With the results of this year’s exploration program on its Blue Moon project now being compiled, Colony Pacific Explorations President Pierre Lebel expects there will be a material increase in tonnage and a slightly improved over-all grade.
Operated by joint venture partner Westmin Resources, the Blue Moon project located in California hosts a base metals deposit with appreciable gold values.
Based on 1985 drilling, probable and possible reserves stand at 2.9 million tons grading 8.55% zinc, 1.3% copper, 0.60% lead, 2.34 oz silver and 0.043 oz gold per ton.
Mr Lebel anticipates expenditures of at least $1.3 million on the Blue Moon property next year by Westmin. Of this amount, $550,000 must be spent prior to June 30.
The recent uncertainty over management fees and overhead costs to be charged by Westmin in connection with the Blue Moon project has now been resolved, says Mr Lebel.
The president says that in a letter to Colony Pacific dated this past Aug 25, Westmin acknowledges that the overhead cost assumptions used in their Wright Engineers’ report, which were the maximum allowable under the project agreements, “might well prove to be unduly generous to the operator, particularly during the development and operating phases.” The letter a lso stated that the only management fees applicable after the parties earn the right to take product in kind, would be Westmin’s sales agency fees.
Mr Lebel says Wright Engineers assumed that management fees and overhead charges would be levied on all downstream handling, processing, smelting and transportation costs. This would only be the case, he adds, if Colony elected to retain a 20% net profit interest rather than a 50% working interest.
In other company business, Mr Lebel says a $250,000 drilling program will start this month on the Schell Ranch property, located about 60 miles north of the Blue Moon project. Drilling will test a 2,000-ft-long coincident geophysical and geochemical anomaly in the northwest section of the property.
This target was identified in the course of the surface work program carried out last May and June.
For the nine months ended July 31, Colony Pacific posted a net income of $201,548 (3.9 cents per share) on revenues of $678,803. This compares to a net income of $372,233 (7.5 cents per share) on revenues of $797,713 in the year-earlier period.
Cash at the end of the latest 9- month period stood at $763,320, down from $987,397 at the end of the same period in 1985. file: cons:cinola catch- consolidated cinola LD Work is scheduled to start shortly on Consolidated Cinola Mines’ Graham Island gold project on Queen Charlott e Islands in the Skeena mining division of B.C. with the intent of completing a feasiblity study.
This news follows the announcement that Consolidated Cinola has reached an agreeement with City Resources (Asia) Ltd. which calls for the issuance of 2.5 million shares at a price of $3.02 per share with a 2-year warrant for an additional 2.5 million shares at $3.27 per share during the first year and $3.52 per share during the second year.
President Reno J. Calabrigo says that with this influx of about $7.5 million in new capital, the obligation to Energy Resources Group will be eliminated thereby giving Consolidated Cinola 100% ownership of the Graham Island gold project.
City Resources (Asia), listed on the Hong Kong Stock Exchange, is a member of the City Resources group of Australia. This group is involved in gold exploration and development in countries on the Pacific Rim, including Australia, Papua New Guinea, Fiji and New Zealand.
John Bailey, the chief executive of the Hong Kong company, will move to Canada as president of the expanded company.