Queenston to confirm chairman’s confidence

While Queenston Gold Mines Chairman Hugh Harbinson stops just short of saying that his company is about to become another Canamax Resources, he confesses to being extremely optimistic about the company’s near-term prospects.

Believing that Queenston had both the properties and potential to approach a production target of five new mines by 1991, he made a successful bid for the tse-listed company earlier this year.

With such a glittering prospect up for grabs, Mr Harbinson managed to raise $4.5 million needed to give HSK Minerals in partnership with Joutel Resources a 42% controlling interest in Queenston. Together, HSK and Joutel bought four million Queenston shares at $2 per share from the Canadian Imperial Bank of Commerce.

When the agreement was completed on May 27, Mr Harbinson became chairman of Queenston while remaining as president of Toronto-based HSK.

Within four to five weeks, Queenston will likely confirm Mr Harbinson’s confidence in the former royalty company by making a series of major announcements on key properties. Millfeed

The first was tabled last Friday when Queenston and Inco Gold revealed plans to step up the search for new mill feed sources at their Kirkland Lake, Ont., joint venture claims.

After a series of programs aimed at providing additional tonnage for the McBean mill, the partners will focus their combined efforts on one of three gold zones located west of the now dormant McBean mine.

Called the Anoki zone, the property has undergone both surface and underground exploration since it was discovered in the 1920s.

Previous exploration had outlined proven and probable reserves of 600,000 tons of mineral resources grading 0.145 oz gold per ton, to a depth of 800 ft and indicated that the gold bearing zone extends downwards.

Mineralization grading 0.26 oz over a 25-ft true width has also been located down the easterly plunge of the zone at a depth of approximately 950 ft.

According to the company, the $7-million program which is scheduled to begin in October and finish in August, 1988, involves driving a ramp to the 735-ft level for underground exploration.

“To obtain a 50,000-ton bulk sample, we will attempt to access what we think is mineralization on four different horizons,” said Claudio Barsotti, Inco Gold’s vice-presi- dent development and operations.

He expects to employ around 35 people to complete some 30,000 ft of underground and 10,000 ft of surface diamond drilling.

The objectives of the program are to increase the resource base to at least one million tons, obtain a bulk sample for metallurgical testing and determine the mineability of the deposit. Mineable orebody

“Assuming the price of gold is reasonable, and we get around one million tons at a reasonable grade (he says 0.15 oz would be sufficient), we would go ahead and mine the property,” said Mr Barsotti.

“The availability of the 500-tpd McBean Mill, means we don’t have to find the moon to have a mineable orebody.” The mill is 65% owned by Inco while Queenston retains a 35% interest.

If the Anoki deposit proves mineable it will be one of a number of producers which Queenston plans to bring on stream in the very near future. Although the details of future exploration on Queenston’s other project s won’t be released until later this month, they are likely to focus on at least three key properties. These include:

* The Upper Canada mine property which produced 1.5 million oz of gold between 1938 and 1971 when it was closed partly because of low gold prices. Located one mile north of the McBean mine, the property encompasses a system of shear zones which are likely related to the Larder Lake, Cadillac Gold structure. Future plans

Detailed mapping and geophysical surveys completed between 1981 and 1982 outlined three near- surface, drill-indicated gold-bearing areas that the company says could possibly yield gold reserves for future development.

In 1986, additional exploration studied the surface potential of two important former producing areas (the B and C zones) which had been mined below 650 ft and 1,750 ft respectively.

* The Pandora mine property which produced 196,929 tons grading an average 0.16 oz from 1939 to 1942. Located on the Larder Lake Break in Cadillac Twp., Que., the property was explored extensively by Camflo Mines before American Barrick Resources earned a 75% interest in the property.

The latter company has been reviewing the project in preparation for exploration on a number of target areas and is preparing to detail its plans in the near future.

* The Kirkland Lake West property which covers the projected westward extension of the Kirkland Lake “main break” for a strike length of one mile. Located just 300 ft west of Lac Minerals’ Macassa mine workings, and 1,200 ft from Macassa’s new No 3 shaft, the property has been declared a top priority for exploration this year.

According to Queenston’s 1986 annual report, the company has submitted a proposal to Lac Minerals for underground exploration on the property and if an agreement is reached, the program could begin almost immediately.

According to Mr Harbinson, eventual production from the Kirkland Lake West, the Pandora or the Anoki projects would be significant milestones in Queenston’s re- emergence as both an operating and exploration company.

Meanwhile, the company receives royalty income from properties it owns jointly with Lac Minerals and mined at Lac’s Macassa mine in Kirkland Lake.

Queenston also receives revenue from the custom milling joint venture with Inco Gold plus a custom milling contract it signed recently with Golden Shield Resources.

Queenston shares were trading recently on the Toronto Stock Exchange at $2.62, just below its 52-week high of $3.15 but well above its 86 cents low point.