Pioneer Metals plans drilling, restructures

Having completed preliminary exploration of several of its British Columbia properties, Pioneer Metals (TSE) plans to forge ahead with drilling.

Trenching on the Hen property has uncovered the source of float samples grading 4-9 grams gold per tonne, which led to the identification of a mineralized zone measuring 2.2 metres in true width and grading about 4 grams gold. The zone is associated with a much larger structure measuring more than 40 metres in width and extending more than 3 km.

Drilling will be carried out here, as well as on the Redfern property where Pioneer has outlined a strong conductor coincident with lead, zinc and copper soil geochemical anomalies.

The junior is earning a 100% interest in Hen and Redfern, where, according to Exploration Vice-president David Dunn, small-scale drilling may be carried out as early as November. The results will determine whether further work is warranted.

Meanwhile, on the Fish Lake property, southwest of Williams Lake, drilling is expected to begin next April. This year’s program returned values of up to 0.17% copper and 1 gram gold, but widths were not large enough to render the intercepts ore-grade. The company hopes to locate the faulted extension of Taseko Mines’ Fish Lake deposit on the Pioneer ground. Ore zones within the deposit are accompanied by magnetite, and geophysical work on the property has outlined two magnetic anomalies that have not been drill-tested. The exploration budget for next year’s program at Fish Lake is expected to range between $100,000 and $150,000.

Dunn says several major companies have expressed interest in the Uduk Lake property, south of Burns Lake. For its part, Pioneer is earning a 70% interest from Pacific Comox Resources (VSE) by spending $1 million and paying $150,000. Alteration and mineralogy at the property resemble those encountered at Round Mountain, and the joint venture is hoping to outline a bulk-minable, heap-leach deposit. Five of the six trenches completed this year have returned anomalous gold values. The best result to date is 6 metres grading 1.4 grams, while one trench returned 0.41 grams over its entire 42-metre length.

Dunn is encouraged by the exploration results, given that outcropping occurs on less than 2% of the 2.5-km area. “We’ve only just scratched the surface,” he says.

Further trenching, as well as drill-testing, will be carried out next summer. The junior has 47.4 million shares outstanding and $440,000 in working capital. In addition, it is in the midst of a restructuring that will result in the formation of a new company. This new entity will hold Pioneer’s resource assets, while the existing company will take over an Alberta-based company that sells and leases scaffolding systems.

The scaffolding entity will raise $25 million through a public offering, with $6.7 million earmarked to buy 500,000 units in the resource entity. (A unit includes a share plus a warrant exercisable at $1.) The placement will benefit the new company, which will end up with about 48 million shares outstanding and almost $7 million in working capital. The balance of the money will be used to build a manufacturing plant for the scaffolding product. Shareholders of Pioneer will receive one share of the resource company and one share of the scaffolding company for each common share held. On completion of the financing, the scaffolding entity will acquire the assets of the Alberta company in exchange for 49% of its then-outstanding shares.

On completion of the reorganization and financing, Pioneer shareholders will hold 1% of the scaffolding company and 99% of the resource company. Reactivation of Pioneer’s Puffy Lake gold mine, near Flin Flon, Man., will remain on hold until the reorganization is complete.