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52BMSWe*91 63.3249 SABAWI t MCCAUL
HBKJKT
OK
A rGN
010
OVER
; BAPAVE GOLD MINE PHOPJvHTY
OF
AT1KO GOLD laRKJ Iffil)., McGAUL TOUJUIOP
OF K. W* ONTARIO
- 0
Dooombor a), 1974 Cho o ter J* Kenora, Ontario
H. Bo. t
-l-
The tjtxpawe Gold Mine property of Atiko Gold Mines Ltd. consists of 47 continguous clainB (16 patented and 31 unpatented claims) located in McGuul Township tt the Atikokan Area of Northwestern Ontario. The property consists of the following olaimsi-
Patented CI alias Unpatonted Plain*
E.H. 4C ?.F. 12625 F.F. 12702K. B. 47 F.F. 12626 F.F. 12703E.B. 40 F.F. 12630 F.F. 12704F.F. 3416 F.F. 12688F.F. 3417 F.F. 12689F.F. VllC F.F. 12693F.F. 4026 F.F. 12691F.F. 4075 *V? * 12692F.F. 4076 F.F. 12693 F.F. 1302^F.F. 4094 F.F. 12701 F.F. 13030F.F. 4096 F.F. 13085 F.F. 13091F.F. 41/44 F.F. 13086 F.F. 13092F.F. 4146 F.F. 13087 F.F. 13093F.F. 4524 F.F, 13088 F.F. 13095F.F. 5937 F.F. 13090
The unp;: tented claims hf;vo been surveyed tind the survey roBulta tire m/aiting the Minister's approval prior to lease application bcinc iu;fle.
Mr. Cieorf'.cF. XaJoiitainCt l-l-cBidont of liayaix;! Explorations Ltd. caid Alike* Gold Mines Ltd. con: ieeioned thie v.'ritor to huve A Kagnotic tui-voy oiiiviocl out on the i*apawe property grid. This magnetic survey work von carried out under the field oupervision of thin vjriter s nCi the inetruwent Ran was Raynond Kuryliw, e 4th year student of lioicmccH vj)io has had Boveral aufiuaers ex))erit?nce as a magnetometer operator. W to resultB of the survey vjere plotted by thio writer on a pi cm E-cal l" " ^XK) feet and result B wore contoured at 100 gatina interval n, Vhe instrunent survey vi'e cariled out in the field during Aunvst, 1974 with the Draughtiiif; and Keport office work ooraploted I,iept0jaber - Deooiaber, 197^- ^y thip. writer.
Me CAUL TWP
C-M,
SAPAWE GOLD MINES LTD. PROPERTY
MCCAUL TWP, ATIKOKAN DIST.ONTARIO
SCALE: l
UNIT AND n
The instrument used was the M-700 Magnetometer which is a vertical field magnetometer employing the fluxgate principle* The instrument IB self-levelling and a self-cancelling circuit permit* rapid accurate measurement of the earths magnetic field from a meter without adjustment!* or calculations* The instrument is practically insensitive to orientation changes* Errors are 25 gammas or less for 160 degree rotation in a 15,000 gamma horizontal field* Vertical fields from *100|000 to -100*000 gammas can be measured*
For latitude adjustment the meter was arbitrarily set at f 260 gamiaan at a chosen base station by operating the latitude adjuataont control*
'/he maximum sensitivity is 20 gammas per scale division on the 1000 gamma range* Keadability is 1/2 scale division or 10 gammas over a temperature range of -350 to 4- 55* centigrade th* temperature drift is limited to less than 50 gammas*
A magnetic base station was established at 00. K - 4,W at a reading cf 560 gararaaiu Base line stations were then read along the base line in 1/2 mile loops each time checking back to the base station or to a newly read and corrected base line station* Picket linea were road along stations at 100 foot intervals in about one mile total loops and reread at the established base line stations* The base station was reread at the start and end of each day* The readings were corrected for diurnal variations in magnetics* when necessary * then plotted in Eftiamas on a plan scale l" ** 200 feet* The magnetic readings were then contoured at 100 gamma intervals.
