Hydra’s Johnsby property possible heap leach mine

An option deal has been completed between Hydra Explorations’ 50%-owned affiliate Johnsby Mines and a private company concerning Johnsby’s gold property in the N.W.T. Discovery Mines holds the remaining interest in Johnsby.

If successfully carried to production, the Arctic would see its first large-scale heap leach mining facility in operation — a processing technique better known to the much warmer southwest U.S.

Located in the Indin Lake area, the Johnsby property was tested by 47,000 ft of diamond drilling in the mid-1940s. Based on this work, reserves of 20 million tons grading 0.05 oz gold per ton were outlined to depth of 500 ft.

M. K. Witte, a principal in the metallurgical consulting firm of Witteck Developments, optioned the property from Johnsby Mines. By assigning her option to Neptune Resources, she became the controlling shareholder of Neptune. Under the terms of the deal, Neptune can earn a 60% interest in the property by spending $4.5 million over a 4- year option period. Of this, $1.5 million must be spent during the next year.

Johnsby has the right to buy back 10% for $4 million or can be diluted to a gross royalty ranging from 3%-10%, based on the price of gold.

Preliminary work by Witteck has enabled the company to improve the grades to 0.085 oz gold per ton in 13 million tons to a depth of 600 ft. Average widths are 160 ft.

Ross Burns, senior geologist for Witteck and consultant to Neptune, says that the initial work will include drilling “to firm up reserves and establish grades.” Although reluctant to discuss in detail the metallurgical aspects of the ore and future processing technology being considered, Mr Burns noted that “we are taking known technologies that will be combined in a novel fashion to make this work.”

Another possible source of income for Hydra is the Porcupine Peninsula property east of Timmins, Ont. Hosting a geological reserve of 1.9 million tons grading 0.113 oz gold per ton, the property is controlled by Pamour Inc. Pamour plans to spend $1 million on the property during the 1986-1987 season.

Work will include dewatering the No 1 shaft to the 425-ft level and 10,000 ft of drilling. Pamour will be attempting to develop some proven reserves which could be trucked the short distance to Pamour’s big mill in Timmins. Pamour holds a 100% interest in the property subject to a royalty payable to Hydra. Michael Zurowzki, vice-president of exploration at Conwest Exploration, which indirectly controls Hydra through its affiliate Faraday Resources, explained that at a gold price of $400(US) per oz, the gross royalty to Hydra would be approximately $1.66 per ton. “It’s a unique royalty based on the price of gold.”

Hydra also has two other properties in Quebec, both of which are being explored by Quebec-based companies.