Murray Pezim ruled Howe Street during the 1980s heydays of the Vancouver Stock Exchange, and the Golden Triangle of northwestern B.C. was a favourite part of his domain. He muscled in on the Snip and Eskay Creek gold plays, both of which later became high-grade gold mines -- and made bucketloads of money for shareholders. But there were other Pezim gold plays that didn’t materialize. As junior mining experiences something of a revival, let’s take a closer look at one of them ...

The Inel area play started in 1983 when Skyline Explorations discovered one of the largest gold-silver-base metals occurrences in the modern era in B.C. The mineralized area -- measuring about 2,000 metres by 2,000 metres -- was outlined through scattered rock sampling.

Within this 1,000-acre area, detailed rock sampling uncovered a highly pyritized area of about 500 meters by 500 meters with values as high as 8.94 oz/tonne of gold (253 grams/tonne) across 16 feet. This 60-acre area represents about 250,000 tons per vertical foot.

The area is shaping up as a base-metals area with high gold and silver content. Although in a different geological setting, the amount of gold in the region is believed to be of the same order of magnitude as the 6.8 million ounces of lode gold mined from 1882 to 1959 in the Juneau area, some 150 miles to the northwest.

Drill holes in 1984 confirmed the discovery of the Inel but the property sat idle until a 50/50 joint venture was formed the following year with Gulf International Minerals Ltd, which staked the McLymont 1-4 claims. Originally staked by DuPont of Canada Exploration Ltd. in 1980 as the Warrior claims, DuPont encountered gold and silver-bearing quartz veins hosted by a quartz porphyry. Extensive mapping, geochemistry, and geophysics outlined several mineralized areas.

Although they appear narrow in width on surface, VLF-EM and soil geochemistry showed the zones may be more continuous than indicated by mapping. The crew drilled three holes to a depth of 100 feet, intersecting a 5-foot-wide quartz-pyrite chalcopyrite vein with average assays of 0.155 oz/t gold (4.39 g/t). The vein was traced for 1,500 feet with samples assaying from 0.255 oz/t (7.23 g/t) to 1.690 oz/t gold (47.9 g/t).

Kyle Resources Inc then entered into a joint venture with Gulf International Minerals Ltd (GIM) for more claims in the Inel target area.

In August 1987, Gulf brought in a small cat and later acquired more property (Mr. James McLeod reported Redwood has entered into an agreement with Gulf International to purchase a 100% interest in and to the Josh and Josh 2-4 mineral claims located in the Iskut River area, Liard mining division, B.C., subject to approval by the VSE.)

Finally, in late August 1987, Gulf International Minerals Ltd launched a drill program on the Inel zone target. Here are two of the historic news releases:

1987-09-16 -- To date, assays from one hole have been received which returned 9 feet of 1.28 oz/t gold (36.3 g/t) and 4 feet of .28 oz/t gold (7.9 g/t).

1987-10-27 -- Assaying has been very slow due to the large amount of samples in the assay labs. We are running 6-10 holes behind.

Further results included 13 feet of .820 oz/t gold in hole No. 25, 6.6 feet of 7.72 oz/t in hole No. 29 and 5 feet of 1.28 oz/t.

Out of the first few holes at the Inel property was born a high-grade gold discovery. Several holes were drilled with super-high-grade gold (Reference Canada Stockwatch news release records from 1987 to late 1990 on drill results). High-grade intercepts from .5 oz gold all the way to 94 oz/t were discovered in 192 surface and underground drill holes completed between 1984 and 1991. About 17,500 metres of drilling was completed, with 91-metre average drill holes, but only 6,500 metres was analyzed.

I suspect a lot of core was not assayed because they were looking for super-high-grade material, richer than today’s lower grades. Today 3 to 5 g/t is considered high-grade but in the old days of the late ‘80s they wanted .50 to 1 oz (14-28/g/t) gold grades to make a mine work. One drill hole had -- in today’s terminology -- 50 metres at 9 g/t throughout.

Then came the twist -- Murray Pezim wanted a piece of the action and his Avondale Resources Inc (AVD) joint-ventured the Inel property with Gulf International Minerals Ltd (GIM). AVD had to spend $10 million to earn their 50% interest, so off they went to drill a pile of holes that returned high-grade gold, with the last results coming out on 1990-11-20.

Seventeen days later, Avondale Resources abruptly terminated the deal with Gulf International. In a stunning turn of events, Pezim's Prime Equities entered negotiations with Gulf.

Now why all of a sudden did Avondale Resources drop the Inel property, only to have Murray Pezim come back and try to steal the property from Gulf through his Prime Equities? VERY STRANGE!!!

No deal was concluded. Fast-forward 26 years and Colorado Resources (CXO-V) has the Inel property. Colorado has consolidated all the properties in the area in tune 59 claims covering 30,504 ha and nobody in the area has see this kind of claim in the last 40 years.

Colorado Resources management includes some of the old boys from the days of Murray Pezim, with excellent track records of major discoveries. Executive chairman Larry Nagy was involved with the Snip and Eskay Creek high-grade gold discoveries.

I was a shareholder of CXO in 2015 and hoped for a drill program on this high-grade gold Inel gold property, which was not to be. That brings us to 2016 and I’m excited about a 5,000-metre drill program on this prospective high-grade area (now described as the KSP property) starting in late May to early June, weather permitting.

Colorado has another exciting property called Heart Peaks, a JV with Centerra Gold (CG-T). Centerra can earn a 70% interest in the property through exploration expenditures of $8 million by Dec. 31, 2019. A fall exploration program last year at Heart Peaks outlined (through soil samples, IP and geological mapping) gold mineralization along two corridors on the property.

I believe CXO has a great shot at putting all the high-grade gold pieces of the puzzle together at the Inel (KSP) property in 2016, leading to a multi-million-ounce discovery.

References:

aris.empr.gov.bc.ca

Stockwatch.com research -- Symbols GIM, AVD, SKX from 1983 to 1991

Colorado Resources (CXO-V)
Price: 20.5 cents
Shares outstanding: 61.4 million
Market cap: $12.6 million
Working capital: $2.8 million (as of Dec. 31, 2015)

Author owns shares of Colorado Resources, a speculative stock that could lose its entire value. This is not investment advice and all investors should do their own due diligence.