Suspect assays reported by resurrected Carolin

Rising like a phoenix once again from its own ashes, Carolin Gold Mines is attempting yet another reincarnation. Trading activity on over-the-counter markets has picked up recently, probably in anticipation of the latest proposal to reactivate the troubled company.

A New York City group claims to have purchased approximately $26.7 million of secured and unsecured Carolin debt, half of which was to be converted almost immediately into common shares. The group says that “notice will be given shortly to convert an additional $8 million of these liabilities into common shares.” These transactions would give the purchasing group effective control.

Carolin will issue a $10-million convertible debenture to the group which has acquired the remaining interests in the mine held by Ocelot Industries and Columbian Northland Explorations. As a result, Carolin will have a 100% interest in the mine.

Existing board members, including President Orval Gillespie, have agreed to resign in favor of Neil Blumstein of Manhasset, New York and Michael Berns of New York City. They will hold the positions of chairman and vice-chairman.

What apparently has attracted the group to take over Carolin is the 800,000 tons of tailings at its dormant mining operation near Hope, B.C. Judging by their claims “Hope certainly springs eternal” because they say metallurgical testing by Intergold U.S.A. indicates those tailings will “yield one ounce of gold and one-half ounce of platinum at a cost of $100(US) per ton.”

Admitting the results are based on “randomly gathered samples,” President Orval Gillespie says sampling work done by others has “resulted in a wide variance of metal values ranging from trace amounts of platinum group metals to substantially higher platinum group metals.” The implication in this, of course, is that the gold content is somewhat more reliable.

The operation was plagued by metallurgical problems from day one and its head grades were well below the stated 0.13 oz gold per ton in the company’s reserve estimate. So it’s difficult to understand how there could be one ounce gold per ton in mill tailings, let alone half the amount in platinum.

No mention was ever made of platinum group metals, so their appearance in tailings is highly suspect, The Northern Miner can say.

Assuming the gold content in the tailings was correct and taking into consideration historic recovery rates at the mine The Northern Miner estimates that millheads must have averaged about 1.7 oz gold per ton during the operation’s short but bizarre existence. That works out to 13 times the grade stated in its reserves. One has to wonder how any mration’s short but bizarre existence. That works out to 13 times the grade stated in its reserves. One has to wonder how any mine with that grade could go bankrupt.

Mr Gillespie says the tailings pile “will be drilled in the near future and samples analyzed to determine over-all values.” In the meantime, the company wants to have its shares relisted on NASDAQ during February and apply for a recession of its cease trading order in Ontario. No doubt securities commissions on both sides of the border will be taking a hard look at t his one before it is allowed to trade again. derry cutlines – 24 picas Duncan R. Derry, O.C., Ph.D., F.R.S.C., L.L.D., internationally recognized economic geologist.

Just over a year ago Carolin announced plans to install Denver- based Moritz Mining’s proprietary leach circuit in the mill, which Carolin said would increase recoveries to the high 90% range. That recovery rate is at least 50% higher than it ever managed before with Canadian technology.