Petromet Res. pins hopes on ex-Consolidated Rambler bet

There aren’t many junior explorers around which can walk into an exploration property and expect to be in production within a year.

But that is the position which Petromet Resources (TSE) and joint venture partners Newfoundland Exploration (Newexco) and Teck Corp. (TSE) say they are in at a former copper/gold producer in Newfoundland’s Baie Verte area.

A Calgary-based company with some natural gas assets in its portfolio, Petromet is betting that the Rambler project will be the first of its gold properties to become a commercial producer.

The company recently dealt Gunnar Gold (TSE) and Mill City Gold (ASE) the right to earn a 37.5% interest in the Fifteen Mile Stream property in Nova Scotia where phase 1 of a $4-million underground exploration program is under way. Petromet would retain 12.5% after the option is exercised.

At Petromet’s recent annual meeting in Toronto, President Donald Sawyer told shareholders that negotiations are under way with Echo Bay Mines (TSE) to reactivate the Kim gold deposit at Indin Lake in the Northwest Territories. But it was the Rambler project in Newfoundland which dominated the discussion.

After a successful tender offer to the Provincial government, Petromet and Newexco are going ahead with exploration on the Rambler properties which were operated by Consolidated Rambler between 1964 and 1982. Irving family

A cog in the Irving family’s maritime empire, Consolidated Rambler produced 4.7 million tons of copper-gold ore from four separate mines including two former producers (the Main and Ming) and a tailings pond which is thought to hold about 125,000 oz gold.

Petromet and Newexco can each earn 50% by completing a $3.8-million phase 1 exploration program. Under an agreement, Teck will then come in and earn 50% by financing the project to production. As a result, Petromet and Newexco’s interests would be reduced to 25% each.

As part of the $3.8-million program, Sawyer said the tailings area will undergo immediate testing and metallurgical studies designed to elicit an early production decision. Petromet and Newexco will also complete 65,000 ft of diamond drilling.

At the Main mine area which produced 440,000 tons grading 1.30% copper, 2.16% zinc, 0.15 oz gold and 0.85 oz silver per ton, the joint venturers have selected three targets for drilling.

They include an area close to surface and above the massive sulphide zone where the following gold intersections were obtained: 12.7 ft of grade 1.79 oz, 5.3 ft of grade 0.99 oz and 12.8 ft of grade 0.24 oz. Main mine

According to Sawyer, the Main mine was developed down to the 650-ft level. Unmined reserves to the 775-ft level are estimated at 172,854 tons averaging 1.75% copper, 1.09% zinc, 0.37 oz gold and 1.12 oz silver. “But there is no reason why the massive sulphide zone can’t extend downwards for another 1,500 ft,” Sawyer told The Northern Miner.

At the Fifteen Mile Stream property in Nova Scotia, some 82,735 ft of diamond drilling has so far indicated the existence of about two million tons grading between 0.2 and 0.4 oz.

However, Sawyer said the nugget-like consistency of the gold mineralization makes it hard to determine the over-all grade without an underground exploration program. At year-end, Petromet held a 160,000 shares (representing less than 5%) of Pan East Resources (ASE) which retains a 50% interest at Fifteen Mile Stream.

Debt free and with a first quarter working capital position of $923,255 compared to $1.5 million last year, Petromet considers itself financially equipped to complete its 1988 programs.

Teck Corp., holds a 4 1/2% interest in the company and may increase its position in the near future, Sawyer said.