Prime extends zones at Eskay Creek property

Prime Resources Group (PRU-T) has completed 17 surface drill holes at the Eskay Creek mine property near Stewart, B.C., testing the boundaries of the Northeast Extension (NEX) and Hanging Wall (HW) zones.

Eleven of the holes intersected ore-grade gold-silver mineralization and extended the previously defined limits of the NEX zone 360 ft. to the northeast. The results also show significant base metal enrichment (primarily lead and zinc).

“Although gold and silver grades are somewhat erratic, we are excited about the potential of the latest drilling program to increase the size of the NEX and HW zones,” said President Ronald Parker.

The zones were previously estimated to contain a geological resource of 227,000 tons grading 0.88 oz. gold and 56.2 oz. silver per ton.

Significant intersections from the recent drilling ranged from 3 ft. grading 0.48 oz. gold-equivalent to 104 ft. grading 0.74 oz. gold-equivalent for the HW zone. The NEX zone returned gold-equivalent grades of 0.64-6.49 oz. over widths ranging from 2 to 40 ft.

Prime is encouraged by holes 96-761 and 96-762, which extended the NEX zone more than 360 ft. to the northeast. Hole 761 intersected 40 ft. of 1.47 oz.

gold-equivalent, including a 21-ft. interval grading 2.33 oz., while hole 762 returned 16 ft. grading 2.5 oz.

The NEX and HW zones appear to be stratigraphic extensions to the northeastern end of Eskay Creek’s main 21B ore zone but with uniformly lower deleterious elements, such as mercury and antimony. A second phase of drilling will test the zones further.

Proven and probable reserves at Eskay Creek, as of Jan. 1, stood at 1.1 million tons grading 1.88 oz. gold and 83.4 oz. silver.

For the second quarter, Prime reported net income of $10.2 million (or 13 cents per share) on revenue of $53.3 million, compared with $10.3 million (also 13 cents per share) on $48.3 million for the same period in 1995.

Earnings for the first half of the year totalled $23.4 million (31 cents per share) on revenue of $102.8 million, compared with $15.7 million (21 cents per share) on $77.5 million in 1995.

Gold and gold-equivalent production for the second quarter amounted to 115,983 oz. — up slightly from 114,706 oz. gold-equivalent produced in the comparable period in 1995 — while cash costs declined to US$176 from US$180 per oz.

At Eskay Creek, gold and silver production for the quarter amounted to 51,734 oz. and 3.2 million oz., respectively, representing a 6% decline, on a gold-equivalent basis, from the same period in 1995. Cash costs decreased to US$173 from US$182 per oz.

Meanwhile, at the Snip mine, also near Stewart, Prime’s share of production rose to 21,203 oz. in the recent second quarter from 13,815 oz. in the same period in 1995. The dramatic rise reflects the acquisition of a 100% interest in the mine, which took effect April 30. Cash costs increased to US$192 from US$170 per oz.

Prime’s total production for the first six months was 227,143 oz.

gold-equivalent at a cash cost of US$170 per oz., compared with 192,555 oz.

at US$181 per oz. in the first half of 1995.

In related news, Prime has begun deep drilling on the Bonsai property of Teuton Resources (TUO-V), 2.5 miles west of Eskay Creek. Prime can earn up to a 60% stake in the property by spending $1.8 million over five years.

Homestake Canada, a wholly owned subsidiary of Homestake Mining (HM-N), is Prime’s largest shareholder, owning about 51%.