Eskay Creek upstages Iskut River gold camp

Both regions came to prominence as a result of spectacular and heavily promoted gold discoveries that subsequently triggered an exploration boom in the surrounding area. At the height of the flow-through funded exploration boom several years ago, Skyline Gold Corp. (TSE) discovered a high grad e gold deposit on its Johnny Mountain claim group located in the Iskut River area. That deposit is now supplying mill feed for the company’s 320-ton-per-day mining and milling operation, the first in the district.

After a rocky start, a management upheaval, and a subsequent dedicated effort to effect a turnaround, Skyline Gold is now reporting improved productions results from its air-accessed mining operation.

The company is currently installing a regrind mill to increase production capacity to 350 tons per day and gold recovery to 90%; a measure it expects will result in profitable operations in its next quarter.

During its latest quarter the mine produced 12,167 oz gold at a production cost of $202(US) per oz, after taking into account silver and copper credits and excluding transportation costs.

Calpine’s Eskay Creek project is still in the exploration stage, but many industry observers say it has already emerged as one of the most significant mineral projects in northwestern British Columbia. The property is located about 25 miles east of the Johnny Mountain mine.

Eskay Creek is owned equally by Calpine and Stikine Resources (VSE) with Calpine as operator. The property has an exploration history going back to the early 1930s, but it wasn’t until late in 1988 that Calpine made its first significant discovery on the property.

At the time Calpine was re- evaluating a known mineralized zone on the property that did not outcrop on surface. While drilling the 21 zone, discovery hole 88-06 intersected a core length of 96.5 ft grading 0.752 oz gold per ton, including 52.5 ft of 1.33 oz gold (uncut).

That spectacular discovery prompted Calpine President Murray Pezim to pull out all the stops and keep drilling despite one of the coldest winters in British Columbia history. The property is rugged and helicopter-accessed, so this meant a signficant mobilization effort.

By the end of the 1988 season, Calpine had established a significant body of moderate to high grade gold mineralization in association with antimony and arsenic. Calpine’s partner, Stikine Resources, estimated this open pittable reserve to be about 3.0 million tons grading 0.25 oz gold.

The discovery sparked considerable interest, but this began to wane when the property’s remote location and the refractory mineralization was taken into account.

But Pezim was still bullish, and the joint venture partners approved a $7-million exploration proposal for 1989. By June work was under way, with the first phase program designed to expand the reserve base of the 21 zone and determine its true size potential. The program also included ground geophysics, mapping, prospecting and geochemical sampling to locate the 21 zone on surface beyond its then- known extent.

The program involved two drill rigs, one drilling step-out holes on 50-m centres to define the strike and dip extensions of the 21 zone and the other doing infill drilling on 25-m centres.

The rest, as they say, is history. Calpine’s step-out drilling this summer intersected a number of spectacular intervals, particularly hole 89-109 which averaged 0.875 oz gold and 0.97 oz silver over 682.2 ft.

It should be noted, however, that the hole was “carried” by a 62.3 ft interval grading 7.765 oz gold (uncut) and 1.35 oz silver.

By the end of September, Calpine had outlined three zones of mineralization collectively known as the 21 zone for a minimum strike length of 4,429 ft. The South zone is separated from the Central zone by about 50 m of low grade mineralization. Calpine considers the Central and North zones as essentially a single deposit that could be mined by open pit at a favorable strip ratio. These zones have returned a number of impressive intersections; notably 45.9 ft of 1.67 gold (uncut) and 57.75 oz silver, 45.9 ft of 1.79 oz gold (uncut) and 55.96 oz silver, and 141.5 ft of 0.515 oz gold and 11.03 oz silver. The step-out drilling also revealed good base metal values in the North zone, particularly for zinc.

The Central and North zones remain open at depth and the North zone is also open to the northeast. Drilling is now concentrated on the area of the North zone near hole 109.

According to Calpine, gold mineralization in the 21 zone is hosted with rhyolite breccias and graphitic mudstone, and in an intervening transitional unit.