The plotted readings indicate changes in the vertical component of the magnetic field*
BIONAL .tft.iUL GU)LOGYi
The consolidated rooks of the area are of precambrian age and include both "Keewatin" type volcanic flows and "Timiskaming" type sediments that have been intruded by granitic masses of Archean ~ Kenoran age* The major structural feature along the Atikokan - Sapawe belt is a major K-W trending fault that has been traced for over 80 miles* The fault follows the Seine Biver* passes Just south of the Town of Atikokan, then runs eastwards along the north Bhorea of Bapawe and Crooked Pine Lakes* The lithology changes abruptly on either eide of the fault* Metaeedinents occur immediately to the south of the fault whereas basic to intermediate
-5-
voloanioa occur to the north of the fault* The volcanics to the north of the fault fora a belt with an irregular contact with granites that lie to the north* The volcanic belt is generally 2-5 miles vide* In the Atikokan - Sapawe area the significant occurrences of gold lie to the north of the fault in the belt with no significant occurrences of gold noted immediately to the south of the fault (O.D.H. Map 206*?)* There are some basic to ultrabasic intrusives in metasediment* within a few miles to the south of the major E-W trending fault that have occurrences of Cu-Ni mineralization* In KoOaul and adjoining Hutchinson, Trottier and Kamsay-Wright Townships there are a great number of known occurrences of gold that comprise the Sapawe* Atikokan Area*
ftOOAL, TABLE OF FORMATIONS
Cenozoic
Itopent - Swamp deposits, peat*
- Clay, gravel, boulders*
7 Quarts Veins
6 Shear Zone Bohists
ffelsio Intrusive s
5 White Granite
4 White Granitic quart K - porphyry
Basic
3 Amphibolite, Gabbro
VoloanioB - "Bapaiwe, OoiBplejx;" of flows and/or intrusives*
2 JQiyolitio (R-1) Aphanitic rhyolite
(K-2) Medium grained white granitic rhyolite
(H-5) Quarte*-dioritio rhyolite phase
l Basaltic (Bl) Aphanitic Basalt
(BP) Medium grained gabbroic basalt
(B2) Porphyritic basalt
Terrain.
The terrain overlying the property is about 20?4 covered by a snnd-e,ravel f^laoi&l drift, "yy/y by muskeg covered swamp or lake, the remaining i?o# of the terrain is composed of ridges of outcrop bare to lightly covered and intervening overburden covered valleys* The Mundo Ptiper Company's logging operations from 1965-75 established a network of truck logging roads* Logging equipment, skidders, etc. laid fcueh of the ridges of outcrops exposed and bare of moss. Logging wae not car j d od out in the swampe, but the drift covered and outcrop areas have all been logged out. Helief of the outcrop to swamp borders is rugged, but does not reach more than 100 feet vertically* Th* logging operations on the property improved access by its network of roads, however, the widespread deep blanket or treetops and branches left over the timbered area made Geologic Mapping in the field quite difficult to traverse* Hidden wasp nests in that same brush also added to the Jmzards*
The volcanics form the main rook group at the property and these occur as nn extrusive complex, referred to here as the "Sapawe" Volctxnic Complex"* The complex consists of series of successive flow groups and of individual flows of basaltic rooks as one component and theee ore intorlayered with individual and/or groups of successive f lowe of rhyolitic rocks as the other component* In addition, intruoive relationships between the basaltic and rhyolitic rocks occur locally v;ith cdther type intruding the other* Chilled tops occur at the northern edge of flows* All of these flows must have been deposited under unusual conditions of rapid deposition, followed by relatively slow cooling because the flows commonly reach medium grained textures in both the rhyolitio and basaltic rocks* Coarsely porphyritic bueolt flows are also common* No evidence was noted during mapping, of flow structures such as pillowed lavas, flow broccic.B or ivggloworate - tuff tops. The "Sapawe Volcanic Complex" on the property consists of about 6Q# bauxitic and 4O# rhyolitio rocks*
The more continuous northerly contact of the volcanics occurs, running D-v near the 00-N base line across the west half of the property, at the Sapawe Mne Bite, tliis contact turns E-S-E for a distance of 1/4 mile then trends eastwards* The trend of individual volcanics within the Sapawe Volcanic Complex generally follows this northerly contact trend and so outlines a gentle monoclinal fold of the steep northerly-dipping volcanics.
