Crown expects Kettle and Key properties will produce gold

With production expected from its Kettle and Key properties in Ferry Cty., Wash., in the next few years, Denver-based Crown Resource Corp. (NASDAQ) could be profitable by 1990, says Mark E. Jones, president. The company confirms that Echo Bay Mines (TSE) has completed feasibility studies on both properties which show reserves of 4.3 million tons grading 0.164 oz gold.

These reserves include a high grade section averaging 0.2 oz gold which is considered by Echo Bay to be mineable, he notes. Echo Bay has been driving a 3,600-ft production-sized decline on the Kettle property and at least 60 holes will be drilled from the underground workings after it’s completed, he predicts. This year’s exploration and development program is budgeted at $9.4 million.

An independent feasibility study covering both properties should be completed this summer with full production starting in early 1990, Jones estimates. The company’s 20% interest in the property is worth about $60 million(US) at today’s prices and preliminary studies suggest production costs between $200 and $225 per oz. Echo Bay is expected to complete its $10-million earn-in commitment by mid- 1988 when it would be entitled to a 60% interest.

Crown claims to be the largest property holder in northeastern Washington where the geology is said to be similar to large epithermal gold-producing areas such as the Carlin belt in Nevada.

The company’s Seattle and Flag Hill properties are also located in Ferry Cty., immediately west of Hecla Mining’s Knob Hill mine. Operated by Crown in a joint venture with Sutton Resources, the Seattle mine produced limited tonnages of high grade ore in 1983 and 1984. The two companies recently negotiated a joint venture agreement with a subsidiary of Texas Star Resources (VSE) which can now earn a 50% interest in the property for an expenditure of $2 million over a 5-year period. Crown will remain as operator and the joint venture expects to spend about $300,000 this year for exploratio n.

Last year Crown and Sutton regained control of their Creede property in Mineral Cty., Idaho. The property is located adjacent to Homestake Mining’s recent discovery on the northern segment of the East Amethyst vein structure which runs for over 6,000 ft on the Crown- Sutton claim group. Denison Mines (TSE) recently optioned the Creede property and can earn a 55% interest for an expenditure of $7.5 million over a 4-year period. A major drill program is expected to begin this summer and exploration expenditures could reach $900,000 in 1988.