The deposit is zoned mineralogically. Gold at the southwest end is usually associated with disseminated stibnite and with massive stibnite-orpiment realgar bands up to 20 ft in thickness at the mudstone- rhyolite contact.

To the northeast, this type of mineralization yields to an assemblage of sphalerite-pyrite-galena with attendant silver sulphosalt mineralization. In addition to the higher values in lead and zinc, occurences of native gold over significant widths (hole 109) have been noted in a portion of this type of mineralization.

Calpine’s latest drill results reveal high base metal values, which Stikine Resources said indicates the North zone is becoming more typical of a gold-rich massive sulphide deposit. Metallurgical test work has not yet been done in this area.

Exploration at Eskay Creek is expected to continue throughout the winter. Calpine’s drill program will be aimed at testing the 21 zone along strike and at depth, however additional targets on the property will also be tested.

Calpine contracts its work programs to Prime Explorations, which also conducts work programs for a number of other junior companies in the Prime group.

Considerable investor attention has been focused on a property to the north of Calpine’s ground that is considered to be highly prospective to host an extension of the 21 zone. Adrian Resources (VSE) has options to earn either a 100% interest or a 50% interest in this property.

Adrian’s original agreement to acquire a 100% interest in the Ski property was with Arc Resource Group, which in turn had acquired the claims from a prospector. But complaints under section 35 of the British Columbia Mineral Tenure Act were filed against the Ski claims by Paul Dupras, alleging the claims were located or recorded contrary to the Act.

Subsequent inspection reports recommended these claims be cancelled, however Arc and the prospector are disputing the claims and the recommendations in the inspection reports.

To protect itself, Adrian secured an option to earn a 50% interest from Paul Dupras and Alex Briden in the Dup claims that were staked over and cover the Ski claims. But a formal complaint was then filed by John Robins (associated with Canarc Resources/Arc Resource Group) alleging the Dup claims were located contrary to the Act.

To complicate matters further, Calpine’s partner, Stikine Resources, claims it has an agreement with Calpine to acquire up to 25% of Calpine’s interest in the claims.

James Foster of Prime Explorations said the property will not be drilled until these matters have been settled.

Several other properties optioned by Prime companies and other companies in the surrounding area are disputed by these same parties. Because of the short working seasons in northwestern British Columbia, only a few of Prime’s projects aside from Eskay Creek are sufficiently advanced to be drilled this winter.

Prime Explorations recently completed a small drill program on the nearby Treaty Creek property held by Tantalus Resources (VSE). However work has finished for the season.

Prime Resources (VSE) is currently assessing the results of a small drill program on the Iskut River joint venture project in the Iskut River mining camp. The co
mpany’s equal partners are American Ore (ASE) and Golden Band Resources (VSE).

The drilling was designed to test the downdip and on-strike potential of the Gorge showing discovered in 1988. Previous results from this area include: 12.5 ft of 0.446 oz gold and 1.0 oz silver and 15.1 ft of 0.921 oz gold and 1.19 oz silver.

Granges Inc. (TSE) is operator of a work program at the Eskay Creek project of Springer Resources (VSE) and Cove Resources (VSE). Granges can earn a 50% interest in a 50,000-acre land package by spending $3.0 million over three years. Four holes have already been drilled, and the junior partners are reporting that mineralization appears to be similar to that encountered at Eskay Creek.

Both the Iskut and Unuk River regions, now accessible only by air, should see an even greater increase in exploration and development activity for gold and base metals if road access becomes a reality.

The British Columbia government is now considering whether it will participate with mining companies in the cost of building an all-weather industrial access road from Highway 37 to the Iskut River camp. A study of road access options has been completed that estimated the costs at $12.5 million. A government decision is expected by year-end.

A favorable decision would be welcome news for Prime Resources which has a 40% interest in the Snip gold project in the Iskut River camp where Cominco Ltd. (TSE) is operator and 60% owner.

The major mining company has calculated diluted reserves of 1.58 million tons with a cut grade of 0.639 oz gold in the Twin zone of the Snip deposit. A revised reserve estimate and feasibility study is expected by year-end, however local mining analysts expect that Cominco will not announce a positive production decision until road access is certain.

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