682 ft. 0.88 oz gold Calpine hole kickstarts VSE

Calpine has drilled 122 holes on the 21 zone to date including considerable infill drilling, however recent interest in the project comes from the step-out portion of the current drill program. Not long after reporting an im pressive 46-ft interval grading 1.67 oz gold in step-out hole 89-87 (N.M., Aug 14/89), Calpine released results from hole 89-109 which represents the furthest test of the 21 zone to the northeast.

A barnburner by any standard, the hole returned in uncut values a 682.2-ft interval (from 134.5 ft to 816.7 ft) grading an average of 0.875 oz gold, 0.97 oz silver, 1.12% lead and 2.26% zinc. Within this interval is a 200.1-ft section (from 275.5 to 475.6 ft) averaging 2.877 oz gold, 0.85 oz silver, 1.86% lead and 3.44% zinc.

“I’ve never seen a hole like it,” said an elated Murray Pezim, president of Calpine.

While these results have obvious tonnage and grade implications for the 21 zone discovery, Calpine’s work also appears to be confirming a new and important type of precious metal mineralization to be found in northwestern British Columbia.

A recent property visit by The Northern Miner and visual inspection of core confirmed the project is indeed different from most small tonnage gold projects in the region which typically feature high grade gold mineralization in relatively narrow quartz-sulphide veins.

“There’s nothing quite like this in B.C.,” said Chet Idziszek, chief geologist of Prime Explorations.

The stratabound deposit at Eskay Creek is described by Calpine as being of a “volcanic epithermal type” with its mineral chemistry and rock associations suggesting mineralizing processes similar to those which produced large tonnage gold deposits in the Carlin District of Nevada.

So far drilling has traced the 21 zone mineralization over a minimum strike length of 3,600 ft (from section 2+00S to 9+00N), with the zone still open to the northwest and partially open downdip. (The average width of the zone was estimated as being in excess of 50 ft, however this does not include the portion of the zone near and including hole 109.)

Although more drilling needs to be done to confirm continuity in the northeastern portion of the zone, it appears safe to say recent step-out drilling has tripled the strike length of the 21 zone and significantly improved its grade.

“It’s an unbelievable discovery and getting richer as we go to the northeast,” said Pezim, who is already mentally calculating an open pittable reserve of 10 million tons grading an average of about 0.5 oz gold per ton.

A rough calculation by a local mining analyst projected a deposit on the order of more than three million contained ounces of gold equivalent in an open pit configuration.

“We are taking the position that this is developing into what may well prove up to be a large and rich deposit,” said Robert Sibthorpe, a mining analyst with Yorkton Securities in Vancouver.

“Hole 109 is a spectacular hole but it is backed up a lot of good holes prior to it,” he added.

Sibthorpe said Eskay Creek fits the model of a volcanogenic stratigraphic deposit rather than a structurally controlled situation. Such deposits tend to be large because the mineralization is disseminated into the stratigraphy rather than confined to a controlling structure.

“That is what is encouraging about it,” he said. “These types of deposits tend to be a lot more predictable and consistent.”

Idziszek said the 682.2-ft interval reported for hole 109 represents the average of consecutive assay sections through the mineralized portion of the hole.

The breakdown of consecutive assay sections is given below. 0400,0400,0400,0400,0400,0400, intervallengthgoldsilverleadzinc

ftftoz/toz/t%% 134.5-144.3 9.80.67033.865.9916.13 144.3-173.8 29.50.041 2.220.49 0.86 173.8-203.4 29.60.016 0.350.06 0.17 203.4-226.3 22.90.081 0.480.85 1.33 226.3-275.5 49.20.021 0.070.02 0.03 275.5-341.1 65.60.487 0.771.84 3.34 491.1-403.4 62.37.765 1.351.63 3.26 403.4-475.6 72.20.830 0.492.08 3.56 475.6-537.9 62.30.095 0.301.47 2.29 537.9-564.1 26.20.016 0.693.8910.63 564.1-797.0232.90.017 0.140.26 0.39 797.0-816.7 19.70.010 0.232.21 6.36

“Our best mineralization is found in a transition zone along a contact between the argillites and footwall rhyolites,” said Idziszek. The altered transition zone is described as predominately rhyolites with strongly silicified, rotated fragments of argillites. The hangingwall andesite unit is barren of mineralization.

Calpine said all sample intervals which returned 0.750 oz gold per ton or greater were analyzed by Total Gold Metallic Assaying techniques which utilize total digestion of the sample.

“We had a lot of visible gold in the section and one is always concerned about nugget effect,” said Idziszek, adding this method is more representative of the entire interval where high grade or visible gold is involved.

