Exploration ’88 THE B.C. BONANZA

TOODOGGONE In terms of exploration activity, 1987 was one of the best years ever for the Toodoggone gold camp, north of Smithers, B.C. Much of the work was flow-through-funded, which obviously will play a diminished role in the years ahead because of plans to phase out earned depletion under federal tax reform. (The Iskut River camp was also busy, but more on that later.) The new Omineca mine road extension into the Toodoggone camp, completed to the Sturdee airstrip last September and, more recently, to the Cheni Gold Mines property, will make exploration in the area less expensive and easier. The road was constructed primarily for Cheni, which received government assistance of up to $4.5 million.

The rather creative repayment of the loan is based on a trigger price for Cheni’s two metal commodities: gold and silver. In November, Cheni announced a doubling of reserves at its Lawyers property to 1.9 million tons grading 0.196 oz gold and 7.1 oz silver per ton. Mineable reserves are now 1.4 million tons at about the same grade, and there appears to be room for expansion, according to the company. Cheni has accumulated about $28.7 million in tax credits, which will be applied against future income. So cash flow during the first two years of operation would be mostly non- taxable, allowing for a quick payback and favorable economics.

Vancouver-based Energex Minerals has been active in the Toodoggone area for several years, and this year will be no different. The company has filed a Stage One report, a prerequisite to production permitting in British Columbia. It has sufficient cash ($4 million at year-end) to mount its 1988 exploration program.

About 25,000 ft of drilling was completed last year in four zones as part of a $2.3-million exploration program. Should it proceed to production, the operation could include conventional milling (200, 400 or 600 tons per day) in conjunction with open-pit mining and a heap leach operation for marginal material that would normally go to low-grade stockpiles. At the time of writing, the company was preparing a feasibility study for the Al, Bonanza and Thesis zones. Metallurgical test work, capital cost studies and an ore reserve estimate were also under way.

Energex President Arne Birkeland predicts ore reserves will double in all categories after results come in from the 1987 program. Additional drilling is planned on known targets this year, including some deep tests which, depending on results, could lead to an underground program in late 1988.

Approval in principle has been given to extend the Omineca mine road another 15 miles to Energex and several other properties. This would allow fixed-wing aircraft to service the area. Currently, equipment is flown to the Sturdee airstrip and, from there, shipped by helicopter to the various camps.

Birkeland says the company’s biggest challenge will be obtaining production financing after it decides what size of operation is feasible. He won’t rule out taking on a joint-venture partner.

Multinational Resources, another key player in the area, has been exploring the old Baker mine property, which includes a 100 ton-per-day mill. (The company has the right of first refusal on the plant.) Last year, Multinational made a discovery about 1,200 ft from the B zone, where most of the current reserves are located. The discovery will be evaluated in greater detail this season. “It will probably be trenched and drilled,” says Nicholas Carter, a consultant for Multinational. The B zone has 50,000 tons of reserves grading 0.6 oz gold per ton, classified as drill-inferred and fully diluted. A 0.2-oz cutoff grade was used and the average silver content of five to six ounces has not been factored in. There are indications of extensions to the B zone at depth, and Carter confirms these reserves are “tighter than a drum.” He suggests the company might even drive an adit into the B zone to confirm grades and ground conditions and provide a bulk sample.

Exploratory drilling is also planned on a couple of vein systems on the other side of the A vein, which Dupont mined several years ago. Nexus Resource Corp. spent about $2.3 million on St. Joe Canada’s Silver Pond property, adjoining the Cheni gold project. The program included 42,438 ft of drilling in 99 holes. At least nine mineralized zones were identified, the most important of which are the West, North, Amethyst and South zones. The Amethyst is apparently the southward continuation of Cheni’s Cliff Creek zone, from which production is slated.

A total of 21,534 ft of drilling (59 holes) was completed in the West zone. Of these, 25 intercepts exceeded 0.1 oz gold per ton across 3.3 ft and seven exceeded 0.3 oz across 3.3 ft. Nexus says it plans a major drilling program this year to further delineate ore shoots in the West zone, carry out deeper drilling on the North zone and test the southward and depth continuation of the Amethyst and South zones.

Golden Rule Resources and Manson Creek Resources completed about 20,000 ft of drilling on their Mets property last season. The work focused on the A zone, North zone and Cirque zones. Reserves in the A zone are 142,000 tons grading 0.35 oz gold per ton, according to the company. Esso Minerals mounted a significant program on International Shasta Resources’ Toodoggone property, where geological reserves are estimated to be 500,000 tons grading 0.172 oz gold equivalent (gold and silver combined). ISKUT RIVER Sparked by the gold discovery on Skyline Explorations’ Reg property (also known as Johnny Mountain), British Columbia’s Iskut River area, northwest of Stewart, has become one of the hottest exploration plays in the province. Late in the year, Cominco and Delaware Resource Corp. announced a major discovery on their snip property, which also seems destined to become a producer.

Poor weather in September and October slowed mill construction at the Skyline property, but the plant is scheduled for completion by the end of March. Measured reserves are 121,000 tons grading 1.25 oz gold, according to Skyline; but, including all categories, they total about one million tons grading 0.72 oz gold per ton.

Additional exploration was carried out by the company on its Reg claims during 1987. Extensions to the Discovery and 16 veins were made east and west of existing underground workings. Detailed exploration work remains to be done on most of the property, and geophysical work has indicated several good targets. The Discovery and 16 veins are still open to depth and at both ends.

An associated company, Inel Resources, has mounted a major underground program on its property just east of Skyline. The program began last September and was to include 1,700 ft of drifting in 1987. The purpose of the work is to explore the Discovery, Main Sulphide and Inel Ridge zones where gold, copper, silver, lead and zinc mineralization has previously been mapped, trenched and drilled from surface.

The snip discovery was the big exploration success story in the region last year. Delaware funded work on the property under an agreement that can see Cominco back in for 60% at feasibility. Inferred reserves are 1.2 million tons grading 0.75 oz gold per ton, cut and diluted, and the ore is very clean. Underground exploration was scheduled to begin in the first quarter to confirm the continuity and grade of the deposit through lateral and inclined development. By year- end, Delaware had spent $3.5 million on the project, and the company now feels it will take a similar amount to reach feasibility.

Tungco Resources completed a $450,000 field program on its Waratah project. The work included extensive geochemical and geophysical surveys, trenching and more than 3,400 ft of drilling. A total of 18 auriferous quartz veins has been discovered. Only three of the veins have been drilled. Exploration this season will involve trenching and drilling on vein structures discovered to date.

Hector Resources completed 15 diamond drill holes (2,000 ft) on its Golden Spray zone, northeast of Skyline. Values up to 0.2 oz gold and 4.9 oz silver per ton
were reported over widths of four to five feet. An extensive exploration program is planned this year, including diamond drilling.