U.S. REPORT (November 25, 1991)

A study by American Mine Services on the Haile gold property near Kershaw, S.C., has boosted reserves for owner Piedmont Mining (NASDAQ).

The study estimated proven and probable reserves minable by open pit at 10.5 million tons grading 0.061 oz. gold per ton, at a strip ratio of 4.3-to-1.

The study uses new drilling data to update an evaluation done by American in 1990. That study estimated minable reserves at 6.4 million tons grading 0.063 oz. gold with a strip ratio of 3.5-to-1.

The Haile mine was originally brought into production as a heap leach mine in 1985 but oxide reserves were exhausted in August.

Amax Gold (NYSE) is now conducting a prefeasibility study to determine the economics of a milling operation on the property but has not released any of its own reserve estimates.

Piedmont optioned the Haile property to a unit of Amax Gold earlier this year, giving that company the right to earn a 62.5% interest by preparing a preliminary feasibility study by May 1, 1992, paying Piedmont US$1.75 million, and issuing the company one million Amax gold shares.

With four drill rigs active on its Summit project in the historic Steeple Rock mining district of New Mexico, Biron Bay Resources (ASE) is finding parallel structures that could boost the property’s reserves.

On the main deposit, the Summit Oreshoot, the company estimates stepout drilling has added at least 25% to reserves of 1.04 million tons grading 0.18 oz. gold and 11.6 oz. silver. Combined with geophysics, the work indicates a strike length of 2,000 ft. and a vertical depth of 1,000 ft. But it’s the discovery of two new parallel zones that has prompted heavy trading of Biron Bay and boosted the stock from 50 cents to a recent $1.42. While testing the downdip potential of the Summit Oreshoot, Biron hit a 60-ft.-wide quartz breccia near the top of the hole. Although the gold and silver grades proved marginal (0.048 oz. gold, 3.15 oz. silver), further drilling confirmed the continuity of the new parallel zone along a strike length of 400 ft. and to a depth of 600 ft.

Further north, on the Billali-Norman King structure, a new zone was discovered when topographic restraints prompted Biron to drill a vertical hole. At a depth of about 250 ft., the hole started to hit gold and base metal sulphide mineralization in stockwork quartz stingers. Intersections included a 63-ft. interval grading 0.08 oz. gold and 5 oz. silver and a 14.5-ft. interval grading 0.30 oz. gold and 21.8 oz. silver per ton. The core has not been assayed for base metals.

In addition, recent geophysical surveys have outlined two IP anomalies, also running parallel to the main zones.

“This changes everything,” said President Leonard Taylor during a recent interview. “All of a sudden we have multi-zones and about 7,000 ft. of structure that we have to explore.”

Taylor estimates that by the end of November, Biron will have spent the US$3 million required to increase its interest in the property to 78%. Currently, Biron shares the property with NovaGold Resources (TSE) under a 60-40 joint venture.

The Summit project lies along a 10-mile fault system running through mountainous country near the border with Arizona. It is surrounded by “Mom and Pop shop” mining operations which together produced about three million ounces of silver from 1890 to 1946.

Taylor says Biron will probably put two rigs on the new high-grade Billali zone, where he sees the potential for a bulk-mining operation. The other two rigs will test the IP anomalies running parallel to both the Summit and Billali structures. Biron expects to drill another 10,000-12,000 ft. by Christmas.

The share price of Coral Gold (VSE) is being given a boost by Amax Gold’s (NYSE) plans to explore new targets on Coral’s Robertson property in Nevada, as well as by reports of a significant gold discovery by a major on neighboring claims.

The Robertson property in the Battle Mountain gold trend came to prominence in 1988 when owner Coral Gold brought on stream an open pit, heap leach mine targeted to produce about 40,000 oz. gold per year.

At that time, the property was also thought to have potential for a large sulphide deposit under the oxidized cap.

But the mine never reached its production target, and was closed in 1989 because of various operating problems and because grades were lower than expected.

