Report from Calgary Dawson Eldorado options Nevada bet

Results of a diamond drilling program on the Lone Star gold property near Dawson, Yukon Territory, have been announced by Dawson Eldorado Mines.

The program, operated by Arbor Resources, was conducted in two areas. Near Boulder Lode, 10 holes encountered intersections grading from 0.1 to 0.35 oz gold per ton over widths from 3 ft to 80 ft. Further drilling on this zone has been suspended until April. Results of the reverse circulation drill program on the north bank of Eldorado Creek were inconclusive due to bad drill conditions and subsequent loss of core.

On the Kiwi zinc prospect, drilling has been suspended until spring. Seven zinc-bearing carbonate zones have been intersected in narrow layers on the edge of the deposit. Operations on the Plata and Keno projects in 1986 produced 300 tons of direct-shipping material, which averaged 120-180 oz silver and 65%-75% lead per ton.

Dawson Eldorado has acquired an option to purchase a gold-silver property in the Willow Creek mining district, Nev. A check sampling program is under way in preparation for drilling later this year. A total of 41 rock outcrop samples assayed from 0.02 to 2.7 oz per ton gold with silver values.

The 18-hole reverse-circulation drilling program carried out on the Idaho Champion gold prospect resulted in significant, but marginal results. Re-assays now are being conducted to resolve discrepancies between fire assays and atomic absorption analyses. Mineralization was found to be erratic and associated with minor sulphides. The 1987 drill program is dependent on current assay checks

Calgary-based Albury Resources has announced the acquisition of 29% of the shares of Pollution Prevention Corp. PPC has the rights to a number of non-toxic silicate- based solutions, the applications of which include use as a soil conditioner, a wood preservative under certain conditions, and utilization in the manufacture of cardboard.

In this regard, PPC recently signed an agreement with a major paper company for the testing of the solutions in the manufacturing of corrugated and kraft papers. Solutions of this type have also been shown to inhibit the harm done by certain species of insects. It is expected that the chemical solutions will partially replace highly toxic compounds now utilized in the agriculture, horticulture and forest industries.

In accordance with the agreement, Albury will receive 29% of the shares of PPC for $25,000 cash and 250,000 shares of Albury common stock. To acquire an additional 22% of PPC stock, Albury will be required to provide funding requirements for PPC’s research, development and marketing in 1987, whi ch is expected to cost in the order of $250,000.

The 18 wells in which Chieftain Development Co. participated in December marked the greatest number of wells drilled in one month of the company’s history. During the whole of 1986, the company participated in 86 wells. Although exploration and development spending was down, low drilling costs and the Alberta government’s drilling incentive programs helped Chieftain to maintain this high level of activity.

Most of the wells were drilled in Alberta with Chieftain holding an average interest of 35%. In the United States, the company drilled six wells in Utah, four in Wyoming and one in North Dakota. Chieftain also participated in one well in the North Sea. Production of oil and natural gas liquids rose 96% to 3,050 bbl per day in 1986 from 1,558 bbl per day in 1985. Natural gas production remained steady at an average 29 million cu ft per day.

Lacana Petroleum increased its oil production by 45% in 1986 to an average 1,623 bbl per day. Gas production, however, was down 8% to 4.4 million cu ft per day. Continual increases in the company’s oil production capacity points to a rate of 2,300 bbl per day by the end of 1987.

The company also reported a 24% drop in net sales to $10.6 million. In spite of this, cash flow is expected to increase by 2% to $8.7 million as a result of the elimination of the petroleum and gas revenue tax, an increase in the Alberta royalty tax credit and reduced provincial royalties.

Proven and probable net oil reserves were increased by 21% as a result of discoveries at Shekilie and Ronalane, and additional development at Enchant, Joffre and Provost, Alta. New gas finds at Altario, Cadogan and Thornbury resulted in a 40% rise in gas reserves.

Suncor Inc. recorded a net loss of $7 million in 1986 compared with earnings of $22 million in 1985. The company exercised a number of financial survival procedures to cope with the low oil prices upstream and the lower-than-expected margins in refining and marketing. Survival tactics included slashing operating and overhead costs, cutting common share dividends by half with payment in stock, lowering long-term debt and reducing the workforce by 20%.

The Suncor oil sands group produced a record 20 million bbl of oil and slashed its cash costs per bbl by almost 50%. In spite of this, it was a break-even operation as compared with a $43-million profit in 1985.

A low level of drilling activity is expected for offshore Canada east coast during 1987. Total count may reach as low as two wells. One well, Golconda C-64, now is being drilled by the Husky Oil-Bow Valley Industries consortium off the coast of Newfoundland. The group has plans for one more well to the north on a different structure.

No applications have as yet been made to the Canada-Nova Scotia offshore oil and gas board for drilling off the coast of Nova Scotia. Three possible wells for this area are rumored. An exploratory well location proposed by Texaco Canada Inc. on Georges Bank is encountering opposition from local fishing interests.

A modified option agreement is in the works between Delaware Resources Corp. and Cominco with regard to the Snip property in northern British Columbia. Under the new terms, Delaware has the right to fund further exploration and may increase its interest to 100% by spending an additional $4 million. Cominco, however, has earn-back rights up to a 60% interest according to designated formulas.

Delaware anticipates expenditures of up to $3 million in 1987. The monies will be allocated for extensive diamond drilling and an underground exploration program. The Dec 31 expiry date for qualification for exploration and development drilling incentive programs in Alberta caused a flurry of drilling activity in the province at year- end. A season peak of 352 rigs were drilling in December. This constituted 75% of the 472 rigs available for work. By the first of the year the count was down slightly to 345 active rigs, but by mid-January this number was drastically reduced to 186. Industry spokesmen expect further gradual decreases until spring breakup, when most drilling activity usually shuts down.

The Energy Resources Conservation Board reports total Alberta coal production for the 10-month period ended Oct 31 at 22.75 million tonnes. Of this total, delivered coal reached 20.79 million tonnes, a 7% drop from the same period in 1985. Sub-bituminous coal deliveries amounted to 14.23 million tonnes, all of which was delivered within the province, primarily to electric generating plants. Bituminous coal deliveries totalled 6.56 million tonnes, most of which was exported, mainly to Japan, Ontario and Brazil.

Bighorn Development Corp. has announced acquisition of an option from Catear Resources and a private Alberta company to earn up to 60% in approximately 54,000 acres in the Sulphurets area of northern British Columbia. The option was obtained in return for Bighorn staking roughly 32,000 acres in the Mt. Madge area surrounding ground held by Catear. According to the option agreement, Bighorn must make payments totalling $60,000 and exploration expenditures aggregating $700,000 over the next three years to earn the 60% interest.

Exploration work has begun on the Isaac Harbour property by Petromet Resources and Greenstrike Gold Corp. The old Boston- Richardson gold mine, which is located on this Nova Scotia prospect, will be evaluated by a $300,000 program of induced polariz
ation and diamond drilling. The prospect area also covers three additional past gold producers, all of which are located along a conductive zone within the Meguma group, Goldenville formation.

Prolific Petroleum has acquired gold prospects in the Motase Lake area of north-central British Columbia. Two of the claims have been purchased from Cominco, while the remaining two claims were optioned from a private individual. Previous work on the property has identified gold occurrences, which the company regards as justifying an aggressive exploration program.

Panarctic Oils expects to make another shipment of 100,000 bbl of oil from its Bent Horn facilities in the Arctic this year. Under a long- term contract, the company will use the tanker MV Arctic over the same route to Montreal.