Calpine drill results fail to meet high expectations

Calpine and equal partner Consolidated Stikine Silver (VSE) have been the focus of investor attention since hole 109 intersected 682 ft averaging 0.875 oz gold at the Eskay Creek property in the Unuk River area of northwestern British Columbia.

The day after the latest results were released, Calpine’s share price fell $1.38 to $7.62 while Consolidated Stikine dropped $5.50 to $52.50. Prime Resources (VSE), which owns about 40% of Calpine, was down 65 cents to $3.90. Prime company Adrian Resources (VSE), which has prospective ground adjacent to Eskay Creek, fell 75 cents to $2.75.

As bullish as ever on Eskay Creek, Calpine President Murray Pezim said he is “pleased” with the latest drill results which are continuing to expand the extent of mineralization on the 21 zone.

“People expect better and better holes and that can’t always happen,” said the well-known promoter and mine financier.

Anthony Garson, a senior mining analyst with Continental Securities in Vancouver, said the share prices weakened because investors compared th e new results with the spectacular results encountered in hole 109.

“What’s more important here is that the mineralization now extends for about 4,000 ft along strike and is open pittable,” he said.

Although Carson conceded that the geologic model is still a puzzle to investors, he said another positive factor is that the 21 zone mineralization is stratabound and therefore likely to be relatively predictable and consistent.

The latest results from step-out drilling on the 21 zone are: 0306,0305,0305,0305,0305,0305,0305, IntervalLengthGoldSilverLeadZinc Holeft.ft.oz/toz/t%% 89-111213.2-239.4 26.20.108 6.39—- 360.8-406.7 45.90.168 2.11—- incl.360.8-380.4 19.60.271 1.95—- 89-112334.6-351.0 16.40.137 0.18—- 89-113377.2-478.9101.70.090 6.84—- incl.377.2-403.4 26.20.149 9.81—- 89-114400.2-426.4 26.20.138 0.87—- incl.406.7-419.8 13.10.208 1.15—- 89-118124.6-160.7 36.10.05611.141.545.22 incl.144.3-160.7 16.40.10822.182.038.37 216.5-259.1 42.60.071 0.280.520.90 295.2-387.0 91.80.170 0.421.261.52 incl.308.3-341.1 32.80.254 0.621.381.58 89-121 39.4-108.3 68.90.20111.72—- 318.3-347.8 29.50.223 3.56—- 534.8-557.8 23.00.100 0.56—- 89-124249.3-269.1 9.80.079 2.92—- 360.9-367.5 6.60.129 0.40—-

Additional assays are still pending for hole 120 which returned a 19.6-ft interval grading 2.04 oz gold and 76.30 oz silver. Partial results were also released for hole 89-122 including 137.7 ft of 0.194 oz gold, 0.40 oz silver, 0.37% lead and 0.85% zinc and 88.6 ft of 0.066 oz gold, 0.25 oz silver, 0.16% lead and 0.35% zinc.

Step-out drilling was mostly done in the vicinity of hole 109, although hole 89-110 was collared 140 m in front of hole 109 to test a weaker IP anomaly west of the anomaly associated with the 21 zone. It returned no significant results.

Three infill holes, 115, 116 and 117, have now defined the lower limit of the stibnite-rich 21 zone mineralization on the southern portion of the zone. Hole 115 returned 9.8 ft of 0.069 oz gold and 0.04 oz silver while hole 116 returned 19.6 ft of 0.037 oz gold and 0.33 oz silver. Hole 117 returned no significant results.

So far Calpine’s drilling on the 21 zone has tested a 1,250 m strike length of mineralization.

Calpine reports that infill drilling on the original 21 zone discovery shows this mineralization is generally characterized by disseminated to locally massive stibnite and realgar over a strike length of about 400 m.

This is roughly the area where a reserve base of about three million tons grading 0.25 oz gold was outlined at the end of the 1988 program.

Step-out drilling northward from this mineralization is now revealing an along-strike change in grade and mineralogy away from this refractory mineralization to increasingly disseminated to massive sulphide zones. The zones now being defined contain low arsenic, antimony and mercury level s, and instead consist of zinc, lead and iron sulphide mineralization locally with silver sulphosalts and abundant free gold.

These sulphide zones are reported to be underlain by a highly altered footwall rhyolite unit containing gold, silver, copper, lead, zinc and iron sulphide mineralization.

]]>