Inco Gold ups investment in High River

Following the merger of High River Resources (VSE) and Nor- Acme Gold Mines (TSE), Inco Gold will be entitled to own up to 40.1% of the new company. Inco Gold’s is a wholly-owned subsidiary of Inco Ltd.

Renamed High River Gold Mines (TSE), the amalgamated company has concluded a flow-through share placement with Inco Gold of 500,000 shares at $1.20 per share. An additional private placement of 750,000 common shares with an equal amount of attached warrants, was completed with Inco at $1.32 per share in August.

High River has also approved the sale to Inco of 2.25 million flow- through shares at the same price with flow-through warrants. If Inco exercises all its warrants, it will own 6.5 million of the 16.7 million issued High River shares, or 40.1% of the company.

Inco’s interest in the junior stems from High River’s 100% interest in the former producing Snow Lake gold mine near Snow Lake, Man. Inco has an option to earn a 50% interest in the property by funding the project to production. Inco has also become the project manager.

Although historically a low grade mine, High River and Inco feel the mine has the potential to become a 60,000-oz-per-year producer of below average cost gold. The mine’s most positive attribute is good width, which according to High River director David Mosher, ranges from 20 to 45 ft below the 1780 level. This, Mosher says, will enable a low cost operation.

Based on drilling and an examination of old mine records, the property has a mineral inventory of two million tons grading 0.145 oz gold per ton above the 1,780 level and an additional 2.95 million tons grading 0.143 oz below the 1780 level. The 1,780 was the deepest level in the mine, which is accessed via a vertical shaft.

These reserves include tonnage in the Toots zone, a near-surface deposit extending from surface to the 580-ft level. Drilling completed by High River has increased reserves from 365,000 tons grading 0.15 oz gold to 580,000 tons grading 0.16 oz gold per ton, High River says. From 1948-1958, the mine produced 5.3 million tons of ore grading 0.15 oz.

A first phase exploration program is budgeted at $2.25 million. The work will test for the down-plunge extension of the known deposits below the 1,780 level. This will be achieved by 20,000 ft of drilling from two crosscuts totalling 1,200 ft in length. A second phase program will include additional crosscutting and drifting which will enable Inco Gold to define the lateral extent of the deposits. Before the work begins, the 1780 level will require rehabilitating.

Upon completion of the program, a feasibility study will be completed which will enable the partners to make a production decision sometime in 1989, James Clucas, vice president of High River, told The Northern Miner.