Exploration ’88 TECK

Teck Corp.’s strategy in 1986 and 1987 was to revitalize its portfolio of properties through deals with junior companies that take advantage of the flow-through share funding so readily available to the junior mining community. The success of this strategy is evident in the company’s activities in 1987. The Lamaque property, in Quebec, is the subject of two active joint ventures. Tundra Gold Mines has spent about $6.5 million of a $9-million earn-in for a 50% interest in two portions of the property, which cover intrusive plugs similar to the Main plug that yielded more than 21 million tons grading 0.196 oz gold per ton. To date, exploration has consisted of underground drilling, drifting and crosscutting on the property containing the No 5 plug. Several new gold-bearing veins have been indicated in the surrounding volcanics.

Golden Pond Resources has earned a 50% interest in a large portion of the Lamaque property, which includes the No 3 mine. Of 11 veins found by surface drilling in 1985/86, seven are in the vicinity of the No 3 mine. The feasibility of dewatering and deepening the 750-ft shaft and carrying out underground development of the new veins is being investigated.

Golden Pond also has the option to earn a 50% interest in the Rocdor Mines property, which is contiguous with Lamaque on the west. A 10,000-ft drilling program will be completed early in 1988.

San Paulo Explorations is funding an exploration program on the Leitch property, in Beardmore, Ont. A $1- million program will be completed in February; $750,000 will be spent on diamond drilling in the No 16 vein area between the ninth Level and surface.

The Gaffney deposit on Manitou Island, south of Dryden, Ont., contains about 83,000 tons grading 0.19 oz gold per ton to a depth of 67 m. San Paulo has the option to earn a 50% interest by spending $1 million over three years. A 3,000-m drilling program, designed to explore the deposit at depth and along strike, began in January.

The Newfoundland Zinc mine, near Daniel’s Harbour on the Great Northern Peninsula, was re-opened in July, 1987, following a temporary closure. The 1988 drilling program is designed to locate ore in areas accessible from underground workings.

In 1987, Teck entered into an agreement with Newfields Minerals whereby Newfields may earn a 50% interest in Teck’s Kirkland Lake Gold and Teck-Hughes properties, in Kirkland Lake, Ont., by spending $5 million over a period of five years. Conversely, Teck may earn a 50% interest in the adjacent Newfields claims by providing senior financing. Newfields concentrated exploration on the Narrows Break, a strong structure that parallels the Main Break about 1,700 ft to the north. Thirty-three holes tested the 2,500-ft-long segment of the Break across the property to a depth of 3,000 ft. The results indicate gold mineralization over a strike length of 1,000 ft in the west part of the property. The east part, towards the Lakeshore boundary, has been tested with only five shallow holes.

Diamond drilling on Golden Hope’s Estrades deposit continued throughout 1987. Based on 170 holes drilled to Sept 15, 1987, the drill- indicated mining reserves are estimated at 1.4 million tons grading 0.15 oz gold per ton, 4.15 oz silver, 0.76% copper and 9.58% zinc. The property is 27 km east of the Inco/Golden Knight Golden Pond mine and is owned 60% by Golden Group and 40% by Golden Hope. Teck manages the program and has the right to earn a 50% interest by matching Golden Hope’s expenditure.

At Casa Berardi, Inco and Golden Knight (30% Teck-owned) are readying their joint-venture property for production. The East zone mine will come on-stream in mid-1988 at a rate of 800 tonnes per day, with provision for escalating this to 1,300 and 1,800 tonnes per day as the West zone is developed. At presstime, a decline was being driven on the West zone to explore the deposit at the 200-m elevation. At the same time, a 15,000-m, $2-million drill program will explore the area between the West and Main zones to a depth of 300 m.

In western Canada, Teck carried out programs on four precious metal properties and two niobium/rare earth prospects. The snip claim, in the Skyline-Delaware area of northwestern British Columbia, is the subject of a joint-venture agreement with Mt. Calvery Resources. It was tested by eight diamond drill holes with encouraging results. To the north, on the bj claims, the Teck/Iskut Gold/ Consolidated Silver Standard joint venture located seven gold-bearing quartz sulphide veins, with values to 0.883 oz gold per ton over 5 ft. A drill program is planned for the 1988 season. In the same area, Teck and its joint-venture partners, Kappa Resources and Consolidated Silver, carried out preliminary exploration on the Castle claim. A sulphide-bearing gossan zone 600 ft wide and 4,300 ft long was outlined. Within this zone, gold values are associated with quartz veinlets in sericitic alteration zones. Gold values range up to 4.03 oz in grab samples and 0.93 oz per ton gold over 3 ft in chip samples. This property will also be drilled in 1988.

