The Graduating Class 1987 GOLD REPORT MT. SKUKUM

The AGIP-Erickson Mt. Skukum project is the first hard rock gold producer in the Yukon and it probably won’t be the last. Discovered by agip Canada in the early 1980s, the mine is now producing at 300 tons per day with Total Erickson Resour ces as operator.

This is one of two mines the company operates. The other, near Cassiar, B.C., is almost identical in terms of production. Both milling operations are brand sp anking new, so the company is well-positioned to capitalize on the recent streng th in gold prices.

Gold mineralization, which is widespread on the Mt. Skukum property, occurs in complex epithermal vein systems localized along fault structure with in a tertia ry volcanic environment. Initial work was confined to the original discovery zon e where close-spaced surface drilling outlined a reserve of 164,134 tons grading 0.73 oz gold and 0.6 oz silver.

That was sufficient to warrant production. But since that time, an additional 1-4,610 tons of drill-indicated reserves have been blocked out in the Brandy a nd Lake zones grading 0.48 oz gold per ton. At last report, the lake vein was st ill open to depth and along strike.

A number of other good targets exist within the immediate area of the underground workings, including the Pika, Fox and Gully veins. Several promising geophys ical and geochemical targets remain to be tested as well.

The mill is operating at full capacity and recoveries during the third quarter were about 93%. Head grades were considerably lower than expected (0.27 oz), mostly because of a change in mining method. Poor ground conditions in the Cirque zone necessitated a change to longhole stoping which began in the lower-grade no rth section of the orebody. Once that is mined out, the grade should improve, Er ickson says.

Significant additions were made to ore reserves at the company’s Cassiar operation where construction of a new flotation mill was completed late last year. N ew reserves were discovered in three areas of the 10,000-ft long vollaug vein an d these will be tested and possibly expanded in the coming year. Further work is also planned on the geologically complex Cusac property where six new gold- bearing veins had been discovered by mid-November. Ore reserve calculations are expe cted for both properties within the near future.

Total Erickson is in a position to acquire a 64% interest in the Dome Mountain project, near Smithers, B.C. The gold property fits in perfect ly with the company’s range of expertise and has a relatively short payback period with an attrac tive rate of return, Total Erickson says.