Camreco in feasibility stage at elusive Goldlund gold bet

Toronto-based Camreco Inc. (TSE) says it is taking a very conservative approach to exploration at the Goldlund property near Dryden, Ont., where production could resume later this year.

The former gold producer has proved to be something of a teaser for at least five operators who since 1946, have unsuccessfully tried to forge a profitable operation before backing away from the 102-claim property.

Part of the problem lies in the erratic nature of the underground gold deposits which are hosted in a series of lenses lying at 40-50 degrees angles to surface, said consulting engineer Philip Broadhurst.

According to President Matthew Gaasenbeek, former operator Campbell Resources built a 500- ton-per-day mill before it had completed enough drilling to fully understand the distribution of the underground ore which is contained in three zones ( Main zone, No 2 and No 3).

“We won’t make the same mistake,” Gaasenbeek told The Northern Miner after Camreco’s recent annual meeting in Toronto.

In a bid to produce a recoverable grade of between 0.2 and 0.3 oz gold per ton, Campell used a selective mining method via an 830-ft shaft and four drifts which extend down to a depth of 800 ft.

But recoverable grades proved much lower and an attempt to offset the dilution factor by upgrading the mill to 500 tons per day proved unsuccessful. Goldlund assets Nearly three years after Camreco acquired the Goldlund assets, the Toronto company appears to have a number of factors riding in its favor. One is high gold prices, the others are the mistakes made by previous operators.

“We have been able to capitalize on everything that the other companies did,” said Broadhurst who advocates shrinkage stoping method if and when underground production begins. An open stoping method using remote control scoop trams is also being considered.

After completing 39,119 ft of diamond drilling in the 1987-88 drilling season, Camreco has established a probable reserve inventory of 781,000 tons of grade 0.14 oz to a depth of 500 ft.

Decisions are still pending, but Camreco is planning to start the operation with 211,000 tons grading 0.10 oz of open pitable ore to generate sufficient cash flow to finance a future underground operation. However, results from a drill hole located 18 ft north of the open pit area suggests that the 211,000 ton figure can be increased.

It assayed 107 ft grading 0.250 oz (uncut) or 0.188 oz cut, the company says. Annual meeting

With an initial production rate of 15,000 oz annually, revenues are expected to be in the order of $5 million which would be sufficient to bring the mill back into operation, Broadhurst told shareholders at Camreco’s annual meeting in Toronto.

The property contains 570,000 tons grading 0.15 oz of underground proven and probable reserves which the company will attempt to place in the proven category.

Some underground sampling, metallurgical testing and a thorough feasibility study are scheduled for this summer, said consulting geologist R. Van Enk who was encouraged by recent drilling results in the No 2 and No 3 zones.

In an area 2,000-ft west of the shaft, Camreco recently encountered continuous intersections varying from 0.025 oz over 115.9 ft to 0.224 oz over 44 ft. Drilling on the No 2 and No 3 zones which appear to be connected over a 1,000-ft strike length, has added 235,000 tons grading 0.14 to the Goldlund reserve inventory.

Possible reserves in the No 2 and No 3 (and a section of the Main) zones now stand at 1.54 million tons grading 0.12 to 0.13 oz, but more drilling is necessary to confirm those figures, said Van Enk.

If Camreco announces a production decision later this year, Gaasenbeek hinted that his company may attempt to go it alone and not bring in a joint venture partner.

The company reported a first quarter cash position of $2.9 million compared to $351,948 in the first three months of 1987.

It also reported a first quarter deficit of $4.13 million on revenues of $208,264 from oil and gas interests which compares with a deficit of $3.97 million on revenues of $209,014 at the same time last year.