Sahelian sees potential at Poura GLOBAL SEARCH FOR GOLD — Summer drilling marks turning — point in quest for Damoti gold — Company seeks to expand resource in deep drilling program

A work program by Sahelian Goldfields (SHGI-C) is adding to the resource potential of the Poura mine, a past producer of more than 600,000 oz. gold in Burkina Faso, West Africa.

The company says recent work has demonstrated the existence of 400,000 tonnes of accessible and recoverable reserves in vein blocks left behind from previous operations. The grade is estimated at 13 grams gold per tonne, which corresponds to the mine’s historical average.

This tonnage, all found above the 267-metre level, is open to the north by at least 300 metres and

to the south by at least 400 metres of the 2,000-metre-long quartz-vein system.

Sahelian intends to start test-mining the existing vein blocks in order to determine the proper mining method and to provide metallurgical samples. The goal is to start production early next year.

Meanwhile, an underground exploration and development program is testing below the 267-metre level to determine if tonnage remains open at depth below existing workings. Initial results are encouraging, and a recent hole on the 317-metre level returned 28.5 grams gold along a 27-metre strike length of the vein over an average width of 1.5 metres.

The vein is open in both directions, and development work is progressing along this vein down to the 352-metre level.

Sahelian also is exploring the surrounding land package, which comprises more than 500 sq. km.

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A 31-hole program of infill drilling at the Damoti Lake project in the Northwest Territories has increased the contained gold resource in the Horseshoe zone to 254,660 from 86,700 oz.

The project is wholly owned by Nevada-based Quest International Resources (QIX-T) and covers 11,433 acres centring on a 6.5-mile strike length of banded iron formation. The project lies 120 miles north of Yellowknife and 16 miles south of the Colomac gold mine of Royal Oak Mines (RYO-T).

The Horseshoe, one of several gold-bearing zones identified at Damoti Lake, extends over a strike length of 1,000 ft. and contains multiple horizons of mineralization. The gold mineralization is closely associated with pyrrhotite, pyrite and silica. Also, chloritic alteration, which is structurally controlled, appears to cut across the banded iron formation.

Exploration Manager Richard Russell explains the geological model of the Horseshoe zone: “The bulk of the mineralization occurs along a curvilinear, or arcuate-type, feature. Within that feature, the gold mineralization seems to occur in a series of stacked zones going downdip in the iron formation.

The mineralization is stratabound (being restricted to the iron formation), but is not stratiform — it is definitely structurally controlled.” Donald Gustafson, president of Quest, says the company has recognized six of the arcuate zones and received high-grade intercepts from two — BIF Island and Horseshoe. The other four have yet to be drill-tested.

Prior to this summer’s program, the Horseshoe zone had been subjected to 60 surface and 35 underground diamond drill holes, several of which returned some spectacularly high-grade intercepts, including 1.26 oz. gold per ton over 13.5 ft., 1.11 oz. over 15.4 ft., 2 oz. over 47.9 ft. and 1.13 oz. over 74.5 ft. The average depth of the holes was about 350 ft.

In 1996, Quest drove a decline into the zone and completed 680 ft. of underground drifting on the 80- and 30-ft. levels. The objective was to confirm the high-grade gold mineralization previously intersected by surface drilling. About 4,000 tons of material grading 0.6 oz. gold were mined and stockpiled on surface for future processing. This work, along with underground drilling, defined a minable reserve of 16,210 tons grading 0.92 oz.

Successful summer

This summer’s closely spaced drilling was designed to delineate further the Horseshoe zone and confirm the continuity of mineralization to depth. The program returned intercepts ranging from 4.6 ft. grading 0.1 oz. gold to 17.2 ft. of 1.93 oz.

Selected highlights include:

* 11.1 ft. of 0.45 oz. gold at a downhole depth of 175.2 to 186.3 ft. in hole 280 (drilled at a dip of minus 70);

* 20.7 ft. grading 0.43 oz. at a depth of 294.9 to 315.6 ft in hole 285 (minus 90 dip);

* 16.4 ft. of 0.66 oz. from 126 to 142.4 ft. in hole 288 (minus 90 dip); * 21.3 ft. of 0.65 oz. from 161.8 to 183.1 in hole 289 (minus 90dip); * 9.8 ft. of 1.58. oz from 136.8 to 146.6 ft., 9.8 ft. of 1.25 oz. from 159.1 to 168.9 ft., and 5.3 ft. of 2.8 oz. from 222.7 to 228 ft. in hole 293 (minus 90 dip);

* 6.6 ft. of 0.95 oz. from 85.6 to 92.2 ft. in hole 295 (minus 90 dip); * 13.1 ft. grading 0.66 oz. from 77.1 to 90.2 ft. and 44.3 ft. of 1.2 oz.

from 169.6 to 213.9 ft. in hole 296 (minus 90 dip);

* 6.6 ft. of 1.48 oz. from 40 to 46.6 ft. in hole 298 (minus 90 dip); and * 6.9 ft. of 0.76 oz. from 40.7 to 47.6 ft. and 23 ft. of 0.87 oz. from 201.1 to 224.1 ft. in hole 301 (minus 90 dip).

