Echo Bay goes underground at Nuinsco’s Cameron Lake

A $3.6-million decision has been made by Echo Bay Mines to launch a major underground program on the Cameron Lake gold property of Nuinsco Resources in the Kenora mining district of Ontario.

This decision has been long- awaited. The two companies entered a joint venture agreement nearly 20 months ago and under the original terms Echo Bay was to have said yea or nay to an underground program before the end of September, 1985. But last fall it was granted a one-year extension to make the final decision.

“This new commitment affirms Echo Bay’s confidence, as well as our own in the Cameron Lake deposit,” Nuinsco President Douglas Hume tells The Northern Miner.

So far, Echo Bay has funded $2.25 million for surface exploration on the deposit. Under the terms of the new agreement, it has committed to fund up to $3.6 million for phase one of the underground program. If successful, there would be a further program at an estimated cost of an additional $3.1 million which is expected to lead to the feasibility stage.

Present estimates suggest the Main zone contains 1.6 million tons of drill indicated ore grading 0.16 oz gold per ton to a depth of 1,100 ft. These reserves include a higher- grade core of 516,000 tons grading 0.258 oz, undiluted.

This past summer saw a stripping program over the Main zone. Mr Hume says that crews stripped about 1,000 ft in an east-west direction with the widest point on a north-south direction of 500-600 ft. The stripping exposed gold mineralization over a strike length of 700 ft, says Mr Hume, with channel samples of the stripped portion returning a weighted average grade of 0.28 oz. These facts lead Mr Hume to expect the underground program to increase reserves to approximately 2 million tons of 0.2 oz. Work starts immediately

Work is scheduled to start immediately. Indeed crews are already on the property preparing the site for the program. A 2,000-ft ramp will be driven from the west end of the Main zone on a 15 angle to the 300-ft level with some 3,400 ft of drifting and crosscutting planned. In addition, work will include underground diamond drilling, geological mapping and bulk sampling.

The first phase of the underground program is expected to be completed by the end of July, 1987. The proposed second phase would involve extending the ramp an additional 2,000 ft to the 600-ft level and driving 3,500 ft of drifts and crosscuts to this elevation. Further diamond drilling, mapping and sampling would also be required.

In consideration for incurring the phase one expenditures, Echo Bay will earn Nuinsco flow-through common shares at a rate of one share for each $2.30 spent on the Cameron Lake property, says Mr Hume.

The Nuinsco/Echo Bay agreement includes the purchase by Echo Bay of 200,000 common shares at $1.50 each to provide working capital.

To date, via its direct participation agreement, Echo Bay has earned 2,049,134 shares of Nuinsco or approximately 24.7 % of the outstanding shares. Under the original agreement, Echo Bay held an option to increase its holdings in Nuinsco to 50.1% by the purchase of additional shares. Two new options

In lieu of this option Echo Bay will now have two options until Sept 30, 1988, which would allow the major gold producer to acquire up to an additional 2.5 million ordinary treasury shares of Nuinsco.

The first option for 2 million shares has been priced at $1.50 per share while the second option covers 500,000 shares at $2 per share. At the end of the day with the completion of firm commitments and the exercise of these options, Echo Bay would earn 49.2% of Nuinsco’s issued shares.

The original 50% interest in the Cameron Lake property held by Vancouver- based Lockwood Petroleum now stands, subject to further dilution, at about 31%, having been reduced due to non-payment of its share of expenditures.