42C08SW0eei 63.6119 JACOBSON 010 Spirtt Cake- 1 E XPLORATIONS LIM LIMITED Ut RICHMOND STREET W. .SUITE 916 TORONTO, ONTARIO M5H2G4 Telephone: (416) 364-3162 FAX: (416) 364-5265 CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED APRIL 30,1990 (UNAUDITED)
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42C08SW0eei 63.6119 JACOBSON 010
Spirtt Cake-1 EXPLORATIONS LIMLIMITED
Ut RICHMOND STREET W. .SUITE 916TORONTO, ONTARIO
M5H2G4
Telephone: (416) 364-3162
FAX: (416) 364-5265
CONSOLIDATED INTERIM FINANCIAL STATEMENTSFOR THE NINE MONTHS ENDED APRIL 30,1990
(UNAUDITED)
TO THE SHAREHOLDERS:
The Directors are pleased to present the unaudited interim financial report for the nine month period ending April 30, 1990.
Also enclosed is a "Press Release" concerning the appointment of new Executive Officers and a new Director for Spirit Lake Explorations Limited. The services rendered by Dr. John Hansuld who resigned as President to remain a Director, and Everett Fagg who resigned as a Director, were valuable and appreciated.
The winter drilling program on the "Edwards" gold property northeast of wawa, Ontario was completed in April. During the period from November 5, 1989, to April 17, 1990, thirty drill holes totalling 19,378 feet were completed and intersected many significant and spectacular gold inter sections. Three principal gold-bearing horizons, the Porphyry, Carbonate, and Shaynee have been identified. Both the Porphyry and Carbonate zones have been traced over a strike length of 600 feet and to a vertical depth of 800 feet. The Shaynee has been intersected by 10 drill holes and remains virtually untested. The 325 foot level drift from the former Edwards shaft is 2 50 feet n orth of the three gold horizons.
Plans and sections of dr'ill results are nearly com plete. Drill indicated ore calculations and engineering studies will be carried out immediately in order to proceed with both surface and underground exploration.
Management feels that present weak gold prices are short-termed and that successful exploration and development of a h igh grade gold deposit now will enable the Edwards Property to be in production coincident with better market conditions and higher gold prices down the road.
ON BEHALF OF THE BOARD
June 28, 1990 v. Noble Harbinson Toronto, Canada President.
INTERIM STATEMENT OF INCOME AND DEFICIT (CONSOLIDATED)
.fOR THE NINE tfONTH PERIOD ENDED APRIL 30.1990 (Unaudited)
Nine Months Nine MonthsEnded Ended
April 30 April 301990 1989
REVENUEInterest income . S 55.819 S 82.906
ADMINISTRATIVE EXPENSES
Accounting and secretarial fees 10,967 5,500
Legal and audit fees 56,658 21,005
Transfer agent fees 5,092 2,998
Share certificate costs - 1,058
Shareholders' information and meeting 15,201 5,809
Directors' and committee fees 10,400 10,500
Administration 89,177 13,825
Head office travel and promotion 41,695 26,144
Stock exchange fees 1,500 500
TOTAL EXPENSES 230.690 87.339
NET LOSS FOR THE PERIOD- ( 5174,871) (S 4,433)
INTERIM STATEMENT OF CHANGES IN FINANCIAL POSITION(CONSOLIDATED)
FOR THE NINE MONTH PERIOD ENDED APRIL 30.1990 (Unaudited)
CASH PROVIDED BY (USED IN):
Nine MonthsEnded
April 301990
Nine MonthsEnded
. April 30 1989
A. OPERATING ACTIVmES Net Loss for the period Changes in non-cash working capital balances
(S 174,871) ( 34.123)
( 208,994)
(S 4,433)( 66,551)
{ 70,984)
B. FINANCING ACTIVITIESIssue of common shares for:
-Cash- Canadian Exploration Expenditures
Shares repurchased for cancellation
C. INVESTING ACTIVITIES ,;- - v ., Deferred exploration expenditures Option - mining claims Purchase of building and plant
SPIRIT LAKE EXPLORATIONS LIMITED (Montreal Exchange Symbol: "SEL") announces that effective June 19, 1990, V.
Noble Harbinson has been appointed President and Director of
the Company, Dr. John A. Hansuld, who has resigned as President of the Company to devote full time to other
business commitments has agreed to remain a director. On other management changes, John A. Francis, C.A. has been
appointed Secretary-Treasurer and Dale M. Hendrick, currently a director, has been appointed Vice-President, Operations.
William Chymyck, formerly Vice-President and Treasurer, and Milton Klyman, formerly Secretary, remain as directors. Everett A.E. Fagg has resigned as a director.
The Company's principal activity is the continued exploration and evaluation of the Edwards gold property northeast of
Wawa, Ontario.
- 30 -
020
DATE:
CONTACT:
SENT VIA TELECOPIER TO:
June 19th, 1990
Dale M. Hendrick (416)364-31 2
Canada News-Wire Limited
JACOBSON 030
SUMMARY REPORTON THE
FALL 1989 AND WINTER 1990 DRILLING PROGRAMJACOBSON TOWNSHIP PROPERTY
VERTICAL LONGITUDINAL SECTIONS(3 Sections: Porphyry, Carbonate fc Shaynee Horizons) (in pocket)
VERTICAL CROSS SECTIONS(15 Sections from 150 E to 450 W)
030C
(Volume II)
JAMES W\de ENqiNECRJNq Lid.
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SUMMARY
This report has been prepared at the request of Dr. John A. Hansuld, President of Spirit Lake Exploration Limited. It describes the results and interpretation of a 30-hole diamond drill program totalling 19,378 feet completed on Spirit Lake's Jacobson Township gold property and presents recommendations for a follow-up exploration program. The drill program was conducted in two phases commencing in November, 1989 and terminating in April, 1990.
The objectives of the drill program were primarily to improve confidence levels in vein continuity and to define structural controls governing the distribution of gold mineralization in an area of enhanced economic potential situated in the central portion of the Spirit Zone, to expand tonnage by extending the known zones both laterally and vertically, as well as to establish a sufficiently detailed data base to permit preliminary ore reserve calculations. Also, four drill holes were targeted at 25-foot centres in a diamond pattern in order to extend a spectacular zone assaying 11.57 oz Au/ton over 10.6 feet intersected in drill hole 89-101.
In all instances the program was very successful, with a significant improvement in the confidence of zone continuity as well as an impressive enhancement in the overall economic potential of the deposit. The mineralized vein systems remain open both laterally and at depth.
Many significant and a number of spectacular gold intersections were obtained from this drilling program. Three principal mineralized horizons of gold-bearing mineralization have been identified within the Spirit Zone to date. These have been named the Porphyry, Carbonate and Shaynee mineralized horizons. Both the Porphyry and Carbonate mineralized horizons have been traced over a strike length of 600 feet and to a vertical depth of approximately 800 feet. The Shaynee mineralized horizon has only been intersected by 10 drill holes, hence it remainsvirtually untested.
iJAMES Mdt ENqiNEERJNq Lid.
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SUMMARY (cont'd)
These vein systems constitute an attractive target which merit further work. Depending on the corporate objectives of Spirit Lake Explorations Limited, this
work could take the form of either an underground exploration program to test
the mineability of high grade lenses in both the Carbonate and Porphyry mineralized horizons above the 4800 foot elevation between 200 west and 400 west
or a further diamond drilling program to extend the vein systems both laterally and vertically and hence expand tonnage. It is recommended that a preliminary ore reserve study be undertaken, the scope of which would aid in determining the thrust of future exploration on the property.
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1.0 INTRODUCTION
This report has been prepared at the request of Dr. John A. Hansuld, President
of Spirit Lake Explorations Limited. It describes the results and interpretation of a 30-hole diamond drill program totalling 19,378 feet recently completed on Spirit Lake's Jacobson Township gold property. The drilling program was conducted in two phases, commencing in November, 1989 and terminating in April, 1990.
The property consists of four patented and 41 unpatented claims situated in the
Sault Ste. Marie Mining Division, near Wawa, Ontario. The claim group covers approximately 1800 acres. The property location is illustrated on Figure l, appended.
2.0 SCOPE OF WORK
Initially James Wade Engineering Ltd. reviewed the property reports, drill logs
and sections of the Spirit Zone from a mine engineering point of view. Drill hole data were examined in order to advise on the most appropriate next phase of drilling in developing an ore reserve base with a reasonable level of confidence.
It was determined that before reliable drill indicated reserves could be calculated
and a decision made to proceed with an underground exploration program, that
confidence in the continuity of the indicated ore zones .needed to be enhanced. There are many spectacular high grade intersections which could be mined economically if continuity could be demonstrated. It was determined that the
most favourable location to investigate this potential continuity was on section 200 west.
As well, on section 50 west, a composite of adjacent values returned 1.48 oz Au/ton over a width of 23.9 feet. It was decided to also test the possible extensions of this zone, as high grade tonnage could thus be added at an early
stage.
