Dispute follows release of Mikwam results

Encouraging results from the Mikwam gold project in the Casa Berardi area of northwestern Quebec have sparked a dispute between equal joint venture partners Trader Resource (TSE) and Hemlo Gold Mines (TSE) over which should be operator of the project.

Hole MK-92-01, the first of six holes recently completed on the property, returned a 23.6-ft. interval grading 0.16 oz. gold per ton, including 14.1 ft. grading 0.24 oz. at a depth of 715 ft. A separate intersection at 169 ft. below surface returned 9.8 ft. grading 0.15 oz. including 4.9 ft. grading 0.26 oz.

Montreal-based Freewest Resources (TSE) has a 40% interest in Hemlo’s 50% stake in the Mikwam property.

According to Hemlo Vice-President Joe Baylis, Hemlo warned Trader that it would sue if the junior went ahead with a proposed drilling program. Shortly after Trader announced results from the first hole, Hemlo issued a statement of claim seeking a declaration that Hemlo is operator of the project or, alternatively, damages.

Trader and its parent Royal Oak Mines (TSE) say they intend to defend the action vigorously. According to a press release issued by the junior, Trader replaced Hemlo as operator of the project in November, 1991. “There were certain conditions in our agreement they didn’t meet so we assumed operatorship,” said Ross Burns, vice-president of exploration for Royal Oak, which holds a 51% interest in Trader.

Covering a 23-mile stretch of the Casa Berardi fault zone, the Mikwam property lies 12 miles west of TVX Gold’s Casa Berardi mine, which has produced 200,000 oz. gold since startup two years ago. About $6 million has been spent on the project to date, Burns estimated.

Phase one of the latest $500,000, 2-phase program focused on the A-8 area on the western extension of the Casa Berardi break. Previous drilling in the area yielded 0.23 oz. over 9 ft. and 0.13 oz. over 7 ft.

Assays for the remaining five holes are expected to be released by the end of July, but Burns said Trader will not begin the second phase of the program until the dispute with Hemlo is resolved.

Meanwhile, Trader has extended the exercise period for 2.14 million warrants issued on Feb. 28. The warrants will now expire the earlier of Dec. 31 or 30 days after the day that the closing trade of the company’s common shares is greater than 26 cents. Trader traded recently at 15 cents.