The anticlinal flexture of the monocline runs through the Sapawe mine shaft area with its anticlinal axis running N-N-E* The synclinal flexture of the monocline occurs about 1/4 mile E-S-E of the shaft*
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Along the northerly contact of the Sapawe Volcanic Complex en K-W trending "en echelon" group of quarts-porphyry intrusions occur* rl'he quart* porpl*yry intrusions individually trend in a W-N-U direction and are cojiuuonly iXX) - 1000 feet thick and about 1/2 nile long* These intrusions hr.vo a tendency to "tongue" into the Sapawe Volcanic Cowplex at thoir i^-u-j2 ends* Such tongues ere found to occur at the ninenitc, 1A r. i. l e to the to-b-E of the nimesite, 1/2 laile to the E. of tho nine mKl l/? nil e to the west of the mineeite. The only intrusion of ouarte-porphyry mapped on the property within the Sapawe volcanic ooio i O ox occurs on lines 10-K to 20-K at tho ?J? ~ B base line*
liatsici, of largely rhyolitic volcanics occurs fron 6*E to y\~\i l o L ho i.* ):el;h of the 00~3s bafie line as reranants between the intruding quii-ufs-porphyry and the wain mass of the Osinawi Lake Granite ;ut}vo3:itlu 1'he gallite irre^lorily intrudee both the volcanic coin::)*'X and quart K-porphyry
ii, voina were found to occur as large tthite "snowbank" veins t)uxt follow the loctd tx^ead of the enclosing volcemios* There appears to bc tn spatial and structural relotionohip of the quartB voi.nr; to tor/^uoc of quarte-porpliyry that intrude volcanics at their jy-.0-3i extrer .5 1 5 os* A L rtherly trending axis can be drawn that rune fron the qutArtz-porphyry tonc^e, norael to the volcanic trends* The quavtsr. voino trcnfl. across theeo oxea. fi'he anticlinal and synclinal floxurcE of the monoclinal fold ut the minesite also have axial trendsr.ijiillt..V tO thCBC-
It i-.'^y be that these transverse or fold axes trace "release tension floxxifes" formed in the layered volcanics that were later filled by tho i.'hite quarts veins.
Faulting
No ma^or single fault was mapped but napping did trace several Patterned pete of closely parallel faults with block xaovementB coraparable to a shifting deck of cards* On line 12W fe} l?0 N one such pattern of "ti^ht-line" parallel faults occured from inchet to four feet apart * thoir strike was K-6i?0 W and they dip steeply northward. Tho displacement P between each fault is inches to several feet each with a right hond movement looking northwards*
A similar set pattern of parallel faulting was mapped at ll.W-51*D* Theae vertical faults strike U-4O* - the progressive movements are left-handed looking northwestwards. The displacements cross the trend of the volcanics*
In both cases the faulting appears to be of the late type i c 11. Y; - ?;l.b the displacements are recognised by shifts of narrow bands of rhyolitio volcanics occurring in basalt* At 12*W - 15*N. the displacement ir, recogiiiaed by shifts in nerrow quarta-filled tension f rao lure B.
l! OO
O E
—
r~ 8^
cs-4
V5&
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{C7*
I06O
OE
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!O 6
OO
E
10 4
OO
E—
— ;
m
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w E: c
32O'L.
\ . \
. f ,,720'L. O* \ ^ 0A \i ^,^A- t.^j^;\\rr.v,::*r^r:rr:^jrj-rr.^vr.v.vvc.-;: -;tr".vjt-4
\920'L. \ '"—•-----••-----••-•-
LONGITUDINAL SBC.
UTM TO FOOTWALL
" 120 feet
t) *A gold deposit was first outlined on the Sapawe property by
diamond drilling by Lindsay Explorations on the Sapawe Hine Zone in I960. Their calculations then estimated 158,000 tons at 1*5? OBA* Au per ton* In 1961 a three compartment shaft was sunk to a depth of 500 feet and two levels were established at 170* and 320** In 1969 Sapawe Gold Minoo Ltd. installed a mill rated at 80 - 100 tons per day* In 1965 the shaft wau deepened to 1015 feet and three new levels at 520*, 7?0* end 920* were opened up. Intermittent milling from 1965 - 1966 of 56197? t one derived from development muck and stoping averaged a recovery of 0.155 OB. Au per ton. The best milling results were obtained in the fourth quarter of 1966 when 5,261 tons obtained from stoping averaged 0.250 OE. Au per ton* An 80*3# recovery was obtained from tilling an average of 57*2 tons per day*
The rccultB of intermittent mining and milling from 1965-66 at the Sapawe Mine were a disappointment as shown in the records. The poor results were due to a number of factors* First the over* simplification of the Sapawe Ooid bearing structures* and the inclusion of high grade d*d* intersections without cutting the heavily weighted the resulting grade and tonnage estimates* During mining the lack of early recognition of the complex habits of gold minerali sation led to excessive dilution. The milling performance was very poor due to its poor recovery, high down-time due to breakdowns and its inefficiently low capacity.