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m Consequently, a nine-hole diamond drilling program totalling 5936 feet was
conducted on the property from November 5 to December 14, 1989. The results of this program were very positive, with a significant improvement in the confidence of vein continuity, as well as an impressive enhancement of the overall
leconomic potential of the deposit. This program is described in a report entitled "Summary Report on the Fall 1989 Drilling Program, Jacobson Township Property,Spirit Lake Explorations Limited", by William S. Hamilton and Dr. Derek E. McBride, dated January 12, 1990.
The success of the initial program led to a subsequent drill program comprised
g of 21 holes totalling 13,442 feet, conducted from January 18 to April 17, 1990. m The aim of this program was fourfold:
l 1. Test the extent and continuity of the spectacular intersection in drill hole89-101 which returned 11.57 oz Au over 10.6 feet.
2. Expand tonnage by extending the known zones both east and west as well g as test the Shaynee Zone.
g 3. Fill-in areas in the existing drill pattern where large gaps existed withdemonstrated potential.
4. Develop a data base sufficient to allow estimation of preliminary ore l reserves in the Spirit Zone.
l The results of the entire two-phase program are discussed and summarized in this report.
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JAMES W\dt ENqteniNq Lid.
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3.0 GEOLOGICAL SETTING
3.1 General Geology
The Spirit Lake Property is situated in the Goudreau-Lochalsh area of the Wawa Greenstone Belt which represents a major succession of supracrustal rocks of the Archean Superior Structural Province. The Wawa Greenstone Belt is comprised of several cycles of volcanic activity as well as a series of sedimentary rocks called the Dore Group. In the vicinity of the claim group, the area is underlain by basal Cycle II felsic volcanics which are overlain by sedimentary rocks consisting
substantially of Algoma type iron formation. The sedimentary rocks are in turn overlain by Cycle III mafic volcanics. Felsic to intermediate intrusive rocks are believed to be related to gold deposition.
3.2 Structural Geology
The Spirit Lake deposit is situated within the regionally extensive Goudreau Lake Deformation Zone (GLDZ) as defined by mapping by the Ontario Geological Survey. The past producing Cline Gold Mine and the Murphy Lake Gold Mine
as well as the currently producing Kremzar and Magino Mines are also associated with the GLDZ.
Hematite and epidote represent the predominant alteration minerals in the area.
Silicification, sercitization and pyrite mineralization are restricted to the deformation zone, along with chlorite, calcite and iron carbonate.
Structural controls are very important in both the localization of gold-bearing vein
systems as well as in the distribution of gold mineralization within the vein systems.
Dominant structural trends in the GLDZ are 100" and 0700.
JAMES Wtde Lid.
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3.3 Mineralization
Two major mineralized vein systems - called the Edwards and Spirit Zones - are known on the property. They consist of multiple en echelon quartz veins containing fine granular gold.
The gold-bearing quartz veins are developed in tension fractures spatially associated with the Edwards-Cline Shear Zone. The shear zone strikes east- west and dips 550-650 north. Both the Cline and the Edwards Deposits are located on the north side of this shear zone, whereas the Spirit Zone is situated
to the south. Zones defined to the north of the shear zone are terminated by it
at depth. One of the better defined veins in the Spirit Zone exhibits a distinct spatial association with a felsic porphyry unit which suggests that the vein systems developed approximately parallel to the host stratigraphy along contacts and other zones of weakness. The strike of the Spirit Zone quartz veins is variable, ranging from 1000 to ISO0 and averaging 1200, with considerable buckling apparent in the central portion of the currently drilled area. Dips are generally steeply north,
with local swings to the vertical or very steeply south. This south-southeast strike direction corresponds to one of the dominant structural trends defined by the Ontario Geological Survey. The veins intersect the Edwards - Cline Shear Zone
at an oblique angle and are terminated by it to the west along a northwest trending plunge line.
3.3.1 Edwards Zone
This zone was discovered in the 1920's and in the mid 1930's was developed via an inclined shaft sunk at a dip of -IT to a depth of 300 feet. Lateral work on three levels amounted to approximately 2500 feet. A small mill was erected and processed 3243 tons or ore of which 1670 tons were extracted from the Edwards
Zone and a further 1573 tons were obtained from unknown sources. Average recovered grade was 0.31 ounces of gold per ton.
JAMES Wvde ENqlNEERlNq Ltd.
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3.3.2 Spirit Zone
This zone is located 600 feet southwest of the Edwards Zone shaft. It was discovered by drilling in 1988 and has subsequently been tested by 72 drill holes. As this steeply dipping zone is located south of the north dipping Edwards -Cline Shear Zone, it could have significant tonnage potential with depth, in that it extends away from the shear, which terminates the depth extent of the Edwards Zone.
Three principal sub-parallel veins have been identified to date in the Spirit Zone. Two of these veins - called the Porphyry and Carbonate mineralized horizons - have been traced over strike lengths ranging up to 600 feet and to vertical depths of 800 feet. The horizontal distance between these two mineralized horizons varies from as little as 20 feet near surface at their western end, to a fairly consistent 120 feet at their eastern extremity as currently defined by drilling. Both vein systems strike approximately 1150 in their eastern portions, show evidence of budding between 300 west and 175 west and strike about 1400 through their eastern extensions with an overall average of approximately 1200.
The third vein - called the Shaynee mineralized horizon - is virtually unexplored. It is situated an average of approximately 180 feet south of the Carbonate mineralized horizon, which is the most southerly of the two mineralized horizons mentioned previously. Based on the limited data available to date, it appears to be oriented essentially parallel to the Carbonate and Porphyry mineralized horizons. The three vein systems dip steeply, generally to the north. The structural characteristics of the veins are displayed on the drill hole cross sections attached to this report.
The width of the individual quartz veins ranges from several inches up to in excess of 10 feet, although they average about 2 - 3 feet in width, sometimes occurring in multiple sets with significant overall width. In many cases, they show sharp contacts with the country rock; however, the gold values may continue outside the quartz veins for a limited distance. Occasionally, the character of the
JAMES Wvde EivqiNEERiNq Lid.
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mineralized zones changes, consisting of wider zones of silicification and carbonatization with quartz veinlets and stringers, resulting in substantially improved widths.
4.0 DIAMOND DRILLING PROGRAM
During the period from November 5, 1989 to April 17, 1990, thirty drill holes totalling 19,378 feet were completed in two phases on the Spirit Zone. The position of the drill holes is displayed on the Drill Hole Location Plan which accompanies this report. The field work was carried out under the able
supervision of Mr. Bruce Edgar, with progress and results monitored by James Wade Engineering personnel. Three site visits were made by geologists employed
by James Wade Engineering in order to review progress, establish that the objectives of the exploration program were being met and to coordinate planning with the principals of Spirit Lake Explorations Limited.
It was initially recognized that there is often a close spatial relationship between felsic intrusive rocks and gold mineralization in the Spirit Zone. This relationship
is helpful as it can be used to predict the location and direction of mineralization.
This is not only important as a guide in correlation, but also it enhances the confidence level with respect to the demonstration of zone continuity.
All drill holes were subjected to down-hole light log (dip and deviation) surveying upon completion and after the termination of the program, a surveyor was
engaged to provide accurate collar location, azimuth and dip information. These locational data are tabulated below.
PHASE I
Drill Length Location Elevation Azimuth Dip89-97 767' 1+05.3 S l 2 +07.7 W 5010.5 205000' -48009'
89-98 990' l +17.0 N f 1 +49.9 W 4996.8 2050 Plugged
(-56.5') 89-99 447' 3+32.6 S l 0 +49.7 W 4983.2 2040 11' -45047
JAMES Wvde ENqiNEEniNq Lid.
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y/Drill89-100 89-101
89-102
89-10389-104
89-105
Drill
90-106
90-10790-10890-109
90-11090-111
90-112
90-113
90-114
90-115
90-116
90-117
90-118
90-119
90-12090-121
90-12290-123
90-124
90-12590-126
Length747'
357'
807'
707'
567'
547'
Length507'
287'
277'
557'
1057847
1057'707'687'
567'
652'
757'
857287'
1007677'
707457'
607'
517
367
Location0+18.2 N 7 0+49.6 W
2+94.6 S 7 2+00.6 W
0+25.0 N 7 1 + 89.2 W
0+19.0 N 7 0+46.9 W 2+90.98S 7 1+44.6 W
2+86.5 S 7 1+02.8 W
PHASE II
Location3+22.5 S 7 2+06.1 W
2+90.1 S 7 2+08.9 W 2+88.5 S 7 2+00.3 W 2+92.5 S 7 1 + 85.7 W
1+12.2 N 7 0+01.9 E 0+05.2 N 7 0+01.2 W 0+67.1 N 7 1+00.7 E 2+35.2 S 7 3+99.9 W 0+24.6 S 7 3+49.5 W 1+31.4 S 7 2+46.2 W
2+173 S 7 2+39.5 W 1+11.1 S 7 0+99.8 W 0+36.2 N 7 1+02.3 W 3+28.5 S 7 0+01.1 E 0+233 N 7 1+41.1 W 0+38.7 S 7 1+54.4 W
1+03.4 S 7 3+00.0 W 1+65.5 S 7 3+72.9 W
2+42.8 S 7 2+99.5 W 2+60 S 7 3+50 W 3+79.7 S 7 3+49.5 W
Survey information is incomplete on drill holes 89-98 and 90-125. The lack of a
surveyed dip of hole 89-98 is not important as light log dip data were employedfor plotting purposes; however, survey data on drill hole 90-125 should be obtained
the next time that a surveyor is brought onto the property.
