Results fall short of expectations, Aur says deposit not `pinched

High-grade intersections that fuelled the rapid rise in the price of Aur Resources (TSE) and Societe Miniere Louvem (TSE) shares in mid-1989 failed to materialize among the latest batch of Louvicourt Twp. drill results. Of the first five holes completed at the Aur-Louvem massive sulphide discovery east of Val d’Or, Que., since mid-November, only one intersected values of any significance. It encountered heavy stringer chalcopyrite mineralization and yielded a disappointing 43.3 ft. of grade 1.56% copper and 0.027 oz. gold per ton (including 15.3 ft. of grade 3.13% copper and 0.077 oz. gold).

But Aur President Jim Gill says investors shouldn’t be discouraged by the latest results even though drillers have had to abandon 24 holes because of excessive deviation.

“People may not understand the deposit has not reduced in size or pinched out in any way,” Gill says; potential reserves still stand at 36 million tons of grade 3.11% copper and 1.34% zinc. He admitted that his team of geologists may have misinterpreted the plunge direction of the deposit.

News that four other deep holes had ended up below the deposit drew the inevitable market reaction as shares of all three companies involved in the project fell significantly.

The holes were designed to test the deposit below hole 74C, which yielded the widest massive sulphide intersection encountered on the property so far. Having intersected 334.8 ft. of grade 3.59% copper, and 0.15% zinc at a depth of 2,160 ft. below surface, hole 74C suggested that the deposit was wide open and getting bigger down- plunge to the east.

On the day the new results were released, shares of operator Aur Resources, which is involved in a legal dispute with partner Louvem for control of the project, closed down 75cents at $10.13. Louvem and St. Genevieve Resources (TSE) both gave up ground closing down 88cents and 19cents respectively. St. Genevieve owns 52% of Louvem.

Gill says the deposit doesn’t dip to the east as steeply as indicated by previous intersections released from the property, including hole 74C.

That conclusion is based on the fact that four holes (77H, 78G, 74H and 79E) drilled to a depth of 2,600-3,100 ft. below surface and down-plunge from hole 74C ended up below the trend of the deposit.

Gill has also been encouraged by the existence of what he called “exceptionally strong” off-hole conductors in holes 74H and 78G indicating the presence of a thick conductive source within 200 ft. and 100 ft. respectively from both holes.

As the geological signature suggests a massive sulphide zone similar in thickness to the one encountered in hole 74C, Aur was expected to probe in that area when drilling resumed March 1.

The deposit also remains untested below a depth of 2,650 ft. and to the east of holes 69 (which returned no significant assays) and 78G. A more shallowly dipping deposit may ease the difficulties that drill crews have faced since the last batch of holes was tabled nearly three months ago.

Between November and early January, drillers had trouble controlling excessive drill hole deviation and in obtaining reliable directional survey data to locate accurately the position of the Aur horizon drill hole intercepts, Aur says.

As a result, some investors who felt they weren’t kept up to date on the situation sold their shares. According to a street rumor, executives at Cominco (TSE) and Teck (TSE), which together hold 21% of Aur, haven’t been entirely happy with the slow going. But Bob Spencer, Cominco’s manager of exploration administration, declined to comment on the rumor. Noranda Minerals, which owns 21.6% of Louvem, is also monitoring the situation closely.

However, according to Gill, deviation problems have now been overcome through the successful application of directional drilling technology and an innovative system of seismic triangulation.

Mapping out his strategy for the next phase of drilling, Gill says more holes will target the 2,250- to 3,500-ft. levels as exploration moves out to the east. While Aur is no nearer to finding the deposit’s centre of gravity or determining the eventual size of the deposit, the shallower plunge factor means that drill crews don’t have to drill as deeply to add tonnage.

The centre of gravity, needed to determine the site of a production shaft, can also be located via surface drilling, Gill says.