Small mines emerging from Mishibishu area

After battling skeptics and fickle financial markets for more than eight years, Monk Gold Resources (ASE) may finally realize its dream of becoming a small-scale gold producer.

The company recently notified shareholders that it will start producing gold from its mill near Wawa, Ont., by the end of the month. Initial feed will be trucked in from Monk’s gold property, eight miles to the east, where a 10,000-ton bulk sampling program is about to get under way. Other small deposits in the Wawa area are expected to provide future supply. “I’m not saying that we have a Hemlo here,” President William Monk told The Northern Miner. “I think what we have is possibly a medium-sized operation.” Ironically, it took an economic slump in Northern Ontario to provide Monk with the final ingredients for success. Taking advantage of bargain basement prices, the company has secured use of the 500-ton-per-day Surluga mill owned by Citadel Gold Mines (TSE).

Monk will pay Citadel $10,000 each month for two years. At the end the 2-year period, Monk can purchase the mill with a final $1-million payment. The company also seems to have shaken off potential competitors. Recently, Central Crude (TSE) abandoned plans to purchase the Magnacon mill from the Muscocho group of companies for lack of financing. Crude had planned to use Magnacon to process ore from its Eagle River gold deposit, 32 miles west of Wawa, Ont., and would likely have captured a piece of the custom-milling market as well.

Other attempts to establish a profitable gold mine within the Mishibishu greenstone belt have also met with disappointment. Perhaps the most famous flop was the Citadel gold mine itself, where millions of flow-through dollars were spent before the deposit was labelled uneconomic in 1989. But, by concentrating on high-grade shallow deposits in the immediate area, Monk believes he can build a whole network of small, but profitable mining operations.

His company intends to process ore at a rate of 250 tons per day initially, expanding to as much as 650 tons per day as it picks up custom-milling contracts and fine-tunes the milling process.

“We want to go after the small, rich deposits,” says Monk. “It could put a lot of little people to work.”

Monk, who works out of his home in Fort Erie, Ont., says the junior has reached tentative custom-milling agreements with two other companies. Gold properties in the immediate area include Van Ollie Explorations’ (CDN) McMurray Twp. property, the Surluga prospect itself, and at least two prospects owned by local mining engineer George Babcock. Spirit Lake Explorations (ME) controls the Edwards property northeast of Wawa, Ont., where a 1,500-ton bulk sample is ready to get under way, subject to financing. At its own property in Rabazo Twp., Monk has dewatered and extended an existing ramp to re-evaluate gold-bearing quartz veins. The target zone, or “B zone,” appears to be about 20 ft. wide and has returned grades of up to one ounce per ton. Monk has been working on the property on and off since the mid-1980s.

The bulk sample, at a grade of 0.5-0.6 oz. gold, is expected to yield 4,000-5,000 oz. gold and take three months to process. Some of the revenue from the sample will be used to complete underground drilling to the east and west of the known gold zone.

Monk says since the property is already developed, operating costs should be no more than $100 per oz.