Crown Butte, Noranda compiling results on Montana property

A new gold discovery was made on the property’s Miller Creek zone this past summer, resulting in a substantial rise in the price of Crown Butte’s shares.

As a major drilling campaign is near completion on the New World property, Noranda and Crown Butte will spend this winter digesting all the results and preparing for an expanded program next year.

Among the better intersections reported previously from the Miller Creek discovery were 54.5 ft grading 0.69 oz gold (cut) in hole 295C, and 35 ft grading 0.37 oz (cut) in another hole 105 ft away. The mineralization occurs in a flat-lying “skarn” zone within beds of limestone intruded by volcanic rocks. The deposit lies at depths of about 200-300 ft.

Crown Butte is 24.9% owned by Noranda and 19.7% owned by a unit of Plexus Resources (TSE).

At a recent information meeting in Toronto, Crown Butte President David Rovig said there is still a considerable backlog of assay data to be received from the recent drilling.

“It could be several weeks before more results are available,” he said.

The Miller Creek gold discovery, made a few months ago, sent shares of Crown Butte soaring to a high of $19 in the first week of October, up from a low of around $2 in June. The price has since backed off to around the $8-level as a major drilling program winds down for the winter. An interesting side effect of the share price volatility was that it caused the company to change its underwriting plans at least five different times.

Considered by Noranda as one of its top ten exploration projects, the New World property is in a historical gold producing area.

According to Rovig, the company is not doing anything new in its search for gold in the area. “We’re just picking up where the old-timers left off,” he said. Past production came from a couple of open pit zones on the property.

Re-working an old mining district has yielded encouraging results for the partners so far.

Noranda entered the scene in 1987 when reserves were estimated at about 950,000 tons grading 0.15 oz gold per ton in two previous open pit areas, and at present they have more than 2.3 million tons of 0.11 oz in the open pit areas, as well as a major new discovery at Miller Creek. “We don’t have any reserve figures yet for the Miller Creek deposit,” said Rovig, but the company expects to have some kind of an estimate incorporating recent results in the early part of next year. Metallurgical test work is also under way on the gold-silver-copper mineralization, but no details of those results have been released.

To date, an area measuring 1,200 x600 ft has been drilled at the Miller Creek discovery with mineralization occurring along limestone and shale beds intruded by Tertiary-age volcanic rocks.

Situated in an environmentally sensitive area just outside Yellowstone national park, the property will likely face opposition to development.

“We know we’re going to have permitting problems,” Rovig admitted, “but our partner Noranda has plenty of experience and should be able to handle any problems.”

Noranda, the operator, is expected to spend $9 million on the project in 1990, nearly triple the amount spent by the partners last year. The senior mining company has rights to acquire shares sufficient to bring its ownership to 60% of Crown Butte. The latter company has about 3.8 million shares outstanding (fully diluted) and plans to seek listing on The Toronto Stock Exchange before year-end, according to Rovig.

John Harvey, president of Noranda Exploration, said his company is “looking at an expanded program” for the New World project next year. He declined to specify exactly how much Noranda is planning to spend, however.

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