Fairmile June 1999 Newsletter
FAIRMILE GOLD CORP NEWLETTER
Volume 1, Issue 3
June 1999
Fairmile Company Newsletter
Fairmile Gold Corporation continues to enhance its resource base, although progress is being severely hampered by low gold prices. Proposed and upcoming sales by the International Monetary Fund (IMF) and European Central Banks have weighed heavily on the price of gold. The sales have offset record high levels of physical demand, resulting in the lowest price for gold in 20 years. Adjusted for inflation, the current price is at historically low levels. Consequently, our search for joint-venture partners at Buffalo Valley and Highland has been very difficult. In spite of these obstacles, we have managed to acquire and fund a new project in central Nevada.
Eastgate Project acquired, JV with Echo Bay
Fairmile has leased the Eastgate gold/silver project from a group of individuals and has joint ventured exploration of the project with Echo Bay Mines, Ltd. The project consists of approximately 600 acres, located about 10 miles northwest of Fairmile's Highland project. The geologic setting is similar and both projects have the potential to host bonanza-grade, epithermal gold/silver deposits.
Veins at Eastgate cut Tertiary volcanic rocks, and the main vein historically produced a small amount of high-grade gold. Previous modern exploration searched for disseminated gold, although this work showed promise for high-grade gold veins. A reverse circulation hole by U.S. Borax & Chemical Co. in 1988 intersecting 15 feet (not true thickness) of 0.343 ouncesgold per ton. Cabot Resources Corporation in 1990 drilled a fan of holes both up section and down section from the Borax hole, and reported intervals between 5 and 20 feet long (not true thickness) with grades of 0.073 and 0.563 ounces gold per ton. These holes have tested only a small portion of the main vein.
Fairmile interprets this mineralization to be at the upper level of a low-sulfidation, epithermal gold/silver system, with the target being a deeper portion of the system. There, boiling may have resulted in the formation of bonanza-grade deposits similar to those found in the Midas district. Detailed mapping and sampling are planned for this Fall, with follow-up based on that work.
Echo Bay can earn a 51% interest in the Eastgate project by spending US$500,000 over a six-year period, reimbursing Fairmile for underlying payments, and making nominal payments to Fairmile. After earning a 51% interest, Echo Bay will be responsible for the next US$1.5 million of joint venture expenditures. Echo Bay has the option of purchasing Fairmile's interest in the JV at any time prior to Fairmile's first cash call by paying Fairmile US$1.25 million and a 1% NSR royalty on production. If that option is not exercised, Fairmile will fund its 49% or accept dilution according to a standard formula. Should Fairmile's interest in the JV dilute to 10% or less, it would convert to a 1% NSR that increases to a 3% NSR once the underlying owner's royalty is reduced to 1% (after US$1.25 million in royalty payments to the owners).
Joe Kizis elected President GSN, 1999/2000
Joe Kizis, President and CEO of Fairmile, has been elected to the volunteer position of President of the Geological Society of Nevada for the year 1999/2000, beginning June 1. This prestigious scientific organization is dedicated to the advancement of geologic sciences in Nevada, with emphasis on the economic geology of Nevada and elsewhere. The organization consists of more than 1100 geoscientists located in most of the worlds mineral-producing countries.
Joe served as Vice President of the GSN during the year 1998/1999, during which time he organized two field trips: Shallow Expressions of Deep, High-grade Gold Deposits and Low-sulfidation Gold Deposits in Northern Nevada. Approximately 90 geoscientists attended each field trip. Guidebooks for these and other GSN field trips can be purchased from the GSN (775-323-3500)
GSN field trip to visit Buffalo Valley
Ken Cunningham, the Geological Society of Nevada's newly elected Vice President, has invited Fairmile to present its Buffalo Valley project as part of the GSN's Fall 1999 Field Trip. The trip will examine gold deposits in the western portion of the Battle Mountain region, and is expected to visit Trenton Canyon, Converse, and Buffalo Valley. Approximately 90 geoscientists are expected to attend. Ken was involved with the discovery of the Converse deposit (JV between Cameco, Romarco, and Newmont).
Questions and Answers
Question: Is there any news from other groups working in the Buffalo Valley area?
Answer: Here is a summary.
