A surface drilling program designed to test for higher-grade underground reserves at the Moss Lake gold property west of Thunder Bay, Ont., will get under way in early October, says Toronto-based Central Crude (TSE).
To finance the program, Hemlo Gold Mines (TSE) has agreed to purchase 545,455 shares of Crude on a flow-through basis at 55 cents per share. The transaction, worth $300,000, will boost Hemlo’s stake in Crude from 43% to 46.8%.
“We’re going to see if there’s an underground mine there,” says Joe Baylis, president of Crude and vice-president of Hemlo Gold.
Probable and possible open pit reserves at Moss Lake stand at 82.2 million tons grading 0.031 oz. gold per ton. Crude was just beginning to test mineralization below 800 ft. early last year when it ran out of funds. One deep intersection returned 118 ft. grading 0.1 oz. gold.
Crude is earning a 51% interest in the property from Storimin Exploration (ASE) and Tandem Resources (ME) by spending $4 million on exploration and making cash payments totalling $450,000. Crude can then increase its interest to 60% by spending an additional $2.5 million by 1995.
Tandem President Stan Hawkins was alarmed when he received news of the upcoming drilling program. Crude has already spent more than $4 million at Moss Lake, but has yet to pay the vendors outstanding instalments totalling $300,000 to earn its 51%.
Under the spirit of the agreement, Crude can’t resume drilling on the property until it has paid off Storimin and Tandem.
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