Hemlo will fund Moss Lake work

Toronto-based Hemlo Gold Mines (TSE), in full charge of Central Crude (TSE), will finance further surface drilling this fall on the latter’s Moss Lake gold project in northwestern Ontario, its new president, Joseph Baylis, confirms following a review of past work.

Held under option from Tandem Resources (ME) and Storimin Exploration (ASE), extensive previous drilling and limited underground work has indicated a large tonnage low grade open pit deposit — 82 million tons grading 0.03l oz. per ton to a depth of 800 ft. Within this is a higher grade core estimated to contain 2.2 million tons grading 0.08 oz.

Central Crude has already spent some $4.5 million on the project while the Tandem-Storimin team has spent upwards of $8 million.

With preliminary reserves estimated at 2.5 million oz., the main zone itself remains open in all directions, with indications of an improving grade with depth. The deepest hole intersected 120 ft. averaging 0.1 oz. at a depth of 800 ft.

It is the possibility of coming up with higher grade underground reserves that Hemlo now plans to investigate by deeper drilling, The Northern Miner gathers.

Under the terms of its option agreement Central Crude must make a further $125,000 cash payment to the vendor companies by year end to either earn a 51% interest or forfeit the project.

Central Crude continues to review the situation at its Eagle River mine in the Mishibishu area of northern Ontario, but has allowed its letter of intent to purchase the Magnacon mill to lapse, Baylis says. Timing of a production decision there is largely dependent on the price of gold, he says.