Quebec nickel play fueled by mystery

Since no drilling has yet been done, a great deal of mystery still shrouds this developing situation, which is the first new base metal exploration play to come along in many years. Deal hungry brokers have jumped into the action and report considerable interest by investors.

Deals continue to be made in a frenzy of on-going activity as more companies attempt to secure a stake in the new copper-nickel play. Sources say claim staking continues to blanket the margins of the huge Lac St. Jean anorthosite intrusion which hosts the original sulphide showings.

Most senior mining companies, however, have taken a “wait and see approach” to the new discovery and are not participating in the staking activity. One major company though, Asarco Exploration Co. of Canada, a wholly-owned subsidiary of the New York-based mining giant Asarco Inc. (NYSE) has picked up several claim blocks near Lac St. Jean.

Robert Gray, Asarco’s manager exploration in Toronto, said his company would like to have a presence in the Lac St. Jean play because it could be an advantage if some of the juniors make discoveries this summer and start looking for a senior partner. Small companies tend to turn to senior companies with established positions in an area, rather than bring in a company from outside, he said. Asarco will be conducting exploration on its Lac St. Jean claims this summer, he added.

In Canada, Asarco conducts mainly grass-roots type exploration projects, and its U.S. parent, like most senior base metal mining companies these days, is in a strong cash flow position for new acquisitions. Although the company hasn’t expanded its exploration staff in Canada, it continues to seek new opportunities.

The dominant geological feature of the Lac St Jean region is a huge anorthosite massif, the largest known in the world. It’s irregular oval shape covers an area of about 100 miles long and 85 miles wide. The intrusive body was emplaced more than a billion years ago, and lies within the Grenville structural province, one of the most complex areas of the vast Precambriam Shield.

Sulphide prospects have been know in the Lac St. Jean region for decades, but none has generated as much interest as the recent findings on the McNickel Inc. (COATS) property.

A 1975 Quebec government geological report recorded a sulphide prospect in lots 11 and 12, and ranges II and III in La Trappe Twp. Grab samples from that occurrence returned 0.20% copper and 0.31% nickel.

Pyrrhotite mineralization was also reported in the southwestern part of Range A, Rouleau Twp., Lac St. Jean Cty. According to the report, a 20-ft thick mineralized zone was found in coarse-grained noritic anorthosite and the zone was traceable for 300 ft. The sulphides occurred as disseminated patches and massive bodies assaying up to 0.2% nickel and 0.3% copper.

The government report also mentioned other surface showings of magnetite, ilmenite, pyrite and pyrrhotite, especially near the border zone of the intrusive, and associated with the gabbroic parts of the anorthosite.

On the 40-claim McNickel property, an option agreement signed last year with the vendor, requires McNickel Inc to spend $3.5 million on exploration by Sept 30, 1991 to earn a 60% interest.

In the event that McNickel defaults, St. Philips Resources (VSE) may acquire 75% of the remaining interest by assuming the corresponding obligations.

St. Philips bought a 30% interest in the claims for $150,000 last November. Vancouver-based Ramcor Resources (VSE) has the remaining 10% direct interest in the discovery claims. The property is subject to a 3% net smelter royalty.

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