Newmont reports that it expects cash costs to average $200 per ounce of gold at its Trenton Canyon project. The project consists of three open-pit deposits feeding a central heap-leach facility located adjacent to Fairmile's Target J. Gold recovery from the run-of-mine heap is projected to be 73%. Newmont's North Peak deposit, located immediately north of Target J, has been in production for several years and will be expanded now that Newmont has received additional permits. North Peak contains a Reserve of 955,000 tons averaging 0.021 ounces gold per ton. Mining has recently begun at the Trenton Canyon deposit, the second of the three planned open pits at the Trenton Canyon project. These deposits are being mined as satellites of the Lone Tree Mine, and are projected to produce 50,000 to 70,000 ounces of gold annually for the next six years.
Romarco recently announced a substantially larger resource estimate for their Converse Project (JV with Cameco and Newmont). Converse is located approximately 6 miles north of Fairmile's Buffalo Valley project. Romarco reports an Indicated Resource of 1.5 million ounces of gold (grade 0.020 ounces per ton) plus an Inferred Resource of 1.1 million ounces of gold (grade 0.018 ounces per ton), using a cut off of 0.01 ounces per ton. Using a cut off of 0.015 ounces per ton increases the grade to about 0.024, reducing the total ounces somewhat. Additional drilling is planned during 1999 to search for higher-grade zones in this large gold system.
Glamis has completed its merger with Rayrock, operator of the Marigold Mine. Marigold is located approximately 9 miles north of Fairmile's Buffalo Valley project.
High Demand for Gold Continues
The World Gold Council (Business Wire, 5/20/99) reports that high demand for gold continued into the first quarter of 1999, being just 2% below the record fourth quarter of 1998. Additional information can be obtained on the Council's website (www.gold.org)
Fairmile Gold's Projects
Buffalo Valley Project - Lander Co., Nevada
·Resource (Measured, Indicated, and Inferred) of ~600,000 ounces gold (~20 million tons @ 0.029 oz. Au/t)
·Much exploration potential remains
·Resource is oxide, above water table
·Preliminary metallurgy favorable
·No unusual environmental concerns
·Excellent logistics: roads, power, mining supplies, manpower
·Numerous deposits within 20-mile radius, including (clockwise from north): Converse, Lone Tree, Marigold, Trenton Canyon, Copper Basin, Copper Canyon (includes Fortitude), Cove & McCoy.
Highland Project - Lander Co. Nevada
·Minor historic production of high-grade gold
·Geologically similar to other bonanza-grade gold camps
·No drilling below 200' vertically beneath strongest veining
·Numerous exploration targets with strong surface gold values
Eastgate Project - Churchill Co. Nevada
·Minor historic production of high-grade gold
·Geologically similar to other bonanza-grade gold camps
·Limited drilling by others with encouraging high-grade gold over narrow intervals.
·Close proximity to Highland Project
·Joint ventured with Echo Bay
What can we do about low gold prices?
Low gold prices have affected all of us in the gold business. We are seeing budget cuts and layoffs at gold companies of all sizes. Raising capital and negotiating joint ventures are extremely difficult in this environment. As a result, several “resource” juniors have given up on gold and have now morphed themselves into “internet” or “high tech” companies.
Demand for gold is at record high levels, with demand exceeding mine production by approximately 1,000 tonnes per year. However, the threat of sales by the IMF and Central Banks (most recently the UK) is applying strong downward pressure on the price of gold.
Several US Senators and Congressmen are fighting the proposed sale of gold by the IMF. The US Congress has effective veto power over this sale, which if prevented would send a strong positive message about gold. Those of us in the US should write to our elected officials to urge them to vote against the IMF sale.
There are several issues. Why sell an asset at the low point of its price cycle? Why contribute to driving down the price of gold in order to help countries who depend on gold in their own economies (9 of the African countries supposed to be helped by the IMF sale produce gold and 5 more have gold projects under development)? Why hurt the US and Canadian Mining Industries at a time when they are already economically stressed?
Lets tell our politicians how we feel about the proposed IMF sale!
This Newsletter
...will be published bimonthly, or thereabout depending on the amount of news.
We invite you to email your questions to us, and we welcome your suggestions for articles that may be of interest to our shareholders.
You may contact the Company at:
Fairmile Gold Corporation
PH5-1060 Alberni Street
Vancouver, BC CANADA V6E 4K2
Telephone: (604) 257-4254
Fax: (604) 608-2949
Online at: www.fairmile.com
E-mail: info@fairmile.com |