Calpine said subsequent drilling on section 9+00N (with two holes up dip and two holes down dip of 89-109) “indicates that the sulphide and visible gold mineralization is conformable with lithology, dipping at about –40 degrees.”

Moderate to strong sulphide mineralization is reported to have been intersected in recent step-out holes 111, 118, 122 and 123, with numerous visible gold occurrences observed over narrow intervals within a 25-m section in hole 118, and a 14-m section in hole 123.

Calpine said the visible gold occurrences in these holes “indicate that the intersected width of mineralization is about equivalent to true width,” while the down dip distance represented by the three holes is about 50 m.

Since “discovery” hole 88-6 hit 96.5 ft grading 0.73 oz gold and 1.1 oz silver last November (N.M., Nov 7/88), the 21 zone has been the primary exploration focus of the Eskay Creek project.

But until the northeastern strike extension of the 21 zone was found, Calpine concentrated a good portion of its efforts on infill drilling within the southern portion of the zone.

Earlier this year (N.M., June 26/88) Consolidated Stikine Silver released an open pittable reserve calculation for that southern portion of the zone which was estimated at some three million tons grading 0.25 oz gold per ton.

Because gold and silver in the southern portion of the zone is known to be associated with massive stibnite and arsenic sulphides, orpiment, the deposit was considered to be refractory which means additional costs in the milling process and increased environmental concerns.

These factors combined with the property’s remote location and limited reserve at the time kept interest in the project at a low ebb. But earlier this year Calpine began to get hints that a higher grade extension migh t exist to the northeast. The 21 zone does not outcrop on surface anywhere on the property so Calpine’s early work involved some blind step-out drilling.

“Hole 67 suggested we had something along strike,” said Idziszek. This hole returned 65.6 ft of 0.217 oz gold and 3.27 oz silver, including 19.7 ft of 0.614 oz gold and 7.51 oz silver per ton.

Besides showing higher grade precious metal values, recent step- out drilling is also showing a change in the character of the associated mineralization.

“We’ve stopped seeing the antimony, realgar and orpiment that we saw in some portions of the southern portion of the zone,” said Idziszek. “We are also seeing an increase in the honey-coloured sphalerite and galena which you don’t really see at the other end of the zone.”

Idziszek said this bodes well from a metallurgical standpoint. However, considerable testwork would likely be required to find the best method for processing the entire deposit.

For the time being, however, Calpine intends to continue its drill program at Eska
y Creek which involves both infill and additional step-out drilling. By the end of the 1989 working season, Calpine estimates a total of $11 million will have been spent on the property.

Work programs managed by Prime Explorations are carried out from a small winterized camp backdropped by a spectacular gossan that first attracted prospectors to the property well over 50 years ago.

By the end of the 1989 working season, Calpine hopes to have advanced the project to the feasibility study stage. At this point — assuming results continue to be positive — the costs of mining in this remote region would have to be factored into the economics of any proposed mining operation.

But because the reserve appears to be open pittable at an estimated 6:1 strip ratio, Calpine is confident that a bulk mining method would provide the key to a profitable operation. Road access is also a possibility as the British Columbia government is expected to make a decision shortly on an proposed access route into the nearby Iskut River district.

Meanwhile Calpine intends to continue drilling to determine the extent of the 21 zone. The geophysical anomaly associated with the 21 zones was recently traced a further 200 m from hole 109 which brings Calpine about a football field away from its property boundary with Adrian Resources (VSE).

Idziszek also said work is planned to determine if other zones of mineralization can be found parallel to the 21 zone.

“That’s blue sky right now but I think we are starting to see the possibility of this in our drilling,” he said, adding that less advanced work is also planned in other key areas of the property.

The latest results from step-out drilling have been a shot-in-the- arm for Calpine which, like most other juniors, was suffering from the market malaise that has gripped the Vancouver Stock Exchange since October, 1987.

The day the results were released, Calpine’s share price was $5.88, while Consolidated Stikine reached a new high of $32.25. Prime Resources (VSE) climbed to $3.15, reflecting the 39.2% interest held by the Prime group in Calpine Resources.

To no one’s surprise, Corona Corp. (TSE) moved to increase its stake in Prime Resources to 28.37% from 11.3%.

Prime Resources — which is known to be in need of a cash infusion to its treasury — agreed to sell Corona 10 million of its existing shares in exchange for two million Class A shares of Corona. The transaction also involved Prime granting Corona an option to buy an additional three mil lion shares at a price of $2.50 per share exercisable for a one-year period.

The share swap is viewed as an extremely good deal for Corona, but a not-so-good one for Prime which will receive far less with respect to the value of the Corona stock than it will be handing over to Corona in the value of Prime shares.

Pezim maintains however that the transaction will provide the Prime group with sufficient capital to finance ongoing committments and work programs at Eskay Creek and a number of other key projects.

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