Many significant and a number of spectacular gold intersections were obtainedfrom the two-phase drilling program. These results have confirmed and enhancedthe overall economic potential of the property, principally by demonstrating thethree dimensional continuity of the various mineralized horizons. The significantintersections obtained from the recent program are listed vertically by sectionfrom east to west below. In addition to the Porphyry, Carbonate and Shayneemineralized horizons, two subsidiary horizons called the P-l and C-l are present.In the table below all distances are in feet and assays represent ounces of gold
per short ton. True widths have been expanded, where necessary, to a minimumfive feet. Mineralized horizons denoted in parenthesis represent subsidiary veins
or bifurcations.
ASSAY SUMMARY
SECTION 150 E
Hole # From To Width Assay oz Au/true Width Elvtn. Remarks
The objectives of the two-phase diamond drilling program were:
1. To improve confidence levels in vein continuity in an area of enhanced economic potential in the central portion of the Spirit Zone.
2. To expand tonnage by extending the known mineralized horizons both east and west as well as to test the Shaynee horizon.
3. To fill-in areas in the existing drill pattern where large gaps existed with demonstrated potential.
4. To test the extent and continuity of the spectacular intersection in drill hole 89-101 which assayed 11.57 oz Au over 10.6 feet.
5. To provide a data base sufficient to develop a preliminary ore reserve estimate for the Spirit Zone.
In all instances the program was very successful, with a significant improvement in the confidence of zone continuity, the achievement of a better understanding of the structural controls on mineralization and an impressive enhancement in the overall economic potential of the deposit. The results of the drilling program, incorporating all previous drilling where locational control has been established, are illustrated on the vertical cross sections which accompany this report. Also enclosed are vertical longitudinal sections of the three main mineralized horizons whereon all assays have been plotted using a minimum five-foot true width. On the longitudinal sections subsidiary veins or bifurcations are denoted by the letter B.
As evidenced on the sections which accompany this report, the Porphyry mineralized horizon is remarkably persistent both laterally and vertically despite its often narrow width. It has been traced over a distance of 600 feet and a
JAMES WK)E EiMqiNEERiNq Lid
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vertical extent of 750 feet. The Porphyry mineralized horizon occurs as a gold- bearing quartz vein spatially associated with a felsic porphyry unit or swarm of felsic porphyry units situated south of the Edwards-Cline Shear Zone. It may consist of a single intersection or a series of narrow zones; however, the general spatial relationship with the porphyry dykes is consistent. The horizon strikes 1150 at its western extremity, becoming tightly buckled from 300 west to 175 west before swinging to a fairly consistent 1400 strike along its eastern extension. The dip is somewhat variable, but generally steeply north. The budding from 300 west to 175 west appears to be related to a cross fold; however, it may be somewhat compounded by drill hole location and deviation problems in this area. As is apparent on the longitudinal section, the Porphyry mineralized horizon remains open to the west of section 400 west up to the shear zone, at depth, and to the east below the 4700 foot elevation. Overall, the mineralized horizon exhibits a steep easterly plunge, with some evidence of cross plunge zonation.
The Carbonate mineralized horizon has been traced intermittently from section 450 west to section 150 east and to a vertical depth of 850 feet. It is less well defined than the Porphyry mineralized horizon and appears to be slightly more sinuous in character; however, it is generally parallel or sub-parallel to the Porphyry mineralized horizon. The Carbonate mineralized horizon lacks a definitive marker horizon, and as such is interpretational in nature. This is demonstrated by the variety of characteristics which it manifests. It ranges from a highly carbonated zone to highly silicified, to a quartz-carbonate stringer zone to a quartz-pyrite breccia. Variable pyrite mineralization up to 1096 is often characteristic of this horizon. The Carbonate mineralized horizon also appears to exhibit an easterly plunge with strong cross plunge zoning. It remains open west of 450 west up to the shear zone, east of 0+00 and at depth to the east.
The Shaynee mineralized horizon is situated approximately 180 feet south of the Carbonate mineralized horizon and it is oriented sub-parallel to it based on the limited information available from this vein to date. It has been traced over a strike length of approximately 200 feet and a vertical extent of about 200 feet, but
JAMES WVCJE Lid.
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as it has only been penetrated by 10 drill holes, it remains virtually untested. It
is characterized by up to 1096 coarse pyrite agglomerations, narrow grey-white quartz veining, frequent carbonate fracture fillings and moderate carbonatization of the host rock.
The P-1 mineralized horizon is situated between the Porphyry and Carbonate mineralized horizons, whereas the C-1 mineralized horizon is located between the Carbonate and Shaynee mineralized horizons. Both of these horizons are very
erratic and discontinuous. In particular, the C-l horizon occurs as at least two discrete lenses developed at different stratigraphic levels between the Carbonate
and Shaynee mineralized horizons. While locally these horizons may contain significant gold mineralization, it tends to be isolated in patches. These horizons have been identified and indicated on the various sections as an aid in any future planning for underground exploration.
Locally some locational problems are apparent on the sections, a situation which is at least partially caused by hole deviation and consequent projection. Specifically on sections 50 west and 100 west, the geological units and mineralized zones in hole 88-91 appear to correlate if this hole is shifted "up" approximately 25 feet in the vicinity of the shear zone increasing to 50 feet down hole
presumably due to increasing hole deviation. On section 100 west, the presumed upward shift in the mineralized veins is indicated on hole 88-91, and it is apparent that a much better structural fit is thus obtained, maintaining strike and dip uniformity with adjacent sections.
Similarly, on section 150 west there is an approximate 50 feet "upward" shift at
depth in the geology of drill hole 88-92 leading to structural and lithological uniformity.
In addition, on section 300 west, a 30 feet "upward" shift in the geology and
mineralized veins is apparent in hole 88-75 to achieve consistency with drill hole
88-76.
JAMES WK)E ENqiNEERliMq Lid.
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On section 400 west, an intersection of 1.451 oz Au/2.0 feet is shown from 542.8' - 544.8' in drill hole 88-72. The collar of this hole was bent during the drill move and consequently, the precise azimuth is unknown. The hole is plotted as it was intended to be drilled; however, it is possible that it has actually deviated onto section 350 west. This swings the above mentioned intersection approximately into line with the Carbonate mineralized horizon, which is otherwise missing in this hole. Thus, while it cannot be stated definitively, it is probable that this intersection is actually located up to 50 feet east of where it is plotted, with a consequent northerly shift in position to compensate for the lateral deviation.
In summary, three main steeply dipping, sub-parallel veins have been identified. Two of these veins, called the Porphyry and Carbonate mineralized horizons, have been traced over strike lengths ranging up to 600 feet and to vertical depths of 800 feet. The horizontal distance between these two mineralized horizons varies from as little as 20 feet near surface at their western end, to a fairly consistent 120 feet at their eastern extremity as currently defined by drilling.
The third vein, called the Shaynee mineralized horizon, is virtually unexplored.
It is situated an average of approximately 180 feet south of the Carbonate mineralized horizon, which is the most southerly of the two mineralized horizons
mentioned previously.
The width of the individual quartz veins ranges from several inches up to in
excess of 10 feet, although they average about 2 - 3 feet in width, sometimes occurring in multiple sets with significant overall width. In many cases, they show
sharp contacts with the country rock; however, the gold values may continue outside the quartz veins for a limited distance. Occassionally, the character of the mineralized zones changes, consisting of wider zones of silicification and
carbonatization with quartz veinlets and stringers, resulting in substantially
improved widths.
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Of particular import are lenses of high grade gold-bearing material centered between 200 and 400 west above the 4800 foot elevation in both the Carbonate and Porphyry mineralized horizons. As indicated on the longitudinal sections, values within the Carbonate horizon range up to a spectacular 11.57 oz Au/9.2 feet true width within a shoot which consistently yields values greater than one ounce of gold per ton over substantial widths. The prospects of extending this high grade shoot to both the west and east are excellent, as considerable gaps in the drill pattern exist. A second high grade lense is present in the Carbonate mineralized horizon at about the 4650 foot elevation from 0+00 to 200 west. This shoot contains values up to 1.478 oz Au/ton over a true width of 23.0 feet and it remains open to the east.
Values within the high grade shoot between 200 west and 400 west above the 4800 foot elevation in the Porphyry mineralized horizon range up to 5.816 oz Au/ton over a true width of 5.2 feet within a lense which consistently yields values greater than 0.4 oz Au/ton. A second high grade lense in the Porphyry horizon is situated between 200 to 400 west from the 4600 to 4800 foot elevation with values ranging up to 7.300 oz Au/ton over a true width of 5.2 feet. This lense remains open to the west although it will ultimately be truncated by the Edwards-Cline Shear Zone in this direction. A third high grade shoot in the Porphyry horizon is centered at 100 west at the 4400 foot elevation. In this lense values range up to 1.157 oz Au/ton over a true width of 10.9 feet within a broad area which consistently yields values in excess of 0.3 oz Au/ton. This lense is open at depth.