Coral then optioned the property to Amax Gold, whose initial exploration program was aimed at finding deep-seated gold deposits below the surface deposit which Coral was unable to mine profitably.

For various reasons Amax was unable to find a deposit at depth, and last year suspended this effort in favor of concentrating on the property’s near-surface potential. An agreement between the two companies was also amended, with Amax Gold now having the right to earn a 70% interest by completing a bankable feasibility study.

As a result of these and other events, Coral’s share price bottomed at 10 cents this year, a far cry from 1988 when its share price reached a peak of $10.63. This downtrend was reversed in November, when speculative trading and the release of Amax Gold’s exploration plans drove Coral’s share price to a recent high of 59 cents.

Amax is planning a 4-part exploration program for 1992, including four offset holes near a previous hole which intersected a zone 125 ft. thick averaging 0.11 oz. gold per ton (which includes a 40-ft. section averaging 0.23 oz. gold).

The company is planning a series of 10-15 shallow holes (400-600 ft. deep) to offset and infill previously intersected near-surface gold mineralization in the Gold Pan and Altenburg Hill zones. This will include a number of near-surface drill targets which were developed during geologic mapping and sampling. A 400-ft. hole is also planned to test a strong gold anomaly identified during soil sampling of the Blue Nugget claims.

Of special interest to market watchers will be two exploration holes planned to test the Gold Acres North target near Placer Dome’s large open pit Gold Acre mine. This interest was triggered by rumors that Placer had intersected high gold mineralization over considerable thickness while testing an exploration target on ground held by the Cortez joint venture. Placer Dome won’t comment on rumors, but did announce it had recently increased its interest in the Cortez joint venture to 60% from 43%. And it also released details of an ongoing exploration drill program on the property. Placer said the program identified new gold mineralization of about nine million tons grading 0.19 oz. gold, including carbonaceous material, calculated at a cutoff grade of 0.05 oz. gold. Material suitable for carbon-in-leach recovery (calculated at a cutoff grade of 0.1 oz.) includes about 5.7 million tons grading 0.27 oz. gold.

The major also reported that the mineralization appears to be open in two directions. Coral Gold is of the view that a possible extension may continue on to its Robertson property.

“Amax Gold has found indications this is an area they must explore,” said Coral spokesman Jim Baylis.

By year end, Siskon Gold (NASDAQ) expects to release a reserve estimate for its 100% owned Big Horn gold deposit in southern California, where drilling is continuing to return encouraging results.

The latest results released by the junior from holes 35 through 38 are: 20.8 ft. grading 0.5 oz. gold per ton, 33.3 ft. of 0.16 oz. gold, 80.1 ft. of 0.11 oz., and 5.7 ft. of 0.59 oz. gold.

Hole 91-41 returned four intersections; 27.2 ft. of 0.14 oz. gold, 27.5 ft. of 0.21 oz., 20.1 ft. of 0.17 oz. and 15.7 ft. of 0.19 oz. gold per ton. All assay results are uncut, and represent actual drill hole length. An underground drilling and tunnelling program is now under way on the property on a 2-shift-per-day basis. The reserve estimate will include results from this year’s drilling program which included a number of previously reported significant intersections.

Siskon Gold was formed from the recent merger of U.S. Precious Metals and Centurion Gold.

Recent diamond drilling on the Golden Quail property in California’s San Bernardino Cty., appears to indicate that reverse circulation drilling understated the grade of previously intersected mineralization.

The property is under option to Golden Hemlock Exploration (VSE), which can earn a 50% interest in the property from owner Golden Quail Resources (VSE) by funding US$1.5 million in exploration.

Reverse circulation drilling outlined a 1,500-ft.-long zone of steeply dipping mineralization ranging up to 100 ft. in width, and extending to a depth of 600 ft.

