Year end results
Gitennes Exploration Inc GIT
Shares issued 26,212,831 Jun 11 close $1.00
Fri 12 Jun 98 Company Review
Mr. Jerry Blackwell reviews the company
The year ended December 31, 1997 was one of continued positive growth for
Gitennes Exploration, despite adverse market conditions during the last
half of 1997.
Virgen Property, Peru
The Virgen property is a 2,600 hectare bulk tonnage gold prospect 180
kilometres east of Trujillo by road. Gitennes, through its Peruvian
subsidiary Compania Minera Kori Pampa S.A., optioned the property in August
1996. Since then, a major exploration campaign including road building,
diamond drilling, underground tunneling, metallurgical test work and site
engineering has been under way.
A number of targets exist on the property, however, work favours the large
Alumbre alteration system as the probable centre of gold mineralization.
Other zones, such as Rio Suro, Paloquian, Escalerilla, Centro and Cuypamba
are viewed as satellite targets to a much more important, yet to be
discovered deposit underlying the Alumbre area. A small portion of Alumbre
has been drilled thus far with some good results, but more drilling is
required.
Zonas Rio Suro and Rio Suro Norte
As of April 1998, the company has drilled 63 core and 22 reverse
circulation drill holes, totalling 9,700 metres. Thirty-five of these holes
had poor recovery or did not reach their intended target depth, resulting
in incomplete tests. There has also been 328 metres of underground
development on the southern portion of the Zona Rio Suro.
The Zona Rio Suro includes at least two high grade zones, one along the
eastern edge of the orebody, the second at the southern terminus. Neither
has yet been drilled in detail. The eastern zone is from 8 to 40 metres
wide, extends vertically to 65 metres, and has an established length of 120
metres. Based on underground sampling and drilling, the grade of this zone
is between 8 and 10 g/t gold. Geologically similar material has been found
to extend a further 350 metres north, but has not been drilled enough to
prove continuity.
Other sections of the Zona Rio Suro comprise lower grade ores ranging from
0.3 to 2.5 g/t gold. The western limit of the zone will be defined by
mining costs, as the grade gradually diminishes in this direction.
Metallurgical results are good. Gold can be extracted rapidly by cyanide
leach, with a minimum of crushing and no milling. Laboratory testing of all
ore types achieved gold recoveries in the range of 79 to 95 per cent. It is
projected that an 80 per cent gold recovery will be achieved during mining.
The Rio Suro Norte has been outlined by drill holes spaced 100 to 150
metres apart. It appears to have a grade potential of approximately 1.8 g/t
gold and 0.4 per cent copper. Zones of enrichment have been found, which
remain to be delineated. Rio Suro Norte is not exposed on surface, and can
only be explored by drilling. The first metallurgical tests indicate
excellent flotation characteristics, with metal recoveries ranging from 92
to 96 per cent. This suggests that a commercial grade gold concentrate
could be produced. Alternative tests for heap leach amenability remain to
be done.
Zona Alumbre
Zona Alumbre refers to the 700 by 1,200 metre area underlain by highly
altered andesite volcanic rock east of the Zona Rio Suro. As of April 1998,
25 drill holes, totalling 7,300 metres, have been completed. Most of these
are in the southern portion of the zone.
In the south, deep drilling has encountered gold at depths from 150 to 300
metres below surface. high grade breccia bodies were intersected in holes
24 and 33, which graded 11.37 g/t over 33.02 metres and 18.33 g/t over 14.9
metres respectively.
In the central portion of the zone, drilling has intersected a broad zone
of mineralization at depths of 90 to 100 metres below surface. Here the
mineralization is strongest in the andesite volcanic unit. Recently
completed hole V98-61 intersected 30 metres grading 2.12 g/t gold.
Exploration drilling at the Virgen property will continue through 1998,
both from surface and underground. At the same time, Gitennes will complete
an initial reserve estimate for Zona Rio Suro, and evaluate the resource
potential on Zonas Alumbre and Rio Suro Norte. The sulphide mineralization
at Alumbre will require full metallurgical test work; while little work
remains to be done on the Rio Suro oxide mineralization.
OUTLOOK
Gitennes also plans to complete a project scoping study during the year, to
firmly establish the project economics before committing to a full
feasibility report.
