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- Some

L.O.M.. Western Securities, a
Vancouver-based investment
dealer, estimated in the spring of
this year that $100 million would
be spent in mining exploration and

investment searching for gold and

developing mines in the Stikine
Arch, the area popularly know as
the Golden Triangle.

If anything, L.O.M. probably
underestimated it. What came of
all that money poured into the
ground, and are the big spenders
coming back for another go next
year?

What came of it probably
depended on what specific piece of
ground the investor was standing
on. In the end a major strike seems
to have been uncovered at Eskay
Creek in the rugged mountains 90
kilometres north of Stewart, the
aréa’s first working gold mine shut
down because it was uneconomi-
cal, and a major company decided
to put a claim adjacent to that
mine into production. At the
moment the northwest has one
producing gold mine, Westmin’s
Premier operation, almost within
walking distance of Stewart.

Dave Lefebure, the district geo-
logist for the Skeena mining
region, described the level of acti-
vity over the summer in the Iskut
River valley as "staggering,
unheard-of". The government data:
base on geologic information in
the Stewart office has more than
doubled in size in the last three
years, he said.

Aside from fortunes made or
lost, Lefebure believes the explora-
tion activity will benefit the region
as a whole because the accumulat-

" ing knowledge of the area’s geo-

logy is beginning to take the risk
out of exploration. As the risk
goes down, money to back ex-
ploration becomes easier to come
by.

Lefebure thinks that familiarity
with the underground structure and
mineralization of some parts of the
Stikine Arch is already beginning
to pay off with investment. "Flow-
through shares helped the high-risk
players in the beginning," he said.
"In 1990 the majors wanted some
of the action." As a result the area
saw giants like Placer Dome and
Corona ‘come lumbering onto the
scene, providing the capital for the
intensive surface and underground
drilling programs needed to define
promising ore bodies.

The exploration season this year
provided insights into the geology
of the Stikine Arch, and Lefebure
says that in itself can stimulate
further exploration if the results
look good. The Eskay Creek find,
the richest yet in the area, has
several unique characteristics, and
now explorationists are better able
to read drilling resulls when they
encounter similar configurations.

Lefebure found 1990 unusual not
just for the intensity of activity but
also for the proportion of attention
the area attracted — 80 percent of
all the exploration dollars in 1990
were spent in northern B.C, a
situation Lefebure says is signifi-

‘by Michael Kelly -

wer C

cant because costs are considerably
higher here than in other areas.
"It reflected the fact that Eskay
and Mount Milligan (northwest of
Prince George) were hot," he
remarked.

He said forecasting is difficult,

‘but 1991 will depend on a number

of variables. Will the enthusiasm
and momentum continue? There
are many favourable mineral
occurrences, but will ihe junior
companies still be able to raise risk
capital? The battered: Vancouver
Stock Exchange is the main source
of investment money for the junior
companies.

Jack Patterson, the president of
the B.C. and Yukon Chamber of
Mines, says venture capital is
becoming more and more difficult
to obtain. "The juniors need capi-
tal, and it’s hard to get during an
economic slowdown," he said. The
junior companies will also suffer
from the loss of flow-through
shares, which gave investors attrac-
tive tax credits, and other povern-
ment measures to help mining
exploration, "It’s going to be tough
on the grassroots companies
because there’s nothing to take the
sting out of the risk," Patterson
said.

The price of gold has been stag-
nant all year, and Patterson
believes that a recovery in the gold
price to the $500-600 level by
itself would be enough to draw the
necessary capital into exploration.
But that’s unlikely to come about.
Patterson says the price is being
held down by, among other things,
forward selling.

Forward selling is the sale of
gold that hasn’t been mined yet —

The gold season

in brief... :

when the price looks favourable,
companies effectively sell the
reserves of producing mines while
they’re still in the ground to raise
operating capital. Every time the
price of gold gets up around $400,
Patterson said, forward selling
dumps unmined gold on the market
and levels the price out again.
Other conditions in the general
economy could also dampen ex-
ploration next year, he said, includ-
ing high interest rates, which draw
investment away from gold into
bonds and securities, the high
value of the Canadian dollar,
which makes gold worth less, and
price of oil, which draws invest-
ment out of gold and mining and
makes everything, including ex-
ploration, more expensive.

"I can’t confirm it, but if that’s
true it’s very disappointing," said
mining analyst Jim Bartlett about
the $100 million exploration and
development expenditure figure.
Bartlett works for Odlum Brown in
Vancouver, and from his point of
view there was a lot of stock pro-
motion and not much to show for
it. :

"I don’t see anything other than
Eskay Creek up there (in the Sti-
kine Arch)," he said. "People think
their showing is like Eskay, but
it’s apples and oranges, Eskay is
unique. .

“"There’s probably a lot of gold

up there, but ‘how much of it is:

economical? You either need con-
centration or a lot of tonnage."
Bartlett says the price of stocks
always runs too far ahead of their
actual value. "They keep hoping
for a good hole," he explained.
During the winter, when no drill-

Terrace Review — Wednesday, December 12, 1990 A5

hot, some were not

' ing results are being announced to

“THE NORTHWEST. |

kick prices up, knowledgable
traders will be buying up attractive
junior stocks to take advantage of
lower prices.

With regard to the coming year,
Bartlett is less. than optimistic.
"Unless gold goes up, there’s nota
hope," he said. "There’s no money
there to be raised."