Several of the holes intersected significant mineralization at depth. Hole 282, drilled at a minus 74 dip, intersected 12.1 ft. of 0.43 oz. at a downhole depth of 797.7 to 809.8 ft., whereas hole 291, at a minus 65 dip, cut 8.2 ft. of 0.43 oz. at a downhole depth of 810.7 to 818.9 ft.

Sierra Mining & Engineering, a Nevada-based consulting firm, used the results of the 1997 program to calculate a measured, indicated and inferred resource within the Horseshoe zone. The estimate — 606,000 tons grading 0.42 oz. — takes into account only the top 350 ft. of the zone.

Geology

The Damoti Lake property is in the Indin Lake supracrustal belt, which consists of Archean metasedimentary and metavolcanic rocks of the Yellowknife Supergroup.

The sequence of metasedimentary rocks comprise turbiditic greywackes, mudstones, siltstones and interstratified amphibolite iron formation. The metasediments are in depositional, or fault, contact with various metavolcanic rocks.

Gold was first discovered at Damoti Lake in an iron formation exposed on BIF Island by Canadian government geologist J. Brophy in 1992. The property was subsequently staked by Yellowknife-based Covello, Bryan & Associates, which still retains a 2% net smelter return royalty.

Athabaska Gold acquired a 75% interest in the property in 1993 and optioned a 51% interest to Quest (then known as Consolidated Ramrod Gold). Gitennes Exploration held the remaining 25%.

Drilling began in 1993 on the BIF Island discovery, and later stepped out to the North Island zone, 500 metres north. The program encountered erratic high-grade gold mineralization.

By May 1994, several zones had been identified and Quest assumed operatorship of the project. During that year, emphasis shifted from the BIF Island discovery to the Horseshoe zone, where multiple, stacked lenses of high-grade gold mineralization were found in sheared and folded iron formation. The Horseshoe zone is 2 miles south of BIF Island.

In 1995, Quest boosted its interest in the Damoti project by purchasing the remaining 49% interest in Damoti Lake through a combination of cash and shares valued at $4.5 million. Quest issued 630,000 shares to Athabaska for its 24% interest and paid Gitennes $1 million in cash plus 375,000 shares for its 25% interest.

To date, 306 surface holes and 35 underground holes have tested a 2.5-mile length of the banded iron formation. Sierra Mining has calculated a total geological resource of 2.1 million tons grading 0.3 oz.

Deep drilling planned

Quest recently raised $1 million, enabling it to resume drilling at Damoti Lake. About 4,000 metres of delineation and exploration work are planned for the remainder of 1997. “Our primary goal is to move ounces from probable to proven, as well as to keep pushing out the zone of known mineralization farther north and downdip [within the Horseshoe zone],” says Russell.

Gustafson adds: “I feel we can enhance the inventory significantly by drilling deeper holes than in the past.”

Quest has retained Golder & Associates to initiate the environmental permitting process. Base-line studies are in progress.

A preliminary scoping study by Sierra Mining suggests that a 200-ton-per-day underground minin
g and standard milling operation could be placed into production at a capital cost of US$14 million. Sierra projects the mine could produce 40,000 oz. per year at a cash cost of US$192 per oz. These estimates are based on a gold price of US$380 per oz.

The ore would be mined using traditional underground methods, then crushed and milled to minus-200 mesh. The gold would be recovered from a carbon-in-pulp leach circuit using electrowinning methods.

Initial metallurgical testwork suggests a recovery rate of 92% or greater.

Gustafson describes the ore as clean, containing no arsenopyrite.

It is a mark of the success of Quest’s summer drill program that the company is now considering a 500-ton-per-day operation.

“We were originally looking at a mill that would start at 200 and be able to go to 400 tons per day and produce somewhere between 40,000 and 80,000 oz.

per year,” says Lennard Glogauer, vice-president of corporate communication.

“We’re totally rethinking that now, because of the size of the Horseshoe zone alone. We think it will warrant a mill that will do at least 500 tons per day.”

Royal Oak holds a right of first refusal to provide production financing for the project.

Quest has 40.4 million shares outstanding, or 49.4 million shares fully diluted.