EXPLORATION ’92 — High-profile gold project — Pipeline

One of the highest-profile projects in southwestern U.S. is the continuing exploration and development program at the Pipeline gold deposit in Crescent Valley, Nev.

The Pipeline project is part of the Cortez joint venture, 60% owned by Placer Dome (TSE) with the balance held by Kennecott.

Placer, which announced the discovery in late 1991, recently upped its reserve estimate to 16.7 million tons of oxidized material grading 0.21 oz. gold plus an additional 1.4 million tons of carbonaceous material grading 0.23 oz. gold.

With heap-leachable material, total contained gold stands at over 4.1 million oz., representing a spectacular find.

Placer expects to complete a feasibility study on the project in the first quarter of 1993 at which time a minable reserve estimate will be released. Despite its size, the find did not create much of an exploration rush in the area since most of the ground is tied up by the majors.

Coral Gold (VSE) may hold the most significant ground of all the juniors with its Robertson property directly to the north of the Pipeline discovery. Amax Gold (NYSE) is earning a 60% interest in the property by completing a bankable feasibility study. To date, Amax has concentrated its efforts on the central part of the Robertson property in the area of Coral’s failed heap-leach mine which operated for a brief period in the late 1980s. Amax has not released any reserve estimates from its drilling in the central portion, nor has it indicated whether any exploration will be done on the joint venture’s southern-most area which lies directly north of the Pipeline discovery.

About half a mile south of the Pipeline deposit is an area of the Cortez joint venture, known as the South Pipeline, in which Royal Gold (NASDAQ) has a 20% net profits interest.

Royal Gold puts a preliminary estimate of South Pipeline reserves at about 9.02 million tons grading 0.082 oz. gold at a cutoff grade of 0.02 oz. gold. The estimate is based on Placer’s exploration drilling this year, which encountered the mineralized zone at depths ranging from 260 ft. up to 460 ft. below surface.

Placer has not released any estimates of reserves for the South Pipeline deposit.

The Castle Mountain open-pit, heap-leach mine, which officially opened early this year, is also yielding some exciting exploration results in neighboring California.

The mine, owned 75% by Viceroy Resources (TSE) and 25% by MK Gold, is in San Bernardino Cty., near the Nevada border.

Gordon Fitzpatrick, a spokesman for the company, joked that the company is having difficulty locating sites for an overburden dump as condemnation drilling keeps turning up gold mineralization.

About 3,500 ft. to the south of current mining operations, the principal exploration area is the 621 zone which has already returned a number of high-grade gold intersections, including 495 ft. (from 505 ft. to 1,000 ft.) grading an average of 0.5 oz. gold.

Fitzpatrick said drilling results from the new zone have been somewhat erratic and drilling is continuing with one rig. He added that Viceroy will not likely complete a reserve and economic evaluation of the 621 zone until sometime in the first quarter of 1993.

About five miles to the northeast of the Castle Mountain property, Channel Resources (VSE) is earning a 50% interest in the Razorback Butte property from Viceroy.

Fitzpatrick said the company has completed two drill holes on the property with limited success. Viceroy geologists are reviewing results before recommending further work.

At the Talapoosa property in Lyon Cty., Nev., Pegasus Gold (TSE) is proceeding with a second-phase drilling program as well as further column leach testing. Pegasus is earning a 70% interest in the property from Athena Gold (VSE) and plans to drill an additional 12,000 ft. in 25 holes to better define reserves in the Bear Creek zone.

Latest estimates put preliminary reserves in two zones on the property at about 19.6 million tons grading 0.045 oz. gold and 0.6 oz. silver per ton at a cutoff grade of about 0.02 oz. gold.

Pegasus is also continuing its metallurgical studies. Gold recoveries during large-scale column leach tests averaging about 70% for oxidized material. Tests on unoxidized material are ongoing, with recoveries to date averaging about 50%.

Glamis Gold (TSE) and 35% joint venture partner Arizona Star Resource (VSE) completed a new internal reserve study for their Imperial County project in southeastern California. After additional drilling earlier in the year, proven, possible and probable reserves in two main zones are estimated to total about 44.2 million tons grading 0.024 oz. gold at a cutoff grade of 0.012 oz. gold.

With a strip ratio of about 3-to-1, the reserves are not considered economic at current gold prices.

James Billingsley, vice-president of Glamis, said the joint venture is now in the permitting process for a US$250,000 drill program scheduled for early 1993. The program will test a number of new targets as well as step out from the main reserve areas.

Almaden Resources (VSE) and PIC International Prospectors (VSE) picked up 34 patented mining claims adjoining their Golden West property in La Paz Cty., Ariz., earlier this year.

HRC Development, which can earn a 50% interest in the land package by spending US$1 million, had planned to conduct an 8-hole drill program in August. The program was designed to test the strike extent of the Golden West gold zone onto the newly acquired ground.

Duane Poliquin, president of Almaden, said the drilling was delayed by rig availability and HRC shifted its focus to other interests.

Poliquin said HRC may be back on the property before year-end to complete the program.