Equinox deal on Nev. mine looks like an asutute move

The totally leveraged purchase by Equinox Resources of a 23.6% interest in Cominco’s Buckhorn mine property in Nevada has proven to be an astute move. Purchased for $1.7 million(US) the property is expected to produce about 34,000 oz gold in 1986 or approximately 2,000 oz more than initially forecast.

Costs are within budget, recoveries are higher than anticipated, and net pre-tax cash flow to Equinox for the next 12 months is expected to be approximately $1.4 million or 41 cents per share, says its president, Ross J. Beaty, who notes that higher gold prices have improved profitability.

Earlier this year, Equinox attempted to purchase another 26.3% interest in the mine but the price was too high. But Equinox doesn’t rule out the purchase of a further interest at a later date, assuming the price is acceptable.

Equinox has spent approximately $720,000 on platinum group metals exploration this year and it has one of the most impressive PGM land positions around. This year’s work involved 18 properties including the Muskox in the Northwest Territories where platinum values of 0.3 oz per ton and palladium values of 1.3 oz were discovered in outcrops from two separate massive sulphide showings.

A geophysical program was completed on the property in November and numerous strong EM and magnetometer anomalies were located. These will be drilled in 1987.

Surface geochem was completed on the Lac des Iles property in northwestern Ontario in July and some airborne geophysics later in the summer. Several anomalies will be tested in a winter drilling program. A number of these claims are in dispute but that ground is all under the lake surface. None of the land claims are involved. Three Thunder Bay residents are taking the legal action which the company feels is without foundation.

A deep penetration geophysical survey and shallow drill program is being carried out on the Equinox- Teck Corp. lithium joint venture in central Nevada. Extremely high lithium values were derived from a 1985 brine sampling program, says Equinox. Teck is funding the program which should be completed by the end of the month.

Also on the lithium front, Equinox has completed an $82,000 market study for a lithium property it has near Yellowknife, N.W.T. Drilling should get under way sometime in February and the purpose of the program is to advance reserves to a proven category and form the basis for a feasibility study.

The company has an unallocated working capital of $700,000 following a 230,000-share private placement at $2 per share. A similar number of warrants are exercisable at $2.60 which would raise the company’s issued capital to 3.9 million shares.