Mineral inventory upgraded by Energex on Toodoggone bet

With the evaluation of last year`s exploration data completed, Energex Minerals reports an upgrade in mineral inventory at its Toodoggone, B.C. property to approximately one million tons grading 0.20 oz gold per ton in the proven, probable and possible categories.

Shallow, open-pitable, drill proven-probable uncut undiluted reserves for the Bonanza Ridge, Thesis III and BV deposits stand at 262,242 tons grading 0.25 oz using a 0.03 oz cut-off. Contained within these reserves are 60,100 tons of drill proven reserves at a grade of 0.56 oz using a 0.23 oz cut-off.

President Arne O. Birkeland says preliminary economic analysis of identified reserves indicates a modest high grade operation is feasible with two to three year mine life based on production rates of about 14,000 oz gold per year.

However, he says that access remains the major economic factor dictating the size, duration and cut- off grade of mining operations.

Extension to the Omineca mine access road into the Toodoggone region is anticipated to proceed in the immediate future, he says. As a result, its been decided not to place the property into production on a fly-in basis this spring.

This year’s plans include over 8,000 ft of diamond drilling to increase proven and probale reserves to support mining operations for a minimum of six years. Deeper development drilling is scheduled to determine the potential for high grade underground mining operation. As well, expanded pilot plant testwork is planned.

Mr Birkeland says, contingent on access, continuous milling of ore mined from three open pits is projected to start in 1988. The viability of a seasonal leaching program on the lower grade wall rock from the open pit operations is being currently evaluated.

Looking at the financials for the six months ended Nov 30, the company posted a positive cash flow from operations based on cash distributions from Giddings Ltd., a gas gathering, processing and transmission system, totalling $335,684.

Actual exploration expenditures during the period was $1,988,380, up 62% from the $1,228,411 spent on exploration in the same period of 1985.

In the past six months Energex reduced the book value of its investment in Giddings by $348,450. This adjustment resulted from a write- down on assets initiated by Giddings itself and was the major reason for the loss for accounting purposes to Energex over the period of $503,828.

At the end of the period, Energex posted a cash position of $1.3 million and a working capital of $1.4 million.