The Sapawe Mine Gold Zone has been traced for a length of 1250 feet along a gently arcuate N-850-E to S-?00~E course at dips of 650 - 756 northwards. This arcuate trend follows the anticlinal flexure of a monoclinal fold. Quarts veining with carrying gold and sulphide mineralization is localized within local structures formed within the zone. The Sapawe cone lies along the voloanio-quartE porphyry contact where overlapping tongues of porphyry occur with volcanics. The Bone has been silicified with two ages of quartK veining and stringers* The earliest veining is a white milky quartz occurring in lenses from a few inches to l? feet wide and up to POO feet long* A later blue quarts veining from an inch to 5 f** wide and up to 200 feet long is found by itself but more commonly it cuts across and fills breccia matrix of the earlier milky white quartz. The blue quartz is richly mineralized with fine gold and it is directly associated with all the significant gold deposition at Sapawe*
Stoping and development have indicated three fairly well defined "eone-shoots" in the western section of the mine* These are known as the "01", "O?" and "05" "Bone-shoots". These apparently plunge down N-250W at -55* * Within the "sone-shoots" there is minor thrust faulting along a number of planes that lie in an acute angle of y to the attitude of the veins these thrust faults produce gaps and overlapping thicker lenses of vein that appear to rake steeply across the "zone shoots". These are termed "vein-lense-rakes"* These vein lenses are the ones that must be looated and followed individually by mining within the "sone-shoots" to be selective*
The surface mapping of this property by this writer vat ouoccBsful in locating several occurrences of milky white "snowbank" quart?- veims. A spot method of chip ewnpling of each major vein did not produce r.ny significant assay in eold| however, the milky white quarts voSnc at the Bapawe arc known to be an earlier quarts deposition t) i? t became hor,t rock to a lator blueish quart* that carried the r;old i.:incraliBCition. The white quartz veins are most rookfl that arc potent M."! exploration rdten in the search for gold deposits*
3 .r c) i o:' the quarts veino located have at least several of thtfcO Xov;5 Hi , cor - -.j* character! eticni
(1) Vhc Quarts vciufc arc jailky white.
(; ) r."}ie (^ufiTtK veins follow narrow r-hearing usually located at volcanlc-auartfc porphyry oont&ote or 5v.tervolcanic rhyolito-basait contacts*
(J5) f.ut'.rtz veins occur in volcanics and they trend acroBB trfjiBvorse oxea, which extend from fold (. ribaywontR of quart a porphyry f.t ite E-13-E end \;}iero the i/^/r/Oiyry intruded into volcanics.
('i) '..'lics'e is cownouly a "laagne'tic-^ow"ufiBOciated with knovm occui^roncee of the white qm.rtjs veins indioatiiit; some depletion of ; ( pnctite in the hydro therraolly active zonfe of ri'Jicification.
rj'he fie; *av;e nine Eonc occure at the finticlinal flexure of a monoclinal fold of the Sapawe volcanic conplex. l^he axis of the synclinal flexure of the samo monoclinal fold extends across a large white ouart?, vein located between lines BE to 20E trending near and alone the ?^H baee line between Mark Lake and Kettle Lake* A tongue of ouo.T^?.~porphyry occurs intruded in the volcanics near a baBalt - rhyolite flow contact ne or th^-t synclinal flexure quarte vein. Wi quarts vein in the synolinfil flexure provides a structural mirror image of the Bapawe Mine /tone. It is known that fcrey quarts that cojrrled gold ninoralization at the bapawe Mine came in along later acute tingle fracturing that occuired across the white quart?, veins. If th t fracturing ut the Bapawe Hine ie etructurally aeeociated wit)i rstrcss adjustments of the antiolihal flexure of tht nonoolintd fold then there is a possibility that similar stress adjustments i-ifiy h/ive caused fracturing in the quartz veins at fracturiri(; in the quartz; veins at syncllruil flexure of the monoclinal fold. This poBDibility nakos tlio quartJs veins at 2^8 - 16Ef a prime exploration twrc;ot*
Fifteen samples of milky white quartz from surface vein expocureB wore taken and assayed for gold* Tht hard smooth glaciated surface exposure did not allow for good channel samples without blasting. The samples taken wore random chip samples* obtained across the vein?}. The B sample did not return any significant gold values as indicated below. However, further exploration of the veins is warranted becnune at the Sapawe Mine those white veins are host rooks to the Ititor .5,0 bluo-grey e?old bearing quarts silicification. Tht afiBayr. v.-ere c.-o.-ried out by Warnock Hersey Labs in Winnipeg October 51 1974.