The zone of gold mineralization occurs in a highly fractured quartz vein stockwork with previous reserve estimates putting the grade at 0.077 oz. gold. Golden Hemlock recently drilled three diamond drill holes covering a 275-ft.-long section of the zone in order to confirm the reverse circulation drill results.

Hole 91-11 intersected 175 ft. from 450 ft. to 625 ft. grading an average of 0.21 oz. gold per ton. Hole 91-13 averaged 0.33 oz. gold over 165 ft. from 295 ft. to 460 ft., while hole 91-16 encountered 250 ft. grading 0.13 oz. gold from 395 ft. to 645 ft.

Laurence Stephenson, president of Golden Hemlock, estimates “minable reserves” on the zone at 2.9 million tons grading 0.12 oz. gold. The estimate is based on the new results. He said the company is in the process of completing a private placement which, along with a recently completed $200,000 placement, will give the company about $500,000 for further drilling. Stephenson said the company is now permitted for stepout drilling on strike to the south. He also plans to do additional diamond drilling on 100-ft. centres along the full strike length of the zone in order to further upgrade reserves. A prefeasibility and economic assessment report on the project is also planned.

Impressed by the magnitude of the grade and width of mineralization obtained from the diamond drilling, Doug Hurst, mining analyst at McDermid St. Lawrence Chisholm, recently recommended Golden Hemlock as a buy for very aggressive accounts. The company has about 2.5 million shares outstanding, including a full escrow position of 750,000 shares.

An increase in net earnings for the first fiscal quarter ended Sept. 30 was reported by First Mississippi (NYSE), a diversified company which has established operations in chemicals, fertilizers, energy and gold and technology-based ventures.

During the quarter the company reported net earnings of US$5.3 million or 27 cents per share on sales of US$139.5 million, up from US$4.3 million or 22 cents per share on sales of US$134.9 in the first quarter fiscal 1991. The Jackson-based company said the increase was due to better results in fertilizers and new ventures, lower interest expense, and gains on asset dispositions.

Gold pretax operating profits for the latest quarter were US$600,000, down from US$900,000 last year reflecting lower gold prices. Coal results were a loss of US$1.1 million compared to US$100,000 pretax operating profit last year. The company said production costs were higher due to mining of high ratio coal during transition to a new mining area.

The historic Cripple Creek district of central Colorado is being brought back to life by a unit of Nerco (NYSE) which began mining in the camp in August at a rate of 10,000 tons per day.

The heap leach mining operation is a joint venture partnership between Pikes Peak Mining, a wholly owned subsidiary of Nerco, and Golden Cycle Gold. Pikes Peak is operator and has an effective 80% interest in the joint venture. Because of delays in permitting and construction, Nerco estimates that gold production this year will amount to 20,000 oz. rather than the 35,000 previously predicted.

Crushing and leaching activities are currently under way, and production is expected to reach 55,000 oz. in 1992.

Pikes Peak Mining is accelerating its deep drilling program for the balance of this year in order to evaluate the deeper portions of the deposit. This is to include both rotary and core drilling holes at depths in excess of 500 ft., the approximate limit of previous drilling.

Thomas Albanese, Nerco’s chief operating officer, said the company’s geologic interpretation of the Cresson deposit, the largest identified target to date, is that it remains open in all directions, including at depth. “The objectives of the accelerated drilling program and additional mine planning are to expand the total resource position and production capacity for the Cripple Creek operation,” he stated.

In mid-1991, the project was reported to host 1.5 million oz. of contained gold reserves.

Nerco is a diversified company whose mineral unit produced 127,000 oz. gold and 2.5 million oz. silver through September of this year. In Canada, the company owns and operates the Nerco Con mine at Yellowknife, N.W.T.

A 25% interest in the Gas Hills uranium property in Wyoming has been sold to UG Mining, a subsidiary of Urangesellschaft of Germany. Project owner and operator is British-owned Power Resources. Minable reserves are estimated to be 20 million lb.

U3 O8. A production target, involving in situ leaching, has been set for 1997.