In the fall of 1987, the Gaul claims, located adjacent to the Equity Silver mine in north-central British Columbia, were drill-tested for the southern extension of Equity’s South Tail deposit. Wide intercepts of low-grade silver/copper mineralization were encountered. Further drilling will be required to evaluate this mineralization. Interests in this project are shared by Teck (39.1%), Pioneer Metals (39.1%) and Equity Silver Mines (21.8%).

Geological, geochemical and geophysical surveys and trenching programs were carried out on two carbonatite-hosted niobium/rare earth prospects. Significant niobium values have been outlined on one of the prospects, which is north of Prince George, B.C. Further trenching and detailed sampling will be required prior to selecting drill targets.

In the U.S., Teck’s wholly-owned subsidiary, Teck Resources, concentrated its exploration efforts on the prolific Carlin gold belt, in Nevada. Promising results were obtained at Emigrant Springs, where drilling previously identified more than one million ounces of gold in two sub- economic deposits, and at the tc project, where early drill results indicate a small gold deposit. All three deposits are subject to joint-venture agreements with Canadian junior companies, which will fund additional drilling in 1988.

Also in Nevada, Teck is involved in grassroots exploration with a joint- venture partner exploring a large private ranch holding and, on its own, is carrying out a regional gold exploration program. The Cherry Creek gold deposit, in White Pine County, was assigned to a Nevada-based mining company for cash and a retained royalty.

In Wenatchee, Wash., Teck has an indirect interest in the Lovitt mine, through its shareholdings in Grange Gold Corp. The joint-venture operator, Asamera Gold, is carrying out an underground drilling program to test the northern extension of the mineralization.

In other commodities, Teck and joint-venture partner Equinox Resources (30%) will drill-test a lithium- bearing brine near Reno, Nev.

In 1987, Teck had greater exposure overseas than in recent years. The company holds a share interest in Micronesia Mineral Resource Co. and has a back-in right to participate in its properties in the South Pacific Islands of Micronesia and the Marianas. Regional programs are being carried out in the search for bulk tonnage epithermal gold deposits.

During 1987, a joint venture between Teck and Wright Engineers explored the Santa Isabel gold prospect in Azuay Province, Ecuador. Although this project has been dropped, other opportunities in Ecuador are being evaluated.

A joint-venture agreement between Teck and Overseas Platinum Corp. has been entered into for the exploration of a platinum prospect in the State of Goias, Brazil. The prospect is a large, layered, mafic-ultramafic complex. Geologically, it is similar to the Bushveld Complex in South Africa and the Stillwater Complex in Montana. Teck has earned a 40% interest in this project and may increase its interest
to a minimum of 60% and maximum of 80%, depending on elections by Overseas Platinum at the pre- feasibility and production-financing stages. Teck maintains exploration offices in Toronto and North Bay, Ont., Vancouver, B.C. and Reno, Nev., as well as at its various mining operations across Canada. — 30 — THE WHITE KNIGHTS Two years ago, about 30 companies began a quest for a major source of platinum, the white metal, on this continent. Here’s an update on the fruits of their labors. By Patrick Whiteway When the price of platinum spiked up to $600(us) an ounce in September, 1986, exploration geologists realized gold was not the only game in town. That year, about 30 junior companies and a number of majors started a scramble to find a platinum mine in North America. We estimate that, in 1987, about $20 million was spent on platinum exploration in Canada alone. Most of this money was raised through flow-through share financings.

But while most geologists agree that North America is a good place to look, finding a mineable platinum deposit on this continent isn’t easy. Nevertheless, Ian Chisholm, manager of platinum exploration for International Platinum Corp., is optimistic: “Once Canadians find those mines, they’ll be able to produce the metal at competitive costs and maybe even at lower costs than miners can in South Africa.”

Platinum deposits in South Africa, where about 80% of the world’s platinum supplies originate, are found exclusively in the Bushveld Complex. Measuring about 300 km long and about 150 km wide, this is probably the largest stratiform, layered mafic intrusion in the world. The Bushveld is so big that six new platinum mines are being considered there in addition to the 10 mines already operating. The new mines should be in production some time in the 1990s.