Lab No,
100^960
61
6?
65
Width
66
67
60
69
70
71
7?
75
M - l/;,
B-;-G(53 -
- 6K
G*. O
4'.0
151. - PBE
6*.O
G 1 .0
e*.o
2*.O
White quart? miner tourmaline D n
ti n
n
tt
n
n
ti
H
tt
ti
n
t!
II
Assay Ooid Qg. /tffl
Trace
Tract
.01
Tract
.01
tract
Tract
Tract
.01
Tract
Tract
Tract
.01
Tract
Tract
-10-
o u s. n/vow^g.0corrected readings from the magnetic survey wore
plotted on a plan of the property scale l" * 200' , then contoured *.t 100 gaiiEia intervals* The most surprising result was the relative similiarity in magnet!* amplitude of the four main rook types over the property which ure the rhyolitio volcanics, the basaltic volcanics*, the quart*, porplxyry and the white granite. It wae found that th* uagneticB could not be used to epeoifically looate fornational contacts with certainty*
er of jatiRnetic high or magnetic low anomaly patterns occur, thetse arts iiore of a local nature caueod by a local variation in the rocks duo to stress or a minor basic intrusion*
A strong uagnetio "positive" anomaly occurs about 400 feet couth of the Bapaw ehaft* It in about 1000 feet long and ourves parallel to the Sapawe Kino Stone. It ooinoidee with a more magnetic flow of medium ^raiuttd rixyolitic volcanic. Coupled with this magnetio high iti a broad etrong "magnetio low" beneath the Sapawe Mine Zone* On line ?6~W at 11-b there ia a H-N-V trending positive magnetio anomaly that probably traces t narrow diabase dyke, however, this tms not located by inapping probably due to the presence of medium grained "gabbroic" volcanic masking its presence*
V/here ntrong development of quartz veins was mapped, the fiDiplitude usually drops 100 - 200 gammas*
The presence of several local magnetio-low anomalies coupled with magnetic highs on each aide ere obvious on the plan but their significance is not known.
The comparative economic favoui'ability of gold deposits at the present price of gold in the 8160 ~ S200 per ounce range encourages the exploration of the Sapawe Mine underground and of the extensions of its cone*
Shallow exploratory surface diamond drilling should be carried out on each of the host rock white quartz veins located by mapping, in the hope of discovering the later gold bearing blue-grey quartz nineralization, and thereafter to expand upon any good gold mineralization discovered*
The d. drill holes should be of shallow depth and of AX core siKe. ^ d. drill holes each 100 feet apart and each 100* - 1^0* deep should be located to cross the prime target area at 15E to 19E net r the 2^S base line* An additional 5 d* drill holes is required to test each of the other veins located by drilling one hole per vein*
-n-
X), .feo.t of ttjio wT oforrTccfbut coiaprlBing 10
dionond drill holes 100 - 150 foet in uo-i)th
Lr.fcivmted cost total
(Includes D.D* Contract
i.1^000.00
Constufcizig Geologist*So., P* Eng.