Some companies will carry on,
he thinks. "The question is (Mur-
ray) Pezim, whether he has the
ability to raise the dollars. It’s
going to be tough except for three
or four select projects." But there’s
always hope. "It would be nice if
they found a pile of gold mines up
there," he concluded.

No one was better placed to
observe the staking frenzy of 1990
than Gold Commissioner Rick
Conte, even though he saw most of
it from Vancouver. Conte said last
week that the initial batch of
orders to settle over 60 staking

City reps

disputes in the immediate area of
Eskay Creek will be handed down
next week.

Massive overstaking of the Eskay
area early this year prompted
Conte to declare a staking freeze
on the area..Parts of some of the
claims were staked by up to five
different warring parties. Ths
claim disputes had to be indivi-
dually investigated by government
inspectors at the site, reports on
each dispute had to be written, and

now the decisions are Degtnnang to to.

be handed down.

Of the 250 staking disputes in
B.C,, 62 of them involve ground in
the immediate vicinity of Eskay
Creek. All the disputes must be
resolved before the moratorium on
staking is lifted.

Conte’s initial target date for
settling the disputes was Sepiem-
ber. Now he thinks it will probably
be June of 1991.

to attend

mining convention

Terrace city council’s Committee
of the Whole has recommended
that council approve an expendi-
ture of around $4,000 to take part
in the Prospectors and Developers
Association Convention in Toronto
next March. It is intended that
tourism and economic development
officer Peter Monteith and one city
-alderman attend the convention,
and for a smal] additional cost take
advantage of the trip back east to
visit a few federal politicians in
Ottawa as well.

According to Monteith, a number
of northwest mining companies

will be represented at the show, —

and with the Iskut road scheduled
for completion next year it is in
our best interest to show them that
we’re interested in their concerns.
"We can put our booth up and try
to hit the companies we know are
up here,” he told city aldermen.

Monteith suggested that the cost
of the trip might be reduced if
Terrace were to work in coopera-
tion with other northern com-
munities, but Committee of the
Whole members seemed to favour
going it alone. Instead, they
instructed Monteith to seek provin-
cial funding to help defray the
expense.

*Eskay Creek — the Stikine Arch prima donna, a massive
sulphide deposit that yielded one spectacular drill hole after
another and kept the Vancouver Stock Exchange dancing with
anticipation all summer. Investment analysts agree that it’s a
major find, but the discovery catapulted flambouyant stock
promoter Murray Pezim into the middle of an insider trading
scandal. It appears now the Pez will be cleared, but it was one
more black brush-stroke across the heavily tarred countenance
of the Vancouver Stock Exchange.

*Johony Mountain — First to open, first to close. The Skyline
gold operation was a sentimental favourite in the area, with
veteran prospector Reg Davis having doggedly raised money to
start the area’s first operating gold mine through stock issues
and sheer determination. The grade of ore wasn’t what Skyline
had hoped, however, and the mine shut down indefinitely in the
fail. Exploration is continuing on the claim in an effort to find
richer: reserves.

*Sulphurets — Years of exploration came to nothing on this
claim just north of Stewart. Newhawk Gold Mines, a member
of the Northair group and partner with Corona and Granduc
on the claim, spent millions in exploration but got a feasibility
study a month ago saying the grade wasn’t economical.

‘Snip — Cominco made a production decision on this one,
adjacent to Johnny Mountain in the Iskut River valley near the
Alaska border, after initial exploration by contractor Brinco.
The mine is expected to be operational early next year.

*Premier — one of the few Stikine Arch discoveries that was
accessible by road right from the beginning, Westmin made an
operating gold mine out of it early this year. The mine has had
some problems, not with the grade but with machinery gremlins

POT ASG RIP GEE PLPC PRET Be OTTERS SERV GPE PE ELON EUR RR SRR Fey SUE

and joint venture partners who need company lawyers to
remind them of their obligations.

*McLymont et al — Gulf International Minerals seems 5 to have
found some action here and struck an agreement with an
adjacent claimholder, Tenajon, for mutual resource use in the
event of production. Still in the early stages.

«Elsewhere — The mountains from Stewart to Telegraph Creek
were crawling with diamond drillers. L.O.M. Western Securities
estimated that $70 million was spent on exploring the Stikine
Arch geology this year. Junior companies were stomping all
over one another in the stampede to stake the claims adjoining
Eskay Creek, but it appears the Eskay claim geology didn’t
grow past Pezim’s boundaries — despite a breathless promotion
rush on the VSE, the drilling results weren’t there, at least not
like they were at Eskay. Other areas that attracted interest in
the early stages of drilling were claims in the Galore Creek area
on the east side of the Stikine River, and in the Kitsault area,
a region of known mineralization that is being explored again
for gold values.

*The Regulator — The 1990 exploration season was one giant
pain in the neck for Gold Commissioner Rick Conte, who is still
sorting through claim disputes four and five parties deep to
determine who gets the rights to what piece of rock, Conte
clamped a staking moratorium on the Eskay area in the spring,
and at one point it got so bad he actually flew into the area to
have a look for himself. Four inspectors spent the entire
summer checking and recording claim marks from what was
the most unscrupulous and gonzo staking rush in the history of
North American mining. At least in the Klondike days they
didn’t have helicopters. There were, however, no reports of
cremations on the banks of the Iskut River. .