It is felt that not only is it premature to cut assays at this stage of the exploration process, but also that the generally consistent nature of the intersections within these high grade shoots lends creedence to their size, continuity and gold content.
While an ore reserve estimate has not yet been undertaken,' a sufficiently detailed data base has been established to allow these calculations to proceed. Subject to the corporate aims of Spirit Lake Explorations Limited, the scope of the ore reserve study could provide direction as to determining the course of further
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work. Specifically, this study could assist in choosing whether additional surface drilling to extend the mineralized vein systems or an underground exploration
program to test zone continuity and mineability is the more appropriate route to advance exploration and development of the property. As the majority of the data have been digitized, in depth computer generated reserves could be employed to achieve various reserve scenarios incorporating varying cut-offs and mining width parameters.
6.0 CONCLUSIONS
The results of the two-phase, 30-hole drilling program totalling 19,378 feet conducted between November, 1989 and April, 1990, are very positive. Many significant and a number of spectacular gold intersections were obtained. These results have confirmed and enhanced the overall economic potential of the property by extending the three main mineralized horizons in all directions and by demonstrating the three dimensional continuity of these horizons.
The Porphyry mineralized horizon is remarkably consistent both laterally and vertically despite its often narrow width. It has been traced over a distance of 600 feet and to a vertical depth of 750 feet. The horizon strikes 1150 at its western extremity, becoming tightly buckled from 300 W to 175 W before swinging to a fairly consistent 1400 strike along its eastern extension. The dip is somewhat variable, but generally steeply north. As is apparent on the longitudinal section, the Porphyry mineralized horizon remains open to the west of section 400 west
up to the shear zone, at depth, and to the east below the 4700 foot elevation. Overall, the mineralized horizon exhibits a steep easterly plunge, with some
evidence of cross plunge zonation.
The Carbonate mineralized horizon has been traced intermittendly from section
450 west to section 150 east and to a vertical depth of 850 feet. It is less well
defined than the Porphyry mineralized horizon and appears to be slightly more sinuous in character; however, it is generally parallel or sub-parallel to the
Porphyry mineralized horizon. The Carbonate mineralized horizon also appears
JAMES VAdE ElMqiNEERiNQ Ltd
ll 'l*.l l l l l i i i i i i i i i i i i
20
to exhibit an easterly plunge with strong cross plunge zoning. It remains open west of 450 west up to the shear zone, east of O H-00 and at depth to the east.
The Shaynee mineralized horizon is situated approximately 180 feet south of the
Carbonate mineralized horizon and it is oriented sub-parallel to it based on the limited information available from this vein to date. It has been traced over a
strike length of approximately 200 feet and a vertical extent of about 200 feet, but as it has only been penetrated by 10 drill holes, it remains virtually untested.
A sufficiently detailed data base has now been established to allow the calculation of an ore reserve estimate on the Spirit Zone.
8.0 RECOMMENDATIONS
It is obvious that the Spirit Lake Jacobson Township property is of merit and warrants further work. While the scope of this work will be subject to the corporate objectives of Spirit Lake Explorations Limited, it is recommended that
either of the following scenarios represent the logical next step in advancing the exploration of the Spirit Zone and furthering the demonstration of its economic potential:
1. Consideration should be given to conducting an underground exploration
program to test the mineability of the known zones specifically targeted on the high grade lenses within the Carbonate and Porphyry mineralized
horizons between 200 west and 400 west above the 4800 foot elevation.
2. Consideration should be given to additional step-out drilling both laterally and at depth in order to expand the reserve base.
In order to provide direction in accessing the above options, it is recommended
that an ore reserve study be carried out.
JAMES Wwk EfjqiNEERlNq Ltd.
21
These two exploration approaches are not mutually exclusive and ultimately could be carried out concurrently at the discretion of the Cqmpajny. | If the underground \ exploration option were^tp^bfejchosen, it is recommended that a limited amount of close-spaced drilling be performed within the high grade target areas in order to further confirm and enhance them. This work would involve 10 drill JioleSj approximating 2225 feet, fit is also reconimenHeonhal^nfeeholes totalling 1150
feet be drilled to extend the high grade lense in/ the Carbonate mineralizedfitfr'"' f?'~~ x **-"*.* *v,*.~/ jvn.e'Hi.horizon which is open to the east of 0+00 between the 4650 and 485Moot elevations. Finally, it is also proposed to test the western extension of high gradelenses in both the Porphyry aaeb Carbonate mineralized horizons, which are both
v ' UW *^o M k open to the west of 400 west between the 46QO*md-4?Q(MQOt elevation* with oaer "il'V 4 .tl.,A~ a-jroo .Jwrote.
drill holeShaving a" planned length of-S5fHeet. The total program would thusY ^oc-fc,
involvexl4)drill holes encompassing some-4225-feet. It is recommended that all pulps be retained and that all rejects of mineralized intersections also be kept. This is important both for check assaying as well as preliminary metallurgical test work. Further, selected samples should be assayed for silver, as to the author's knowledge, no analyses for this element have yet been undertaken. Consideration should also be given to carrying out detailed geological mapping of the property.
June 19, 1990 Toronto, Ontario
William S. Hamilton, F.G.A.C.
.k
JAMES Wide EisqiNEERiNq Lid.
ll SEl l l l l l l l l l l l l l l l l
22
CERTIFICATE OF QUALIFICATIONS
I, William S. Hamilton, of 459 Millwood Road, Toronto, Ontario, do hereby certify that:
1. I am an employee of James Wade Engineering Ltd.
2. I am a graduate of Mount Allison University, B.Sc. (Geology) 1973.
3. I have practised my profession continuously since graduation.
4. I am familiar with the Spirit Lake property having made site visits in November and December, 1989 and February, 1990 and having worked in
the general Wawa area since 1984.
5. I do not have, nor do I expect to receive any interest, direct or indirect in the property or in the securities of Spirit Lake Explorations Limited.
6. This report is based on my observations in the field and on technical data supplied by Spirit Lake Explorations Limited.
7. I am a Fellow of the Geological Association of Canada.
Toronto, Ontario June 19, 1990
William S. Hamilton;
JAMES Mde bd.
Dh'AM 1AM
N.VII
UAGINO ; VINE
iorr.1,',UKX
t K KB
FINAN TWP. , JACOBSON TWP.
MA*
' ' PMX ' f -.;: HOCK,--'', s ™X*™R ^ y /SO3 .,/S (-s,~*?A"!*-"\^\S'^'^
poplar and birch with alders present in the low areas. The north
ern part of the property has been lumbered and replanted with Jack
Pine.
The low areas are swampy and this will hinder the movement
of heavy equipment in the summer.
Resources ;
The Great Lakes high tension power line crosses the prop
erty. Telephone service to the area has been extended to the-
Canamax and Magino mine sites to the west of the Edwards property.
The local villages of Dubruilville, Lochalsh and Ooudreau
can be counted on for minor supplies, some labour and housing.
The planned road (Ont. Government) from the area to Wawa would
improve the availability of labour, housing and supplies for the
mining developments.
There appears to be adequate water in the area for mining
purposes.
The Claims;
The property consists of 45 claims located in the central
part of Jacobson Township (formerly Twp 48) in the District of..*. r^-"~' O,-,,. -JAlgoma, Northern Ontario.
Four of these claims are patented and 41 claims are stak
ed. All of the required assessment work has been completed on the
staked claims.
Production royalties are payable on the claims purchased
from Superior Northwest Inc. and Loydex Resources Inc.
(i)
SUMMARY
This report has been prepared at the request of Dr. John A. Hansuld, President of Spirit Lake Exploration Limited. It describes the results and interpretation of a 30-hole diamond drill program totalling 19,378 feet completed on Spirit Lake's Jacobson Township gold property and presents recommendations for a follow-up exploration program. The drill program was conducted in two phases commencing in November, 1989 and terminating in April, 1990.
The objectives of the drill program were primarily to improve confidence levels in vein continuity and to define structural controls governing the distribution of gold mineralization in an area of enhanced economic potential situated in the central portion of the Spirit Zone, to expand tonnage by extending the known zones both laterally and vertically, as well as to establish a sufficiently detailed data base to permit preliminary ore reserve calculations. Also, four drill holes were targeted at 25-foot centres in a diamond pattern in order to extend a spectacular zone assaying 11.57 oz Au/ton over 10.6 feet intersected in drill hole 89-101.
In all instances the program was very successful, with a significant improvement in the confidence of zone continuity as well as an impressive enhancement in the overall economic potential of the deposit. The mineralized vein systems remain open both laterally and at depth.
Many significant and a number of spectacular gold intersections were obtained from this drilling program. Three principal mineralized horizons of gold-bearing mineralization have been identified within the Spirit Zone to date. These have been named the Porphyry, Carbonate and Shaynee mineralized horizons. Both the Porphyry and Carbonate mineralized horizons have been traced over a strike length of 600 feet and to a vertical depth of approximately 800 feet. The Shaynee mineralized horizon has only been intersected by 10 drill holes, hence it remains virtually untested.
JAMES Lid.
