Atlantic Report Coxheath to cash in on plan

Coxheath Gold Holdings of Bedford, N.S., will be the first mining company to cash in on a new provincial investment incentive, the Nova Scotia Stock Savings Plan.

Investors who buy the stock of qualified companies are entitled to a provincial tax credit of 20% or 30% of the amount invested, to a maximum credit of $3,000, depending on the size of the company. To earn the tax credit, an investor must hold the stock for three years.

The plan enables small companies to raise much-needed “hard dollars,” while reducing financial risk to investors by the amount of the tax credit.

Coxheath hopes to raise $2.5 million through the Halifax branch of the brokerage house Walwyn Stodgell Cochran Murray. The money will be used for general corporate purposes.

To qualify for the plan, a company must have assets and revenues of less than $25 million and, until regulations are made, be listed on the Montreal or Toronto stock exchanges.

“The stock savings plan will be very useful for those mineral exploration companies which have been existing almost entirely on flow-through funds,” says Michael Riddell, Coxheath’s president. “It’s about time Nova Scotia implemented such a plan.”

In other news, Coxheath has started the second phase of underground exploration on its Tangier gold property in Halifax Cty. A total of $4 million will be spent on underground drilling, bulk sampling, milling of bulk samples and surface diamond drilling. The work should be completed by the end of January.

Underground crews from Canadian Mine Development of Mississauga are on site at Tangier. One underground drill and one surface drill are expected by late September, “and we’re looking for more surface drills,” says Mr Riddell.

A mill building is being assembled. The mill, with a rated capacity of 250 tpd in gravity circuits, will be tuned up by early November. The mill building has been designed so the mill could eventually expand to 500 tpd.

Coxheath is constructing a small refinery attached to the mill building, for pouring base bullion. Also, a complete assay lab is being installed under the direction of Bondar-Clegg.

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There’s been a dramatic increase in the value of shares of Halifax- based NovaGold Resources in recent weeks, to a record high of more than $7 as of mid-September. With about 4,000,000 shares outstanding, the market is setting a value of $28,000,000 on NovaGold, despite no announced ore reserves.

NovaGold was recommended as a buy on the Penny Mines Analyst hotline in early September. Also, NovaGold has released results of analyses on core samples drilled at its cornerstone Fifteen Mile Stream property (see separate story).

NovaGold has also been on the acquisition trail. Through its wholly-owned subsidiary, NovaGold Resources Nevada, the company has picked up an option on 48 unpatented mining claims known as the Sawtooth property in Humboldt and Pershing cties, Nev., the state where more than half the gold in the U.S. is mined. If NovaGold pays $90,000(US) within the 3-month option period, it will acquire a 100% undivided interest in the Sawtooth property, subject to a net smelter return royalty reserved by the vendor, J. R. Espy of Las Vegas. NovaGold has the right to buy out the net smelter return royalty for $1,890,000.

American Hunter Resources of Reno is evaluating the property for NovaGold. Grab samples have returned gold assays which NovaGold President Gerald J. McConnell regards as “very encouraging.”

Surface samples are being assayed; results are expected soon. The property is said to be a large- tonnage, low grade proposition.

NovaGold also recently acquired the assets of an Ontario company, Middle Belt Mines, which include claims covering the Lake Charlotte gold district in Halifax Cty. Exploration totalling $200,000 has been budgeted for the property.

Over 100 km of lines have been cut and an all-new mag and vlf survey will be completed soon. A drill and tractor will be barged to the claims within a week, as there is no road access. About 126 oz of gold were produced from testing efforts at Lake Charlotte over the past 50 years.

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The Maritime Mineral Exploration Discussion Group met for the first time in five years recently and some 70 geologists, stock brokers, prospectors and claim holders heard updates on several companies’ recent activities.

NovaGold Resources may be making a production decision in October for its Fifteen Mile Stream, property after results are back from current drilling, according to Greg Morris of A. C. A. Howe International. Jonathan Graham, also of A. C. A. Howe, spoke on Jascan Resources’ Dufferin Mine property, mph Consulting’s Terry Bottrill discussed the Fifteen Mile Stream property of Pan East Resources, Greenstrike Resources as well as Northumberland Mines’ Goldenville property. Recent drilling at Fifteen Mile Stream should increase the ore reserves over the current 600,000 tons grading 0.23 oz gold per ton, as mineralization is still present at depth, Mr Bottrill said.

He was particularly enthusiastic about an argillite unit that contains neither quartz veins or sulphides but which returns constant ore grades whenever it is intersected.

Regarding Goldenville, he said that an underground project will be required to properly evaluate its potential. Goldenville produced about 21,000 oz from three separate mines in the district.

Dennis Forgeron, chief exploration geologist of Coxheath Gold, said that due to the coarse-grained nature of the gold in the Tangier deposit, 80-kg samples are needed to test the mineralized zones.

Craig Millar, president of Scotia Prime Resources, a wholly-owned subsidiary of Petroco of Texas, spoke on his company’s $950,000 exploration program scheduled to begin this month. Despite a shortage of drills in the Maritimes, two rigs have been secured to commence drilling at the Lower Seal Harbour property in late September. Funds for the program were raised through First Exploration Fund.

A further update of gold exploration is planned by the mmedg for later this fall. Information on date and place will be available from the N.S. Chamber of Mineral Resources at (902) 422-5806.