Nothing that has been uncovered so far in North America rivals in size the three commercial platinum- bearing reefs in the Bushveld. The Merensky Reef, the ug-2 and the Platreef contain enough platinum, it is estimated, to satisfy the world’s needs for hundreds of years. On the other hand, the geological nature of some of the layered mafic intrusions in North America are comparable to the Bushveld. The only advanced play in Canada is Madeleine Mines’ Lac des Isles project.

The Stillwater mine, in Montana, illustrates well the amount of time it takes to find a pgm mine (see “Stillwater Runs Deep” in our October, 1987 issue). It may not be typical, but it took 20 years to find and start up this mine. (The mine produces about 25,000 oz of platinum and 75,000 oz of palladium per year.) Of course, companies exploring in North America plan to find another platinum mine a lot faster.

Platinum was first found in soils in the Stillwater area in 1920. Johns- Manville spent six field seasons in the late 1960s collecting thousands of stream sediment samples from streams which cut through the rocks of the Stillwater gabbroic intrusion. They were attempting to find the rock unit that hosts the platinum.

In the early 1970s, Johns-Manville bumped into an interesting assay and went back to the same area to find other good samples. This eventually lead them to the bedrock source of the platinum values. That discovery was called the Johns-Manville Reef (or J-M Reef for short) and was made in 1974. It took a consortium of three major companies — Chevron, Lac Minerals and Manville Corp. — 13 more years to bring the mine into production.

“What makes this really interesting,” says James Trusler, senior geologist for International Platinum, “is that the detailed geology of the Stillwater Complex was known back in the 1930s. And what was remarkable is that it was the same as the Bushveld geology in detail. Even so, the discovery of that single platinum-bearing rock unit took many years.” It has now been traced for about 28 miles.

Reserves at the Stillwater mine are about 500,000 tons grading 0.88 oz pgm per ton and it has a platinum-to- palladium ratio of 1:3.

The lack of visible platinum in rock samples also contributes to the difficulty of prospecting for the metal. All rock suspected of containing platinum has to be assayed. With gold, the metal is often visible. And, so far, platinum has been found only in special geological environments, while gold is found in many different environments.

Concentrations of platinum, large enough to justify mining, have been found mainly in relatively narrow rock units within a larger package of mafic plutonic rocks. (However, some small placer deposits are being mined.) Narrow here, means one to 10 ft.

There is considerable debate within the academic community concerning the role of primary-magmatic processes and of later, hydrothermal processes in the formation of platinum ores. And just because a platinum layer is found, there is no guarantee it will be economic.

Equinox Resources, one of the junior companies involved in platinum exploration in North America, and International Platinum are both working on the Muskox layered, mafic intrusion, located south of the small community of Coppermine in the Northwest Territories.

Here again, like the Lac des Iles deposit near Thunder Bay, there is more palladium than platinum in the drill holes put down so far. Equinox holds ground totalling 210 sq km on the Muskox. Together with International Platinum’s 126 sq km, that gives an area of 336 sq km of ground to explore.

At the other end of the country, in northern Quebec, another junior company has struck a nerve with investors. La Fosse Platinum Group has raised about $12 million to explore for platinum deposits. That company has chosen a geological structure better known for its immense iron ore reserves — the Labrador Trough — than for its platinum exploration potential. Last year, La Fosse came up with seven pgm discoveries and is now re-exploring a previously- discovered copper/nickel deposit at Blue Lake, near Schefferville, Que. The company is now drilling from underground openings. Previous work on the property by companies interested in finding a copper/nickel mine did not assess the deposit’s pgm potential.

International Platinum, with a total of 20 properties all across North America, is one of the major players in the search for a platinum mine. “Our strategy,” Chisholm told delegates at the Gold Show in New York, N.Y. in January, “is to look for a medium-to- large-tonnage source of supply. So we’re bypassing the high-grade, flashy prospects with only limited tonnage. Commodities customers generally like to see a more evenly-spread global production pattern for commodities. That way they can be assured of a regular flow of the commodity. So they need a long-term source of supply. And they’ll often pay a premium for it. I don’t think platinum is an exception.” Degussa of West Germany is one such customer. It is putting up $3.25 million for a 40% interest in 15 of International Platinum’s properties.

