Orofino seeks cash source to replace Scadding gold

The 51%-owned Northgate Exploration (TSE) subsidiary is currently earning a 40% interest in the Coronation Gulf project in the Northwest Territories which has yielded some promising results.

But it is the Swayze property near Timmins, Ont., which will probably succeed Scadding as Orofino’s next gold producer, shareholders were told at the company’s recent annual meeting in Toronto.

The property is thought to contain a geological reserve inventory below 340 ft of 1.3 million tons of grade 0.11 oz.

Following a $3.8-million underground exploration program, proven, probable reserves at Swayze now stand at 136,500 tons grade 0.203 oz gold per ton to a depth of 340 ft.

While Orofino says the reserves can easily be mined, it has yet to decide whether to build a new mill on site or have the ore custom milled at a facility in the area. “The decision will be taken in the next couple of months,” said President John Kearney.

Meanwhile, ball mill problems which reduced gold output at the Scadding project to 4,680 oz last year have been overcome and the operation is expected to produce about 12,000 oz before it is mined out.

As a result of the problems at Scadding, Orofino reported a net loss of $624,846 or 3 cents per share for the year ended Sept 30, compared to net income of $159,521 or 1 cents per share at the same time last year.

Orofino has $2.1 million in working capital and that combined with cash generated from Scadding will be used to fund exploration on other projects.

According to Gerry Harper, vice- president projects, the Coronation Gulf joint venture is the most promising exploration play in Orofino’s stable of properties.

A joint venture with Canuc Resources (TSE) and Dore-Norbaska (TSE) it is located within a stone’s throw of the Arctic Ocean and equipment can be shipped in and out quite easily.

The property is known to contain 860,000 tons of grade 0.22 oz but the company has signed a deal which Harper said offers plenty of time to examine different drill targets.

Under an agreement, Orofino has until 1993 to spend $2.9 million on the project. It recently conducted an $800,000, 10,000-ft drill program to test the strike and depth extension of the main veins as well as other gold-bearing structures.

Assay results included 75.6 ft of grade 0.35 oz gold per ton. The same intersection included 43 ft of 0.42 oz, according to Orofino which is planning to drill (at a cost of $750,000) another 10,000 ft this summer.

The Orofino issue was trading recently at 37 cents on the Toronto Stock Exchange in a 52-week range of 85 cents and 35 cents .

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