The balloon burst for the juniors. A year before,
Skyline Gold put a mine into operation at Johnny
Mountain, the first of the Iskut Valley discoveries to
go. into production. After less than a year it shut
down, with a disappointing grade of ore that simply
wouldn’t pay the freight. The company hadn’t done
its homework on the ore body before jumping into
production, and that seems to have been an omen for
the rest.

- But two of the three B.C. mines that went into
production — and stayed in production — during
1991 were in the Northwest: Cominco’s find at the
low end of the Iskut River, Snip, and Westmin’'s
revival of the Silbak Premier-Big Missouri mine a
few kilometres north of Stewart. Both were small,
high grade ore bodies that had been thoroughly
explored and promised high return, low risk, short-
life mining.

With the Iskut Valley now staked from head-
water to tidewater and a firm picture of its geology
developed from thousands of drill holes, the junior
companies are concentrating on promising but
undefined ore bodies and the majors are playing an
increasingly important role in the area. Financing for
the juniors, however, has become increasingly hard
to come by.

What worked four years ago — high precious
metal content in the right kind of mineral context,

discovered through exploration and flogged on the

‘Vancouver Stock Exchange through the release of

drilling results — doesn’t cut it today, The risk of
investing in partially proven gold properties has, if
anything, gone up, but the potential for return is no
longer what it used to be. The cost of developing a
gold mine is more daunting than ever, with the
adverse terrain, transportation obstacles and the
responsibility for environmental safeguarding and
reclamation. But the price of gold has been stagnant
for years, meaning that there is a ceiling on the
potential return from even a spectacular ore body.

The actions of Placer Dome in the past six
months have reflected the sobriety that has come to
the stock exchange as a whole. The company wrote
off Mount Milligan and tried to pull out of Eskay
Creek, then, for Jack of a more attractive option,
bought into a direct ownership position to gain some
control over the development.

The trend for 1992 appears to be northward-
moving exploration by the juniors and cautious
appraisal of known gold-bearing ore bodies in the
Iskut area by the majors. A full feasibility study is
under way for Eskay; if it is a go, the mine will cost
over $200 million to develop. It will last eight years
and employ about 100 people.

Few of the discoveries become mines. The few
that do, however, reverberate loudly in the economy.

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B.C. Mining Week / Terrace Review — February 28, 1992