J, Chotvfcer J* l.uryliw, of 223 llinto Drive, Keaora,
Onturio O o horoby declare that I have continuoucly preotiodd
the p.. oftr.rdcm of Geolocy for the pact 25 years and that I hold
a dopree of ":-i oholor of Science rocoived in 19^9 fron the University
of licmitoThfj ; :.l the degree of Master of Science in Geology, received
froro thnt c t-:.-.a Univcreity in 1966 wid tliat I im a member in good
Btanding of the profeeBionel Lnc^ineeris of Ontario*
I do hereby declare that this report is baaed upon say
porcoiuil vor)t in the field wx3 in the plotting and study of results*
December. PQ. 1974CheBter/44 Kuryliw^/iV. Gc., P* Eng* Consxiiitng
SaB148WM91 63.3249 SABAWI t MCCAUL 020
HEPOHT
ON
A GEOLOGIC MAPPING
OP
THE SAPAWE GOLD MINIS PROPERTY
OF
A'HKO GOLD MINES LTD., KcOAUL TOWNSHIP
ATIKOKAN AREA OF N. V. ONTARIO
January 20, 1975Chester J. Kuryliw, M.S., P. Eng., Kenora, Ontario*
-l-
PROPERTY AM? LOCATION
The Sapawe Gold Hine property of Atiko Gold Minea
Ltd. conslete of 47 oontinguoua claims (16 patented and 51
unpatented claims) looated in MoCaul Township in the Atikokan
Area of Northwestern Ontario. The property consists of the
following claimsr
Patented Claims
E.B. S.S. E.B, F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F.
464? 48
5416541754184026407540764094409641444146452445725957
Unpatented Claims
F.F. 12625 F.F. 12626F.F. 12650 F.F, 12688 F.F. 12689 F.F. 12690 F.F, 12691 F.F. 12692 F.F. 12695 F.F. 12701 F.F. 15085 F.F, 15086 F.F. 15087 F.F. 15088 F.F. 15089 F.F. 15090
The unpatentod claims have been surveyed and the
survey results are awaiting the Minister's approval prior to lease
application being made*
MCCAUL TWF
SAPAWE GOLD MINES LTD. PROPERTY
MCCAUL TWR, ATIKOKAN DIST. ONTARIO
SCALE: 'l 11 * '/2,mll*
-2-
LOCATION AND ACCESSSapawe Gold Mines Limited hold 47 mining claims (16
patented and 31 unpatented claims) located in MoCaul and Hutchinson Townships, Northwestern Ontario. The property is located 20 miles east of Atikokan in the Thunder Bay Mining Division. From Atikokan, access is by motor vehicle along paved highways 11B, 11 and 623 to Sapawe. Alternatively, the property may be reached by meter vehicle from Thunder Bay (approximately 120 miles) via highways l? west, 11 west end highway 623 to Sapawe. From the junction of main highways 11, and paved route 623, it is about 2 miles to the mine road. The mine road is an all-weather gravelled road about 5)4 miles long which is presently being maintained by the Ontario-Minnesota Pjilp Company.
Mr. Georges LaFontaine, President of Bayard Explorations Ltd. and Atiko Gold Mines Ltd. Commissioned this writer to carry out the Geologic Mapping on the Sapawe property with recommendations for further work, if warranted.
This writer carried out the field mapping of Geology and Topography during the months of August, September and October. The results of the Fiold Mapping were plotted on maps scale l" * 200'. The draughting, coloring and reports were prepared in December, 1974- and January, 1975.
(REGIONAL) TABLE OF FORMATIONS
(After Map 2065, l" - 4 miles - Ont. Dept* Mines)
CENOZOIC' pleistocene and Recent ~
sand i gravel and clay - Great Unconformity -
(6) Aoid igneous and metamorphic rooks*Oranite (gniess) porphyritic granite* quartss and feldspar porphyry, syenite, pegmatite.
- INTRUSIVE CONTACT -
(5) Basic and Ultrabasic Igneous rooks Gabbro, diorite, pyroxenite , amphibilite, granodiorite.
- Intrusive Contact -
METAi3KDIHENTB (o)Conglomerate, arkose greywacke, slate, limestone intermixed metavoloanios f iron formation*
(d) Arkose, greywacke, slate, mica-schists and gneisses*
(2) hHPAVOLCANIOSAcid raetavolcanics - Rhyolite, trachyte, etc.
(1) Basic and intermediate meta-voloanios. massive greenstone, pillow lavai pyroclastic rooks, chlorite schists, interflow iron formation.
