boreal and a private company now holding the property, Hagel Augen, Boreal can earn a 100% interest in the property by spending US$2.5 million on exploration before the end of 2002, paying US$100,000 in cash and issuing 3 million shares. No less than US$500,000 per year must be spent on exploration, and the shares will be issued on a schedule governed by the amount of money Boreal spends every six months — 500,000 shares on closing, plus one share for each dollar spent until the earn-in conditions are met.

Hagel Augen retains a 3% net smelter return (NSR) royalty on the first 200,000 oz. gold recovered from a 12-claim block on the property, and Nevada Star Resource (NEV-V), which dealt the property to Hagel Augen, holds a 4% NSR on the entire property. Boreal has options to buy back Hagel Augen’s NSR for US$1 million and three-quarters of Nevada Star’s NSR for US$1.2 million.