Speculation runs high on Cortez-Robertson

A recent gold discovery on the Cortez joint venture owned 60% by Placer Dome (TSE) helped push Coral Gold’s (VSE) share price to new highs on speculation the deposit may extend on to an adjoining property held by Coral.

Coral’s Robertson gold property, under option to Amax Gold (NYSE), is located to the north of the Cortez discovery and about 30 miles south of Battle Mountain, Nev.

Coral recently hit 82 cents, marking a 52-week high in a protracted period of speculation beginning in early November following the release of Placer’s third-quarter report.

In a brief paragraph at the end of the report, Placer announced it had discovered a new deposit at its Cortez mine, identifying about 9 million tons grading 0.19 oz. gold per ton at a cutoff grade of 0.05 oz.

The company went on to note that the reserve included about 5.7 million tons of material grading 0.27 oz. gold suitable for carbon-in-leach recovery based on a cutoff grade of 0.1 oz. gold. Placer also stated that the deposit remains open in two directions and that the company had increased its interest in the Cortez joint venture to 60% from 43%.

The bearings of the two open directions are unclear and a notable lack of solid information since Placer’s third quarter has only fuelled the speculative fire under Coral Gold.

Hugh Leggatt, a spokesman for Placer, said the company is still compiling drilling data and finalizing numbers on the new discovery. He added that Placer will not issue any further information regarding the discovery until the release of its year-end results on Feb. 19.

During a recent site visit to Coral’s Robertson property by The Northern Miner and a group of Vancouver mining analysts, the secretive nature of the activity surrounding the play was exemplified when, minutes after arriving at the site, a security guard for the Cortez joint venture confronted the group on a county road near the border of the Coral and Placer properties. Amax, which can earn a 60% interest in the Coral property by completing a bankable feasibility, also hasn’t said much since releasing its exploration plans last November. The company declined to give a start date or a budget for the program but did comment that “things are a little touchy down there right now.”

Rumors have surfaced that certain claims boundaries in the area are in dispute, although these could not be confirmed.

One thing is certain; Placer has five drill rigs on the property all located in close proximity to an old dump on the Cortez ground about 2,000-3,000 ft. to the south of one of the Robertson claim boundaries.

Coral originally brought the property into production in October, 1988, projecting yearly gold production from the open pit heap leach mine at 40,000 oz. Proven and probable reserves at the time were estimated at about 11 million tons grading 0.04 oz. gold.

The mine was forced to close in August, 1989, because of operating problems, higher than expected strip ratios and lower than expected grades. Over 200,000 tons of material was placed on a leach pad during the period, netting just over 4,400 oz. gold.

Amax subsequently optioned the property to test its deep sulphide potential but met with limited success and changed its focus to near-surface gold targets.

Under a renegotiated option agreement, Amax has the right to earn a 60% interest in the Robertson property by completing a bankable feasibility. Coral, in turn, has the right to revert to a 30% carried interest. Amax appears to be concentrating its efforts in the central part of the property rather than the south end (Gold Acres North) where Coral hopes to pick up the extension of the new discovery.

Exploration plans include four offset holes around drill hole AT-39A which intersected a 125-ft. mineralized zone from 660 ft. to 785 ft. grading 0.11 oz. gold. The company is also planning a series of 15-30 shallow holes to test previously intersected near-surface gold mineralization in the Altenburg Hill and Gold Pan zones in the central part of the property where previous mining took place.

Amax’s plans for the Gold Acres North area, according to the November release, include two exploration holes to test for possible extensions to Placer’s discovery.