International Platinum has two drills working around the clock on two of those properties. The most advanced exploration program is at Big Trout Lake, in Ontario.

But all platinum exploration companies share the same technical problems working in the field. This is why things may not be moving as fast as investors or brokers would like. Finding enough outcrop is one problem. Most of the layered mafic intrusives identified in North America are under soil, swamp and vegetation. Where there is little or no outcrop, companies have had to rely on geophysics to locate drill targets. Recent improvements in exploration technology are helping in the search. Advanced gradiometers now allow exploration geologists to discern the stratigraphy of an area without actually drilling, and lightweight, electrically-controlled drill rigs are helping cut drilling costs in more remote areas where every pound of equipment means added expenses. Assaying for platinum has advanced in recent years, too. It took some ingenious work by the Geological Survey of Canada and by Bondar-Clegg, a major international assaying company, in the early 1970s to come up with a relatively inexpensive way to accurately assay for p
latinum. That method, widely used today, cuts the costs of a single assay down to $22 from a high of about $100. Considering the thousands of samples taken on each property, that adds up to quite a saving. Having the technology to detect platinum in the 15-parts-per-billion range is just one of the reasons platinum exploration on this continent has really taken off in recent years. Exploration companies looking for copper/nickel deposits, for example, can now routinely assay for platinum as well — something they could not do in the past.

In South Africa, platinum exploration is much easier. The three rock units that host platinum are known. Rustenburg Platinum Mines, Impala Platinum and Western Platinum are the three major companies sitting on the big deposits in the Bushveld. The deposits occur anywhere from surface down to depths of about one mile. The companies that control the ground don’t have to go out and find new deposits. They need only pick a point along strike and start drilling, often to great depths. A South African exploration geologist has just one step to find a mineable deposit. In North America, it takes three steps — finding a layered intrusive, doing geophysical surveys to locate drilling targets, and then drilling.

With the amount of exploration activity that’s going on in Canada, it’s only a matter of time and money before more mineable deposits are found. But can Canadian production compete with the richer-grade South African ore? Geologists working on platinum finds think so.

To start with, a steeply-dipping orebody can be mined at a lower cost than an orebody that is nearly flat- lying like the ones in South Africa, which dip from 5 degrees to 14 degrees.

Second, Canadians have more experience using trackless mining equipment in narrow-vein mines. We can move more rock at a lower cost using machines in underground mines than South Africans can using lots of relatively inexpensive labor. The Northern Miner Magazine estimates Canadians could produce platinum at a total cost (mining, milling and capital costs included) comparable to the typical underground gold mine — or about $70 to $100 per ton. And we suspect the costs of milling — liberating the platinum from the ore and recovering and concentrating it — would be comparable to that of South Africa’s platinum mines. So the main hope of finding a cheaper source of platinum in North America lies in finding a big, steeply dipping orebody with good grade.

What should that grade be? Taking all six valuable pgms contained in a deposit and converting them to a “platinum equivalent” per ton based on current prices, estimates are that an average grade of 0.16 oz platinum equivalent per ton would be sufficient to support a profitable underground mining operation. (This again, is different from ounces of pgm per ton.) At a total production cost of $70 per ton, that translates into a cost of about $440 per oz of platinum equivalent. An average grade of 0.06 oz platinum equivalent per ton would probably support an open-pit mine.

There is also a good chance of finding a deposit at a shallower depth in North America. One of those six new platinum mines in South Africa (the Northam mine) mentioned earlier will start mining at a depth of 2,000 m. Millions of dollars (or South African Rands) will be spent on refrigerating the air that is blown into the mine to keep the heat bearable for the miners. Millions will also be spent to hoist the ore from such great depths. If a shallow deposit is found in North America, such large expenditures would be unnecessary.

Location of a deposit is also important. Many North American platinum properties are in relatively inaccessible areas of the country. That has created skepticism among many investors. But governments, both federal and provincial, have indicated considerable interest in a local source of platinum. Therefore, if a large deposit is discovered, it could trigger a co-operative effort in building the necessary infrastructure to develop such a deposit. But it has to be big.

Like investors, most exploration geologists look at the odds of finding a deposit. Although it is doubtful that a deposit as big as the ones in South Africa’s Bushveld Complex will be found on this continent, smaller ones of similar composition have already been found. Most have yet to be explored in detail. But platinum exploration geologists believe that, given enough time and money, they will find those mines.