,l,* (ii)
SUMMARY (cont'd)
These vein systems constitute an attractive target which merit further work. Depending on the corporate objectives of Spirit Lake Explorations Limited, this work could take the form of either an underground exploration program to test the mineability of high grade lenses in both the Carbonate and Porphyry mineralized horizons above the 4800 foot elevation between 200 west and 400 west or a further diamond drilling program to extend the vein systems both laterally and vertically and hence expand tonnage. It is recommended that a preliminary ore reserve study be undertaken, the scope of which would aid in determining the thrust of future exploration on the property.
JAMES \Mtde ENqtacRiNQ Lid.
3.0 GEOLOGICAL SETTING
3.1 General Geology
The Spirit Lake Property is situated in the Goudreau-Lochalsh area of the Wawa Greenstone Belt which represents a major succession of supracrustal rocks of the Archean Superior Structural Province. The Wawa Greenstone Belt is comprised of several cycles of volcanic activity as well as a series of sedimentary rocks called the Dore Group. In the vicinity of the claim group, the area is underlain by basal Cycle II felsic volcanics which are overlain by sedimentary rocks consisting substantially of Algoma type iron formation. The sedimentary rocks are in turn overlain by Cycle HI mafic volcanics. Felsic to intermediate intrusive rocks are believed to be related to gold deposition.
3.2 Structural Geology
The Spirit Lake deposit is situated within the regionally extensive Goudreau Lake Deformation Zone (GLDZ) as defined by mapping by the Ontario Geological Survey. The past producing Cline Gold Mine and the Murphy Lake Gold Mine as well as the currently producing Kremzar and Magino Mines are also associated with the GLDZ.
Hematite and epidote represent the predominant alteration minerals in the area. Silicification, sercitization and pyrite mineralization are restricted to the deformation zone, along with chlorite, calcite and iron carbonate.
Structural controls are very important in both the localization of gold-bearing vein systems as well as in the distribution of gold mineralization within the vein systems.
Dominant structural trends in the GLDZ are 1000 and 0700.
JAMES \Vfcde Lid
3.3 Mineralization
Two major mineralized vein systems - called the Edwards and Spirit Zones - are known on the property. They consist of multiple en echelon quartz veins containing tine granular gold.
The gold-bearing quartz veins are developed in tension fractures spatially associated with the Edwards-Cline Shear Zone. The shear zone strikes east- west and dips 550-650 north. Both the Cline and the Edwards Deposits are located on the north side of this shear zone, whereas the Spirit Zone is situated to the south. Zones defined to the north of the shear zone are terminated by it at depth. One of the better defined veins in the Spirit Zone exhibits a distinct spatial association with a felsic porphyry unit which suggests that the vein systems developed approximately parallel to the host stratigraphy along contacts and other zones of weakness. The strike of the Spirit Zone quartz veins is variable, ranging from 1000 to ISO0 and averaging 1200, with considerable buckling apparent in the central portion of the currently drilled area. Dips are generally steeply north, with local swings to the vertical or very steeply south. This south-southeast strike direction corresponds to one of the dominant structural trends defined by the Ontario Geological Survey. The veins intersect the Edwards - Cline Shear Zone at an oblique angle and are terminated by it to the west along a northwest trending plunge line.
3.3.1 Edwards Zone
This zone was discovered in the 1920's and in the mid 1930's was developed via an inclined shaft sunk at a dip of -IT to a depth of 300 feet. Lateral work on three levels amounted to approximately 2500 feet. A small mill was erected and processed 3243 tons or ore of which 1670 tons were extracted from the Edwards Zone and a further 1573 tons were obtained from unknown sources. Average recovered grade was 0.31 ounces of gold per ton.
IAMCI V&de lid,
CONCLUSIONS
The results of the two-phase, 30-hole drilling program totalling 19,378 feet conducted between November, 1989 and April, 1990, are very positive. Many significant and a number of spectacular gold intersections were obtained. These results have confirmed and enhanced the overall economic potential of the property by extending the three main mineralized horizons in all directions and by demonstrating the three dimensional continuity of these horizons.
The Porphyry mineralized horizon is remarkably consistent both laterally and vertically despite its often narrow width. It has been traced over a distance of 600 feet and to a vertical depth of 750 feet. The horizon strikes 1150 at its western extremity, becoming tightly buckled from 300 W to 175 W before swinging to a fairly consistent 1400 strike along its eastern extension. The dip is somewhat variable, but generally steeply north. As is apparent on the longitudinal section, the Porphyry mineralized horizon remains open to the west of section 400 west up to the shear zone, at depth, and to the east below the 4700 foot elevation. Overall, the mineralized horizon exhibits a steep easterly plunge, with some evidence of cross plunge zonation.
The Carbonate mineralized horizon has been traced intermittendly from section 450 west to section 150 east and to a vertical depth of 850 feet. It is less well defined than the Porphyry mineralized horizon and appears to be slightly more sinuous in character; however, it is generally parallel or sub-parallel to the Porphyry mineralized horizon. The Carbonate mineralized horizon also appears
JAMCV Wuk bd.
J 20
to exhibit an easterly plunge with strong cross plunge zoning. It remains open west of 450 west up to the shear zone, east of 0+00 and at depth to the east.
The Shaynee mineralized horizon is situated approximately 180 feet south of the Carbonate mineralized horizon and it is oriented sub-parallel to it based on the limited information available from this vein to date. It has been traced over a strike length of approximately 200 feet and a vertical extent of about 200 feet, but as it has only been penetrated by 10 drill holes, it remains virtually untested.
A sufficiently detailed data base has now been established to allow the calculation of an ore reserve estimate on the Spirit Zone.
8.0 RECOMMENDATIONS
It is obvious that the Spirit Lake Jacobson Township property is of merit and warrants further work. While the scope of this work will be subject to the corporate objectives of Spirit Lake Explorations Limited, it is recommended that either of the following scenarios represent the logical next step in advancing the exploration of the Spirit Zone and furthering the demonstration of its economic potential:
1. Consideration should be given to conducting an underground exploration program to test the mineability of the known zones specifically targeted on the high grade lenses within the Carbonate and Porphyry mineralized horizons between 200 west and 400 west above the 4800 foot elevation.
2. Consideration should be given to additional step-out drilling both laterally and at depth in order to expand the reserve base.
In order to provide direction in accessing the above options, it is recommended that an ore reserve study be carried out.
JAMES VAdc ENqiNECRhq Lid
The two exploration approaches are not mutually exclusive and ultimately could.V
be carried out concurrently at the discretion of the Company. If the underground exploration should be carried out, it is nevertheless recommended that a limited amount of surface drilling be performed in the vicinity of near surface high grade target areas in order to further confirm and extend them. This work would involve 10 drill holes totalling 5150 feet and it is designed to test the following areas:
Four holes totalling 1350 feet to test the extension of the high grade lense in the Carbonate mineralized horizon which is open up dip from 0+00 eastward between the 4650 elevation and surface.
Three holes totalling 1100 feet to extend the near surface high grade lenses in both the Carbonate and Porphyry mineralized horizons to the east.
Three drill holes totalling 2700 feet to test the western extension of high grade lenses in both the Porphyry and Carbonate mineralized horizons which are both open below the 4700 elevation. These holes will also penetrate the Shaynee mineralized horizon which is virtually untested to date.
Specifics of the proposed drill program are as follows:
Planned Elevation Elevation Elevation Location Pip Length Of Porphyry of Carbonate of Shaynee
It is recommended that all pulps be retained and that all rejects of mineralized intersections also be kept. This is important both for check assaying as well as preliminary metallurgical test work. Further, selected samples should be assayed for silver, as to the author's knowledge, no analyses for this element have yet been undertaken. Consideration should also be given to carrying out detailed geological mapping of the property. The cost of the surface drilling portion of the proposed program is estimated at S140,000 (5150' @ SZS/ft. plus Si 1,250 contingency).
The proposed underground exploration program has not been costed in detail; however, the following budget estimates are provided:
BUDGET ESTIMATE
Item Puration
Site Preparation 3 months Site Installations (headframe
As many aspects of the underground exploration program will proceed concurrently, the overall time frame to complete the program outlined above is estimated at 12 months.
All of the patented claims are subject to a l 1/2* net smelter return (NSR) production royalty. A purchase clause is Included in the agreement.
STAKED CLAIMS
The claims SSM 924602 to 924613 inclusive are subject to a l 1/2* NSR production royalty. An advance minimum royalty of S7,500 is payable starting on November 9, 1989.
The other staked claims have no overriding royalties to be paid.
VERTICAL CROSS SECTIONS(3 Sections: 350 W, 200 W and 50 W)
VERTICAL LONGITUDINAL SECTIONS(3 Sections: Porphyry, Carbonate and Shaynee Horizons)
APPENDIX I: Audit of Ore Reserves by Jaman Patel
JAMES W\de ENqiNEEiwq Lid.
li SElllliiilllillllii
(O
SUMMARY
The Edwards property of Spirit Lake Explorations Limited is situated in Jacobson Township, Sault Ste. Marie Mining Division, near Wawa, Ontario and it consists of 41 unpatented and 4 patented mining claims encompassing approximately 1800 acres.
Gold was discovered on the property in 1924 - 25 and exploration has been carried out intermittently since that time. During 1936 - 37, underground development and limited mining were undertaken by Edwards Gold Mines Ltd.
