North American big spender on Golden Bear prospect

What probably represents the largest single exploration and development program in B.C. is well under way 77 miles north of Telegraph Creek. North American Metals Corp. is spending $3.3 million on Chevron Minerals’ Golden Bear property which appears to have some real production potential.

Probable reserves in the Bear zone are estimated to be approximately 1.3 million tons grading 0.31 oz gold fully diluted and there is considerable potential elsewhere on the 30,000-acre joint venture.

The property, which was optioned by North American Metals in June, was Chevron’s largest Canadian gold asset. Weakness in the oil sector has forced Chevron to farm out some of its mineral interests and this one was among the most advanced.

Chevron is said to have spent $12.3 million on the project, a large portion of it for drilling. About 60,000 ft of surface drilling was completed and thre e gold deposits discovered, two of which have calculated reserves. The find was made by grassroots prospecting and Chevron compiled an extensive data base on the project and had completed a pre-feasibility study.

North American is project operator and must spend $9 million to earn a 50% interest. The company won’t earn any interest until it has spent $5.5 million, at which time it will hold 33.5%. Earlier this year, the company raised $5.9 million in Europe (London and Switzerland) through private placements and they leveraged that with flow- through funds.

According to Robert Dickinson, a director for North American, his company will have spent the $3.3 million by year-end for what he describes as a “development feasibility.” That figure includes the cost of a full feasibility study in March by Wright Engineers of Vancouver.

The project is located in a remote area of northern B.C., so road access will be critical to its development. A winter road exists from Telegraph Creek but the company wants to construct an all-weather road to the site, something that is estimated to cost around $8.2 million. Mr Dickinson hopes the provincial government will be able to provide some assistance for road construction. They would like to start the road next May and the company is also concerned there might be some delay in getting stage one approval for the project which will have a year’s lead time to production.

Approximately 50 people are working on the property at present, almost half of them contractors.The bulk of the budget will go towards 2,800 ft of underground development and another 10,000 ft of surface drilling which was completed recently. Noting the discovery is located in a virgin area, he says there is potential for both epithermal and mesothermal gold deposits.

Underground development seems to suggest the actual grade will be higher than that indicated by drilling, he says. Chevron had very poor core recoveries because the rock was heavily fractured, which could explain the discrepancy. “We are going to have a substantial grade increase in the Bear deposit and possibly a tonnage increase,” he predicts.

The main purpose of the underground program is to move reserves in the Bear zone into the proven category. Chevron’s drill spacing was simply “not bankable,” he admits, so drifting, crosscutting and raising will be required to firm up the reserves. Both the Bear and Fleece zones are wide open and he feels the potential to the north is similar to the Bear. More exploration is planned towards the Fleece zone to the north and he says they expect to find “further gold deposits” in that area. The exploration will include underground drifting from existing mine workings.

The gold is fine grained and some of it is associated with arsenopyrite which could impact on recoveries. Limited metallurgical test work has been done but a 10-ton sample will be sent out for testing in the near future. The best results thus far have been from autoclaving which gave recoveries of 96%-98%, he notes. But this recovery method is expensive. Wright Engineers is overseeing the metallurgical test work.

The current work program will determine how much of the Bear zone is open pitable and whether part of it will have to be mined by underground methods. For 800,000 tons of open pit reserves in the Bear the strip ratio would be 4.5 to one (waste to ore). An 8-year mine life is indicated at this moment based on a mill rate of 500 tons per day but 1,000 tons might also be considered in the feasibility study.