Getty spending $13.7 million on 1988 exploration program

Exploration spending will jump 37% to $13.7 million in 1988, Getty Resources says in its 9-month interim report.

Taken over in January by Total Resources Canada, a wholly- owned subsidiary of Total Compagnie Francaise des Petroles of France, the company is well-financed to proceed with its aggressive exploration plans.

Flow-through funding of $6 million has been arranged with CMP 1988 Resource Partnership. As of Feb 22, Getty had a cash position of $40.1 million as a result of a $9.8-million financing, a $4.1-million property disposal and $18.1 million from the exercise of share purchase warrants during Total’s tender offer.

Shareholders tendered 12.4 million shares at $11 per share, giving Total 87.5% control on a fully diluted basis, President Jean-Pierre Januard says in the report.

Total Resources is controlling shareholder of Total Erickson Resources, and has offered the latter the right to acquire its interest in Getty at cost. Details of the proposed transfer of control have not been finalized.

Total Resources’ objective in acquiring control of Getty was the latter’s 49% interest in the Tundra deposit which hosts possible geologic reserves of 26.4 million tons grading 0.18 oz gold per ton. Noranda Exploration holds the remaining 51% interest in the project, which is located 130 miles northeast of Yellowknife, N.W.T.

A 2-year underground exploration program at Tundra, estimated to cost $33 million, is now under way. The program will include the installation of a temporary sinking headframe and hoist, a 1,500-ft vertical shaft, drifting, underground diamond drilling and raising on ore for bulk sampling and metallurgical testing.

In a 50/50 partnership with Davidson Tisdale on the Tisdale gold property near Timmins, Ont., Getty is mining reserves estimated at 55,000 tons grading 0.23 oz gold per ton. Mining, at a rate of 260 tons per day, started mid-January and will be completed by August. The ore will be milled on a custom basis at Giant Yellowknife’s Gomill near Timmins.

Another promising project is being carried out with Fairfield Minerals on the Logan zinc-silver discovery west of Watson Lake, Yukon. Estimated reserves are 7.5 million tons grading 7.2% zinc. The companies plan a $1.5-million program which will include trenching, drilling about 45 holes, and metallurgical testwork. At completion of the program, Getty will have earned a 50% interest and the right to become operator.

Other exploration highlights outlined in the report include drilling at Slemon Lake, 70 miles northwest of Yellowknife, which intersected a mineralized zone grading 0.32 oz across a core length of 13.1 ft. An expanded drill program is under way with Noranda Exploration as operator. Noranda is also operator of a joint venture drill program at Sito lake, 25 miles north of Yellowknife. Drilling of six holes started late in January.

Highly anomalous gold values were intersected in drilling at Rock Creek Ranch gold project in Nevada, a joint venture of the U.S. subsidiaries of Getty Resources and Getchell Resources. Budget for 1988 is $800,000(US). Getty reports a loss for the nine months ended Dec 31, of $7.5 million, primarily due to writedowns totalling $7 million in the carrying values of mineral properties. Most significant writedown is the Tisdale project where book value was reduced by $5.7 million to reflect estimated returns from mineable reserves.