Spirit Lake Explorations Limited became involved with the property in 1986. Since then, the Company has explored limited portions of the claim block by geophysical surveying, basal till sampling, mechanical stripping, geological mapping, rock sampling and diamond drilling. To date, 126 holes have been drilled totalling 73,648 feet. Initially the drilling was targeted on the Edwards Mine area; however, the emphasis later shifted following the discovery of a new vein system called the Spirit Zone, located 600 feet southwest of the Edwards shaft.
Many significant and numerous spectacular gold intersections were obtained from the drilling program. The gold occurs in its native form in quartz.veins which range in width from several inches up to in excess 10 feet, sometimes occurring in multiple sets with significant overall width. Three principal horizons of gold- bearing mineralization have been identified within the Spirit Zone to date. These have been named the Porphyry, Carbonate and Shaynee mineralized horizons. Both the Porphyry and Carbonate mineralized horizons have been traced over a strike length of 600 feet and to a vertical depth of approximately 800 feet. The Shaynee mineralized horizon has only been intersected by 10 drill holes, hence it remains virtually untested.
JAMES WK)E ENqiNEEniiMq Lid.
l l l l l l l l l l l l l ll l l l l
(U)
Spirit Lake Explorations Limited have calculated a mineral resource inventory on the Spirit Zone using a cross sectional method. This work has been audited by Mr. Jaman Patel on behalf of James Wade Engineering Ltd. Using a cut off grade of 0.100 oz Au/ton over a minimum five foot true width the uncut and undiluted mineral resource inventory of the two principal vein systems is as follows:
ZonePorphyryCarbonate
Tons78,40051,100
Grade0.9630.936
TOTAL 129,500 0.953
These veins constitute an attractive target which merit further work. It is proposed to carry out a limited surface diamond drilling program totalling 5600 feet in 11 holes to confirm and extend several high grade lenses in both the Porphyry and Carbonate mineralized horizons, as well as to further test the Shaynee vein. In conjunction with this work, it is proposed to carry out an underground exploration program utilizing the existing Edwards shaft to permit detailed underground drilling of both the Carbonate and Porphyry mineralized horizons. This work would involve site preparation, equipment installation, dewatering, rehabilitation of both the shaft and the third level, 1000 feet of drifting and 15,000 feet of underground drilling. The total cost of this program is estimated at 52,330,000.
JAMES WKJE ENqiNEERlNq Lid.
111111111111111
,/n; 1
1,0 INTRODUCTION
This report has been prepared at the request of Mr. Dale M. Hendrick, VicePresident - Operations of Spirit Lake Explorations Limited. It describes theresults and interpretation of an extensive surface diamond drill program on SpiritLake's Jacobson Township gold property. To date, 126 holes have been drilledtotalling 73,648 feet.
2.0 PROPERTY DESCRIPTION
The property consists of four patented and 41 unpatented claims situated in theSault Ste. Marie Mining Division, near Wawa, Ontario. The claim group coversapproximately 1800 acres. The property location is illustrated on RegionalLocation Plan, Location Plan and Claim Map, all of which are attached. Excellentaccess is provided by an all weather gravel road which traverses the property. Apower line also transects the claim group.
3.0 PRODUCTION HISTORY
The production history of the Goudreau-Lochalsh area of the Wawa GreenstoneBelt is summarized as follows:
Grade GradeProduction (oz/Au/ Reserves (ozAu/
Mine Current Owner Period (Tons1) ton) (Tons') (ion}
The Edwards Property is situated in the Goudreau-Lochalsh area of the Wawa Greenstone Belt which represents a major succession of supracrustal rocks of the Archean Superior Structural Province. The Wawa Greenstone Belt is comprised of several cycles of volcanic activity as well as a series of sedimentary rocks called the Dore Group. Regionally, the area is underlain by basal Cycle II felsic volcanics which are overlain by sedimentary rocks consisting substantially of Algoma type iron formation. The sedimentary rocks are in turn overlain by Cycle III mafic volcanics. The property is predominantly underlain by an assemblage of mafic lavas of the third cycle.
4.2 Structural Geology
The Spirit Lake deposits are situated within the regionally extensive Goudreau Lake Deformation Zone (GLDZ) as defined by mapping by the Ontario Geological Survey. The past producing Cline Gold Mine and the Murphy Lake Gold Mine as well as the currently producing Muscocho/McNellan-Magino Mine and recently shut down Canamax-Kremzar Mine are also associated with the GLDZ. The Cline Gold Mine is of special import as it is immediately east of the Edwards property and associated with the Edwards-Cline Shear Zone. Structural controls are very important in both the localization of gold-bearing vein systems as well as in the distribution of gold mineralization within the vein systems. Dominant structural trends in the GLDZ are 1000 and 0700.
4.3 Mineralization
Two principal mineralized vein systems, the Edwards and the Spirit Zones, are located north and south respectively of the east-west striking, northerly dipping
JAMES Wvde ENqiNEERlNq Lid.
li HEiiiiiiiiiiliilill
(600) Edwards-Cline Shear Zone. The Edwards-Cline Shear Zone is a major regional shear structure that, to the north, terminates the Edwards and Cline gold deposits. The Spirit Zones (Porphyry, Carbonate and Shaynee) occur to the south, beneath the Edwards-Cline Shear Zone, striking 1200 and dipping steeply north. The vein systems intersect the Edwards-Cline Shear Zone at an oblique angle to the west along a northwest trending plunge line.
4.3.1 Edwards Zone
This zone was discovered in the 1920's and in the mid 1930's was developed via an inclined shaft sunk at an angle of -IT to a depth of 300 feet. Levels were established at vertical depths of 96 feet, 189 feet and 289 feet and lateral work on these three levels amounted to approximately 2500 feet developing four erratic and deformed gold-bearing veins. A small mill was erected and processed 3243 tons of ore of which 1670 tons were extracted from the Edwards Zone and a further 1573 tons were obtained from unknown sources. Average recovered grade was 0.31 ounces of gold per ton. The third level extends to within 230 feet from the Porphyry mineralized horizon and 365 feet from the Carbonate vein system.
4.3.2 Spirit Zone
The zone is located 600 feet southwest of the Edwards Zone shaft. It was discovered by drilling in 1988 and has subsequently been tested by 61 drill holes. The steeply dipping zones are located south and in the footwall of the north dipping Edwards-Cline Shear Zone, implying significant tonnage potential with depth.
Three principal sub-parallel vein systems, the Porphyry, Carbonate and Shaynee, have been identified to date in the Spirit Zone. The Porphyry and Carbonate mineralized horizons have been traced over strike lengths ranging up to 600 feet and to vertical depths of 800 feet. The horizontal distance between these two
JAMES VAde ENqiNEERJNq Ltd.
ll 31lllllllllllllllll
mineralized horizons varies from as little as 20 feet near surface at their western end, to a fairly consistent 120 feet at their eastern extremity as currently defined by drilling. Examples of assay results from these zones are as follows:
Core Hole No. Section From To Width oz Au/ton Zone
The Shaynee mineralized horizon is virtually unexplored. It is situated an average of approximately 180 feet south of the Carbonate mineralized horizon, which is the most southerly of the two mineralized horizons mentioned previously. Based on the limited data available to date, it appears to be oriented essentially parallel to the Carbonate and Porphyry mineralized horizons. Significant assay results from the Shaynee Zone are as follows:
Core Hole No. Section From To Width oz Au/ton Zone
89-104 200 W 542.8' 546.2' 3.4' 0.948 Shaynee89-124 300 W 528.0' 536.0' 8.0' 0.405 Shaynee89-125 350 W 484.0' 491.0' 7.0' 0.753 Shaynee89-126 350 W 335.0' 343.0' 8.0' 0.191 ShayneeIn summary, the three vein systems dip steeply, generally to the north. The structural characteristics of the veins are displayed on the Geological Schematic Plan, the drill hole cross sections (Sections 350 W, 200 W and 50W), as well as the three longitudinal sections, all of which are attached to this report. With respect to the cross sections, assay values are reported over core widths, whereas on the longitudinal sections true widths are employed, with intersections expanded as necessary to a minimum five-foot true width. The width of the individual quartz veins ranges from several inches up to in excess of 10 feet, although they average 2 - 3 feet in width, sometimes occurring in multiple sets with significant overall width. Occasionally, the character of the mineralized zone changes, consisting of wider zones of silicification and carbonatization with quartz veinlets and stringers, resulting in substantially improved widths.
JAMES VAck EisiqiNEERlNq Lid
NEW NORTH HORIZON AT THE 3001
\ ltd
-600 S
\ s \ \GEOLOGIC; SCHEMA TitJACOBSON TWP. PROPERTY
^™ \\•w ^ ^A 200 N —
^ \:
UAF1C VOLCANICS
PORPHYRY HORIZON AT THE 300- LEVEL
CARBONATE HORIZON AT THE 300* LEVEL
HORIZON AT THE 900' LEVEL
600 8-
uol
N?\\\\\\\\V \\\\ 200 S—
100 60 O tooFEET
EXPLORATIONS LIMITED
IxL
SHAYNEE HORIZON
4800 EL 0.191 DZ/T
7.0 FT.
CARBONATE HDRI:
SECTION 350 W
LEGEND
EOVARDS/CLINE SHEAR ZONE
FELSIC PORPHYRY UNIT
4800 EL
—— — PROJECTED MINERALIZATION
MINERALIZATION
ORE GRADE MINERALIZATION (GRADE WIDTH ) 1.0 DZ FT.) USED FOR GEOLOGICAL RESERVES
4400 EL
l
in
l
EXPLORATIONS LIMITED
OCJfl JAMO Wtcfe Lid.