CANADIAN PROJECTS
Gitennes retains two properties in the Northwest Territories: the Fishhook
Lake and the Tanqueray projects. During 1997, the option agreement with
Placer Dome was allowed to expire and has not been renewed.
NEW PROJECT
In 1997 Gitennes and a joint venture partner, Navigator Exploration,
undertook a country-wide search in Peru. During the year, the joint venture
examined over 20 properties and did two prospecting campaigns into
geologically uncharted territory. One situation, the Azul property, was
staked as it appears to hold unusual gold potential.
The Azul is on the eastern flank of the Andes Mountains, in the Amazon
River basin. During 1998 the joint venture will begin a large scale
exploration program, evaluating several bedrock showings found during
initial field visits, before moving into the core of the property for the
first time.
Tanqueray (formerly Fibre-Klad option)
In 1993, the company entered into an agreement with Tanqueray Resources for
an option to earn a 50 per cent interest in some mineral claims at Damoti
Lake, Northwest Territories. The company incurred exploration expenditures
in 1996 of $88,247 for a total of $854,498 and has fully earned its
interest.
During 1996, the company signed a letter of intent with Placer Dome Canada
to option 55 per cent of the Tanqueray property.
During 1997, Placer informed the company that it will not pursue this
property.
Fishhook Lake
The Fishhook property was acquired in 1993 through staking. During 1997,
the company entered into an option agreement with Placer. Placer may earn a
55 per cent interest in the property.
During 1997, Placer informed the company that it will not pursue this
property.
Damoti Lake Project
In 1994, the company exercised its option to acquire 100 per cent of the
outstanding shares of 933266 NWT Ltd., which held a 25 per cent undivided
interest in a property near Damoti Lake, Northwest Territories. On July 2,
1994, all the assets of 933266 NWT were transferred to the company.
In December 1995, the company sold its 25 per cent interest in the Damoti
Lake project to Quest International Resources for $1,010,000 and 375,000
shares of Quest valued at $532,500, for total proceeds of $1,542,500,
resulting in a gain of $220,390. The shares were subject to resale
restrictions until Dec. 15, 1996 and have been written down to quoted
market value of $108,750 as at Dec. 31, 1997.
FINANCIAL
A loss of $1,885,337 was recorded for the year ended Dec. 31, 1997 compared
with a loss of $1,413,479 for the year ended Dec. 31, 1996. The principal
reason for the increase in 1997 over 1996 is the net result of increased
administrative costs, a lower writeoff for development costs and a zero
gain in 1997 compared with a 1996 gain of $705,292 on the writeoff of
Gitennes' property interest and related debt on the Deloro property.
Administrative expenses for 1997 were $1,357,575 compared to $413,043 for
1996. Until Sept. 30, 1996, the company shared office space and staff with
a company with some common officers and directors. Effective Oct. 1, 1996,
the company moved to its own office space and hired its own employees. An
office was also opened in Lima in mid-1996, which resulted in higher costs
for 1997 versus 1996.
For 1997, the writeoff was $377,596 comprised mainly costs associated with
Peruvian properties. The 1996 loss of $1,517,132 was made up of Howard Lake
($516,648), Yellowknife East ($318,044), Itchen Point/Healy Lake ($551,178)
and others ($131,262).
At Dec. 31, 1997, the company had working capital of $6.9-million
consisting of cash of $7.4-million, miscellaneous accounts receivable of
$0.4-million, marketable securities of $0.1-million, less accounts payable
of $1.0-million.
During 1997 the company issued 1,000,000 units at $4.20 in a private
placement. Each unit consists of one share and one warrant to purchase one
additional share at $5.00 up to Jan. 15, 1998. All of these warrants
expired without being exercised.
A total of 2,000,000 special warrants at $5.00 were issued via a private
placement on Oct. 2, 1997. Each special warrant entitled the holder to
acquire one share and one half of one warrant. Each whole warrant entitles
the holder to purchase one share at $5.50 until Oct. 2, 1998. On Oct. 2,
1997, the company received $4.3-million from the above private placement.
The remaining $5-million was being held in escrow and was received on Jan.
15, 1998 after the commissions issued receipt for the prospectus.
(c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com
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