Freeport Gold considers shaft on first project

A number of diversified mining companies have spun off separate gold mining entities in the past two years and the results have tended to be secretive, slow-moving corporate entities.

Freeport-McMoRan Gold won’t be like that says Vic Tanaka, exploration manager for Canada. “It’s an extremely aggressive group,” he says.

In fact, the company is already talking about a $5 million budget in 1987 for work that could include sinking a 1,500-ft exploration shaft on a gold property near Matheson on which it recently gained an option, its first project in Canada.

The company, listed on the New York Stock Exchange, is an 84%- owned subsidiary of Freeport- McMoRan Inc., a Louisiana-based mineral and oil and gas concern with assets at the end of 1985 of about $2 billion(US) and net earnings in 1985 of $111 million. Freeport Gold, which operates and is 70% owner of the Jerritt Canyon open pit gold mine in northern Nevada, went public in June, 1985, and has kept an office in Vancouver since September of that year.

Freeport Gold’s first Canadian deal gives it the right to earn a 60% interest in Maude Lake Gold Mines’ 13,000-acre property in Beatty, Coulson, Wilkie and Carr twps about six miles northeast of Matheson, Ont. It has to put the property into production to gain that interest. No up-front money, share exchange or time frame were included.

Maude Lake is a private company, and its property has a fairly low profile, but since acquiring the ground in 1973 and starting serious work in 1980 it has picked up nine miles of strike along the Pipestone Fault. The property is about 25 miles west of American Barrick Resources’ Holt-McDermott mine and 25 miles east of St Andrew Goldfields’ Stock Twp. property.

Mr Tanaka says speculation that the Five Zone deposit on the property holds about 750,000 tons grading 0.25 oz gold per ton would not be far off, but he declined to set a tonnage or grade himself: “It’s just too early,” he says.

But the property is by no means a grass roots play. Since 1980 Maude’s shareholders, a group of “lawyers, judges and doctors” from Montreal, Sudbury and Toronto, has spent a lot of money on the property says Maude geologist Robert Bennett.

In 1985, however, the property grew beyond being a “little hobby mine” and the company went looking for a partner.

It looks like they may have found a good one in Freeport.

Drilling done to 1,100 ft has traced continuity of what had originally been a near-surface, open pittable deposit to depth. Mr Tanaka says at that depth two intersections over a true width of 10 ft cut 0.36 oz gold per ton and “more than an ounce.” Mr Bennett would not disclose any figures from Maude Lake’s work but said he had interpreted the same drilling over a greater width, about 28 ft, with a lower grade.

Freeport plans to do 20,000 ft of drilling to test for extensions of the known gold mineralization at depth and laterally and, contingent on those result, it “may elect to sink a 1,500-ft shaft by mid-1987 to conduct underground exploration on the property,” says Chairman Milton Ward.

The initial drilling will cost about $500,000 while the total budget for 1987 “could reach $5 million if underground exploration is undertaken.” Freeport has been working on the property since mid-December. There are two drill rigs working on the property now, although only three holes have been drilled. More rigs could be put to work as they become available, probaly in March, says Mr Tanaka.

The property fits in well with Freeport’s intention to acquire properties at an advanced stage of exploration. Although this is Freeport’s first project in Canada, it’s not likely to be the last.

“We’re negotiating on a couple more,” says Mr Tanaka who says the company is interested in getting involved in some other projects of a similarly advanced nature.