4800 EL
SHAYNEE HORIZON
4400 EL
z
g
SECTION 200 V
4600 EL
LEGEND
EDVARDS/CLINE SHEAR ZONE
FELSIC PORPHYRY UNIT
PROJECTED MINERALIZATION
MINERALIZATION
ORE GRADE MINERALIZATION ^ADE VIDTH ) tO OZ FT,) USED FOR GEOLOGICAL RESERVES
Spirit JCake-EXPLORATIONS LIMITED
JAMES Wwie Ud.
SECTION 50 W
PORPHYRY HORIZON \ \
C-1 HORI20N
LEGEND
EOWARDS/CLINE SHEAR ZONE
FELSIC PORPHYRY UNIT
— — PROJECTED MINERALIZATION
MINERALIZATION
DRE GRADE MINERALIZATION (GRADE WIDTH ) 1.0 OZ FTJ USED FOR GEOLOGICAL RESERVES
EDWARDS U1NE WORIONOS
ri Cake-EXPLORATIONS LIMITED
JAMES N*de Lad.
APPROXIMATE SURFACE OF BEDROCK ...J?.EDWARDS MINE WORKINGS
— 4800 EL
——4400 EL
PORPHYRYHORIZONLONGITUDINAL
LEGENDCONTOUR LINES OZA*Ft (ORADC*WID7H)
SHADINO
4800 EL——
* ASSAY INTERSECTIONS > 1.0 Au (APPEARS AS GRADE/WIDTH)
A ASSAY INTERSECTIONS < 1.0 Au 0Z/M* (NO ASSAYS li WIDTHS SHOWN)
m PROPOSED Drea HOLE INTERSECTIONS
tOO 60 100
FEET
EXPLORATIONS LIMITED
Lad.
APPROXIMATE SURFACE OF BEDROCK n EDWARDS MINE WORKINGS
— 4800 EL.
•4400 EL
CARBONATEHORIZONLONGITUDINAL
5
LEGENDCONTOUR UNES OZ/Wt SHADING (ORADE.WOTH)
^^__l L.--
1.00
2.00!
5.00
10.00:
20.00
30.00
OVER
4800 EL-
A ASSAY INTERSECTIONS > 1.0 Au (APPEARS AS GRADE/WIDTH)
O ASSAY INTERSECTIONS < 1.0 Au (NO ASSAYS * WIDTHS SHOWN)
U PROPOSED DRILL HOU INTERSECTIONS
100 50 O 100
FEET
7/rff jCafce-EXPLORATIONS LIMITED
JAMB V*cfa Ud.
f] EDWARDS HINE WORKINGS
l ll ll i
J L-...-,l
. _ __ _ J
*
LEGENDCONTOUR UNES (GRADE*WIOTH)
SHADING
1.00
2.00:
5.00
10.00:
20.00:
30.00:OVER
9 ASSW INTERSECTIONS > 1.0 Au OZ/M7*(APPEARS AS GRADE/WIDTH)
O ASSAY INTERSECTIONS < 1 .0 Au OZ/Ttn(NO ASSAYS * WIDTHS SHOWN)
M PROPOSED DRia HOU INTERSECTIONS
4600 EL.-
too so 100
FEET
^Spirit Cake-EXPLORATIONS LIMITED
Lad.
APPROXIMATE SURFACE OF BEDROCK
— 4*00 Q-
— 4400 EL
SHAYNEE HORIZON LONGITUDINAL
l l l l l l l l l l l l l l l l l l l
5.0 MINERAL RESOURCE ESTIMATE
Spirit Lake Explorations Limited have calculated a mineral resource inventory on the Spirit Zone. They requested James Wade Engineering Ltd. to audit their work and this was performed by Mr. Jaman Patel. A copy of his report is attached as Appendix I and hence only the salient features are discussed below. Mr. Patel briefly reviewed the geological aspects of the deposit from cross sections and drill logs and checked the interpretations, calculations and methods. To paraphrase Mr. Patel:
The drill results were plotted on cross and longitudinal sections. Spirit Lake have used the following parameters to calculate the resource using a cross sectional method and plotting the blocks on the longitudinal sections at 25 and 50 foot section intervals.
"The parameters applied to the resource calculations are:
1. The assay values are not cut.
2. The drill hole values are generally projected half way to the next hole on the section and half way to the adjacent sections. As a result, some of the blocks are quite large in the dip direction.
3. A minimum width of 5 feet (true) is used. The ore intersections vary from l foot to 24 feet. A cut off grade of .1 oz Au/ton over 5 feet minimum width is used in the calculations.
4. All the intersection widths are true widths, but the heights of the blocks used are vertical. As the dip of the veins in most part is interpreted to be 850, this will make little difference in adding tonnage to the resource inventory.
5. A tonnage factor of 12 cu ft/ton is used in the calculations.
Using the above, tonnage and grade of each block in the two veins are averaged to arrive at a total of 129, 500 tons and .953 oz An/ton uncut and undiluted grade. A mineral resource calculation of Shaynee zone, from the long section gave 8,842 tons grading .377 oz Au/ton. This zone is not sufficiently drilled yet."
JAMES WUJE ENqiNEER&sq Lid.
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"The majority of the intersections used in the resource calculations contain high grade values over one oz/ton Au, some of which are of much higher grade. And, as nugget effect in this type of deposit is expected, a level to which the high grade assays should be cut needs to be established."
It should be pointed out that the drilling on vertical sections is not on a consistent spacing and the spacing between drill holes is too wide for this type of free gold, high grade intersections. To improve confidence, the drill spacing should not be greater than 50 feet.
"Internal waste or low grade sections are not included and therefore the higher grade blocks give somewhat checkerboard appearances. It would be prudent to include internal waste or low grade blocks when estimating a mineable grade.
All in all, the project is an exciting gold play with a potential for a high grade minable deposit. The work so far is satisfactorily recorded and drafted."
6.0 CONCLUSIONS
The results of the 126-hole drilling program totalling 73,446 feet are very positive. Many significant and numerous spectacular gold intersections were obtained. These results have confirmed and enhanced the overall economic potential of the property by extending the three main mineralized horizons in all directions and by demonstrating the three dimensional continuity of these horizons.
The Porphyry mineralized horizon is remarkably persistent both laterally and vertically despite its often narrow width. It has been traced over a distance of 600 feet and to a vertical depth of 750 feet. The horizon strikes 1150 at its western extremity before swinging to a fairly consistent 1400 strike along its eastern extension. The dip is somewhat variable, but generally steeply north. As is apparent on the longitudinal section, the Porphyry mineralized horizon remains substantially open both laterally and at depth. Overall, the mineralized horizon exhibits a steep easterly plunge, with some evidence of cross plunge zonation associated with the Edwards-Cline Shear Zone.
JAMES \Vkde ENqiNEERiisq Ltd.
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The Carbonate mineralized horizon has been traced intermittently over a distance of 600 feet and to a vertical depth of 850 feet. It is less well defined than the Porphyry mineralized horizon and appears to be sub-parallel to it. The horizontal distance between the two vein systems varies from 20 feet at their western end to 120 feet at their eastern extremity as currently defined. The Carbonate mineralized horizon also appears to exhibit an easterly plunge with strong cross plunge zoning. It remains substantially open both laterally and vertically.
The Shaynee mineralized horizon is situated approximately 180 feet south of the Carbonate mineralized horizon and is oriented sub-parallel to it. It has been traced over a strike length of approximately 200 feet and a vertical extent of about 200 feet, but as it has only been penetrated by 10 drill holes, it remains virtually untested.
An inferred mineral resource has been calculated by Spirit Lake Explorations Limited and these figures and procedures were audited by Mr. Jaman Patel on behalf of James Wade Engineering Ltd. Using a cross sectional method and plotting the blocks on a longitudinal section, the uncut and undiluted inferred mineral resource of the Porphyry and Carbonate mineral horizons totals 129,500 tons grading 0.953 oz Au/ton, suggesting a gold inventory of 123,400 ounces.
7.0 RECOMMENDATIONS
The Spirit Lake Jacobson Township property is of merit and warrants further work. It is recommended that the following scenarios represent the logical next step in advancing the exploration of the Spirit Zone and furthering the demonstration of its economic potential:
1. Consideration should be given to additional step-out surface drilling both laterally and at depth in order to expand the reserve base.
JAMES VAde tod.
li SEiiiiiiilliiliiiil
8
2. Consideration should be given to conducting an underground exploration program to test the continuity and mineability of the known zones. This work could utilize the existing Edwards shaft and ancillary underground workings. The shaft is inclined to the north at an angle of -IT and development has been undertaken on three levels 96 feet, 189 feet and 289 feet vertically subsurface. The third level extends to within 230 feet from the Prophyry mineralized horizon and 365 feet from the Carbonate mineralized horizon.
