Jury out on discovery in Galore Creek camp

Reports of a significant new discovery in the rugged and remote Galore Creek region of northwestern British Columbia have generated another flurry of speculative trading on the Vancouver Stock Exchange. This time, however, local mining analysts are warning that investors may be “speculating blindly” because assay results are not yet available to determine the copper-gold content. The discovery in question was recently reported by Bellex Mining (VSE) and Quattro Resources (VSE) on their joint venture J.W. property, an early stage copper-gold prospect in the Galore Creek camp. The share prices of the tightly held juniors rose to peak at $5.12 and $10 respectively from below $1 after “initial visual results” from the first drill hole were released, and after a national newspaper gave the story prominent coverage on its business pages. Neither company is associated with Murray Pezim, or his group of junior companies which currently control the largest land position in the Galore Creek camp.

The first hole drilled on the J.W. property was reported to have intersected 45 ft. (from 730-775 ft.) of “quartz breccia with chalcopyrite, pyrite and pyrrhotite and minor chlorite epidote veinlets.” The total sulphide content of this intercept was estimated at 25%, with 2% visible chalcopyrite. Visual observations were also made for several other intercepts within an overall length of 265-797 ft. where minor chalcopyrite was noted.

“Previous data on the property suggests this mineralization (chalcopyrite) carries significant gold values,” the companies reported at the time. This, coupled with some promotion and a rumor machine working overtime, appeared to be enough to trigger heavy trading in both companies, and media reports of a “significant” gold discovery, or, alternatively, a “massive sulphide” find.

John Kaiser, an analyst with Pacific International Securities, cautioned that various rumors and inaccurate descriptions of the mineralization “might tempt images” of a deposit type similar to Eskay Creek. In a recent report on the Galore Creek camp, Kaiser noted the sulphides encountered on the J.W. property do not contain galena (lead) or sphalerite (zinc), but rather pyrite (fool’s gold) and chalcopyrite (copper), both typical of copper- gold porphyry systems. Other analysts say the depth at which the 45-ft. intercept was encountered is another factor to be considered, as porphyry systems are usually mined by open pit methods.

“I don’t know what all the excitement is about,” said Don Poirier, an analyst with Brink Hudson & Lefever, who raised the issue that in most cases visual results are not material changes and should not be reported until assays are available.

Other analysts expressed concern that should assay results from the J.W. property not meet high expectations, the fallout might temporarily affect other junior companies working in the area. Over the long term, however, analysts expect that Galore Creek will remain an active exploration camp as it is now recognized as being highly prospective for a variety of mineral deposit types.

The camp already has a number of huge porphyry copper-gold deposits discovered in the 1950s that are likely to remain undeveloped for some time because the area is rugged and inaccessible. Unlike the Iskut and Eskay Creek camps to the south, the Galore Creek camp has no immediate prospects for road access.

The Galore Creek deposit — owned by Hudson Bay Mining & Smelting (TSE), Cominco (TSE) and Kennecott — was discovered in the 1950s and is reported to contain 125 million tons of 1.06% copper and 0.012 oz. gold. A second porphyry, Schaft Creek, is even larger with geologic reserves of one billion tons grading 0.33% copper, 0.034% molybdenum, and minor gold and silver. It is owned by Teck (TSE).

Mingold, operating on behalf of Hudson Bay, is exploring the periphery of the Galore Creek deposit for satellite gold-rich copper deposits. Ed Yarrow of Mingold said the 1990 drill program will have two phases, and results of the program may be released later this year.

The J.W. property held by Bellex and Quattro was first explored by Kennecott for its copper potential after the discovery of the nearby Galore Creek deposit and later explored by Teck. (Kennecott is now back in northwestern British Columbia after it has entered into agreements with several companies active in the area).

The peripheries of porphyry copper deposits are also considered prospective for gold deposits, which are among exploration targets being pursued by companies in Murray Pezim’s group of juniors (under the umbrella of Prime Equities). Several juniors have already reported a number of early stage discoveries. The exploration targets include precious metals, porphyry gold- copper systems, skarns, and massive sulphide deposits.

Prime group company Consolidated Rhodes Resources (VSE) recently announced plans to earn a 50% interest in the Copper Canyon project in the Galore Creek camp held by Canamax Resources (TSE). It is reported to contain a geological reserve of about 29 million tons of 0.7% copper, 0.30 oz. silver and 0.01 oz. gold. A $250,000 first-phase diamond drill program is planned.

Mike Muzylowski, director of Gold Torch Resources (VSE), recently announced that drilling will begin in September on the ICY project (adjacent to the J.W. property) held in a joint venture with Sarabat Gold (VSE). The program will test the newly discovered Trident gold vein and several other zones. Sampling on the Trident vein returned high gold values.

Muzylowski’s Goldbelt Resources (VSE) is also a significant landholder in the Galore Creek camp. Goldbelt also controls about 14% of Pass Lake Resources (VSE), which has also amassed a huge land position in the region.