The two exploration programs are not mutually exclusive and ultimately could be carried out concurrently at the discretion of the Company. This surface work would involve 11 drill holes totalling 5600 feet designed to test the following areas:
Five holes totalling 1800 feet to test the extension of the high grade lense in the Carbonate mineralized horizon which is open up dip to surface.
Three holes totalling 1100 feet to extend the near surface high grade lenses in both the Carbonate and Porphyry mineralized horizons to the east.
Three drill holes totalling 2700 feet to test the western extension of high grade lenses in both the Porphyry and Carbonate mineralized horizons which are both open below the 4700 elevation. These holes will also penetrate the Shaynee mineralized horizon which is virtually untested to date.
Specifics of the proposed drill program are as follows:
JAMES WACJE ENqiNEERJNq L?d.
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Planned Dip Length
Elevation Elevation Elevation Of Porphyry of Carbonate of Shaynee•' J
The proposed underground exploration program would involve site preparation and equipment installation, dewatering and rehabilitation of the shaft and third level. This level would then be extended to the southwest to a point midway between the Porphyry and Carbonate mineralized horizons. A drift would then be driven between these to veins in order to provide a base to carry out a 15,000 foot diamond drill program on both zones (i.e., 1500 feet per section on 10 sections in a ring pattern). (See attached Geological Schematic for proposed underground development layout.)
The proposed underground exploration program has not been costed in detail; however, the following budget estimates are provided:
As many aspects of the underground explorationconcurrently, the overall time frame toestimated at 12 months.
November 29, 1990Toronto, Ontario
10
Cost Estimate
S 123,2006.800
S 130,000
Cost Estimate
S 250,000
350,000300,000
100,000400,000300,000
300,000200.000
52,200,000
S2,330,000
program will proceedcomplete the program outlined above is
UJ(William
/n J,Mfo^fi^^S. Hamilton, F.G.AlC.
JAMES MCJE ENQINEEP Lid.
11
li* CERTIFICATE OF QUALIFICATIONS
lm I , William S. Hamilton, of 459 Millwood Road, Toronto, Ontario, do hereby ' certify that:
™ 1. I am an employee of James Wade Engineering Ltd.
B 2. I am a graduate of Mount Allison University, B.Sc. (Geology) 1973.
l 3. I have practised my profession continuously since graduation.
l 4, I am familiar with the Spirit Lake property having made site visits in— November and December, 1989 and February, 1990 and having worked inl the general Wawa area since 1984.
l 5. I do not have, nor do I expect to receive any interest, direct or indirect inthe property or in the securities of Spirit Lake Explorations Limited.
6. This report is based on my observations in the field and on technical data J supplied by Spirit Lake Explorations Limited.
J 7. I am a Fellow of the Geological Association of Canada.
l
ll Toronto, Ontario William S. Hamilton, FGAC
November 29, 1990
l l JAMES Wvde ENiNEERtoq Lid
li/K
APPENDIX I
JAMES WACJE ENqiNEEuiNq Lid.
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Audit of Ore Reserves Calculated by Spirit Lake Explorations Limited on their Gold Deposit in Jacobson Township Property
Spirit Lake Explorations Limited, following their last drill program have calculated an ore inventory on their gold deposit in Jacobson Township, Ontario. The writer of this report was asked to audit their work. The procedure followed and the parameters used in the calculations are listed below. The writer briefly reviewed the geological aspects of the deposit from the sections and drill logs, and checked the interpretations, calculations and methods. The writer's views are presented in the conclusions and recommendations.
As I feel that it is premature to categorize the tonnage and grade calculation as ore reserves, I will call it an inferred mineral resource.
SUMMARY
On the property, an earlier effort was made to mine the Edwards vein with an inclined shaft. Only 1610 tons were mined from the shaft at a recovered grade of .31 oz Au/ton. Following the discovery of a new zone in 1963, subsequent exploration programs have developed this property significantly.
Two major and other subsidiary sub-parallel veins are interpreted. The two main veins are the Porphyry and Carbonate veins. The Porphyry vein occurs within or adjacent to a porphyry dike and the Carbonate vein occurs in the foot wall of the porphyry dike, within the volcanics.
The mineralization is described as quartz stringers and veins related to tension fracturing associated with the Edwards-Cline shear zone. Gold occurs as very fine to fine granular native gold within the quartz veins. The majority of the sections with visible gold occurrences grade over one oz Au/ton and some spectacular ones are over 10 oz/ton Au.
JAMES VAde ENqlNEEniNq Ltd
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The highest assay is 39.73 oz Au/ton. Normally where there is no visible gold, the assays are lower.
RESOURCE CALCULATIONS
The drill results are plotted on cross and longitudinal sections. Spirit Lake has used the following parameters to calculate the resource using a cross sectional method and plotting the blocks on the long sections.
The parameters applied to the resource calculations are:
1. The assay values are not cut.
2. The drill hole values are generally projected half way to the next hole on the section and half way to the adjacent sections. As a result, some of the blocks are quite large in the dip direction.
3. A minimum width of 5 feet (true) is used. The ore intersections vary from l foot to 24 feet. A cut off grade of .1 oz Au/ton over 5 feet minimum width is used in the calculations.
4. All the intersection widths are true widths, but the heights of the blocks used are vertical. As the dip of the veins in most part is interpreted to be 85", this will make little difference in adding tonnage to the resource inventory.
5. A tonnage factor of 12 cu ft/ton is used in the calculations.
Using the above, tonnage and grade of each block in the two veins are averaged to arrive at a total of 129, 500 tons and .953 oz Au/ton uncut and undiluted grade.A mineral resource calculation of Shaynee zone, from the long section gave 8,842 tons grading .377 oz Au/ton. This zone is not sufficiently drilled yet.
JAMES VAck EwqiNEERlNq Lid.
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CONCLUSIONS AND RECOMMENDATIONS
My mandate was to audit the ore inventory calculated by the Spirit Lake Explorations Limited and as such I have examined the sections and verified the calculations. I feel a discussion on some of the points is in order to improve the reliability and confidence in the inferred resource necessary to take it a step further to drill indicated probable reserves and eventually proven ore reserves.
The majority of the intersections used in the resource calculations contain high grade values over one oz/ton Au, some of which are of much higher grade. And, as nugget effect in this type of deposit is expected, a level to which the high grade assays should be cut needs to be established. Even though the continuity of the high grade intersections is yet to be established, a preliminary figure derived from statistical calculations or an arbitrary figure of 2x the average uncut grade may be used.
The effect of the very high grade intersections on the total resource calculations is illustrated below.
In the Porphyry zone, only sk out of the 28 holes used in the resource calculations represent 289fc of the tons and 7296 of the gold.
In the Carbonate zone, four drill holes represent 2996 of the tons and 61.596 of the gold. The consequence of only some of these holes failing to line up is obvious.
The above reflects the necessity of establishing the continuity of high grade zones; without it the grade will drop significantly.
Confidence in outlining the Porphyry zone is higher due to its association with the dike, but the Carbonate zone is interpreted with much less confidence due to the lack of a marker horizon or other geological aids. It is concluded that Shaynee horizon is not sufficiently drilled off to include in the mineral resource at this time.
JAMES \Mvde ENqiNEERiisq Ltd
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\'l*\It should be pointed out that the drilling so far isspacing between drill holes is too wide for this type
4
not on a consistent spacing and theof free gold, high grade intersections.
To improve confidence, the drill spacing should not be greater than 50 feet.
Internal waste or low grade sections are not included and therefore the higher gradeblocks give somewhat checkerboard appearances. It would be prudent to include internalwaste or low grade blocks when estimating a mineable grade.
All in all, the project is an exciting gold play withdeposit. The work so far is satisfactorily recorded
A further program of surface drilling and/or an
a potential for a high grade minableand drafted.
underground exploration and bulksampling program is suggested. An underground exploration program will establish thecontinuity of mineralized veins and high grade ore values and aid in estimating miningdilution. The Edwards shaft, if useable, is the most economically convenient undergroundaccess method.
-5^
/^/^^\i S un*AJv PATFI f"\\^*ffi-
JamanralelOctober 5, 1990
JAMES WACJE EivqiNEEt
ll *
I, Jamnada (Jaman) Patel of 25 Ellsworth Avenue, Richmond Hill, Ontario, L4C 9N8 hereby certify that:
2. I am a graduate of the University of Poona, India with B.Sc. Hons. degree in geology. I also have a post graduate M.Sc. degree in Mining Geology and Mineral
m CERTIFICATE OF QUALIFICATIONS
l
lm 1 . I am a consulting geologist, president of Jaman Patel and Assoc. Inc.
l— Exploration from the University of Leicester, U.K.
— 3. I have practised my profession continuously since 1967 and as an independent l consultant since 1987.
l 4. This report is based on my review of the technical data supplied by Spirit Lake Explorations Limited.
5. I am a fellow of the Geological Association of Canada, a member of the Canadian f Institute of Mining and Metallurgy, and a Chartered Engineer and a member of
the Institute on Mining and Metallurgy of U.K.
6. I do not have nor do I expect to receive any interest, direct or indirect in the l property described in this report or the securities of Spirit Lake Explorations