The consolidated rocks of the area are of precambrian age and include both "Keewatin" type volcanic flows end "TimiskamingM type sediments tht.it have been intruded by granitic masses of Archean - Kenoran age. The major structural feature along the Atikokan - Lippove belt is a nad or K-W trending fault that hat been traced for over 80 miles. The fault follows the Seine Hiver, purser t1uf,t south of the Town of Atikokan, then runs eastward B aionr, the north shores of Sapawe and Crooked Pine Lakes. Tho lithology changes abruptly on either side of the fault. Metasodiitienta occur immediately to the south of the fault wheroun br,uic to intermediate volcanics occur to the north of the fault. The volcanics to the north of the fault form a belt with an di^'ocular contact with granites that lie to the north. The volcanic belt is generally 2 - 5 miles wide. In the Atikokan - Sapawe area the significant occurrences of gold lie to the north of the fault, in the belt with no significant occurrences of cold noted immediately to the south of the fault (O.D.M. Map ,-'OG^). There ^re some basic to ultrabasic intrusives in metanedlinentc within a few miles to the south of the major E-V trending J'^ult thot have occurrences of Cu-Ni mineralization. In licCaul and udjjoining Hutchinson, Trottier and RamBay-Wright Township* there are t* great number of known occurrences of gold that comprise the iiapawe-Atikokan area.
-5-
LOOAL (TABLE OF FORMATIONS
Cenozoic
Recent - Bwamp deposits, peat.
riiestpoene - Clay, gravel, boulders,
7 Quartz Veins
6 Shear Zone Schists
j clsio InXiyjstiyes5 White Granite
4 White Grfoiitic quarts - porphyry
BjB,sTlo Intrusive^
3 Amphiboiilo, Gabbro
Volcanics - "Sapawe Complex" of flows and/or intrusive s*
2 Khyolitic (H-l) Aphanitic rhyolite
(K-2) Hed. grained white granitic rhyolite
(K-5) Quortfc-dioritio rhyolite phase
l Basaltic (Bl) Aphanitic Basalt
(B2) Medium grained gabbroic basalt
(B2) Porphyritic basalt
ROOK TYPES
NOTE l
These rook descriptions vert derived from visual examanations in the field with the aid of a hand lens* No microscopic studies were carried out by this writer.
Volcanics
(1) Basaltic Rooks
The basaltic rooks occur in variations of grain sice and textures. The basalt may occur as an aphanitic fine-grained rook or as fine to medium-grained equigranular gabbro or as porphyritic basalt. The predominant mineral components art amphiboies and plagioclase*
The Aphanitic-fine grained basalt occurs as a massive rook that does not exhibit the usual volcanic extrusive structures such as pillows, flow-breccias or agglomerates common to the Keewatin* Precambrian basalts. Most frequently this rook occurs in widespread sheet like flows 50' to 80* thick* Within some flows there is a grain size gradation from a fine grained chilled border near its northerly contact for the first 5-10 feet of thickness then the grain size increases southwards across the blow to reach maximum grain size of 2 mm* diameter in some oases, so that the bulk of each flow resembles a fine grained gabbro. A few porphyritic basalt flows were mapped, these oocured having a fine, dark green gabbroic matrix and 5 - 20^ phenocrysts of plagioclase feldspar (labradorite?) most commonly the phenocrysts are l cm. - 2 cms* diameter*
No significant sulphide or magnetite mineralization was recognizable in the field examinations of the basalt* The magnetic relief of the basalts is relatively low, so that the magnetic survey did not provide a reliable tool for differentiating the basalts from the interflow rhyolites.
(2) Rhyolites
The rhyolitio rooks occur in variations of grain sizes and textures. The rooks may occur as an extrusive flow, aphanitic to fine grained, or as a flow with fine to medium grained equigranular textures. Occassionally a fine porphyritic texture of plagioclase feldspars (albite?) was recognized* In one large rhyolitio flow some differentiation in oomposition was mapped* At grid ooord's 6V - 8N, the rhyolitio flow oomposition was estimated at 20 - 25^ quartz, 70 - Ty/o white plagioclase feldspar and 2 - 5# amphiboies* This
rhyolitio mass mapped progressively in a V* N* Westerly direction indicated a gradual change in composition, the quartz content progressively decreased while amphibole content progressively increased. Eventually at ooord's 12N ~ 16W the rook approached diorite in composition and contained O - 5# quartz. 3506 - 40# amphiboles, 60^ plagioclase (oligoclase - andesine?). It was found in mapping the property area that, in general. the rhyolitio rocks became progressively more basic W* N. westwards.
The rhyolitio rocks all weather a whitish porcelain appearance in outcrops whereas on freshly broken surfaces the rook is light greenish grey in color and vitreous*
The rhyolitio flows were commonly found to occur as successive flows 40 - 100 feet thick having chilled flow tops to the north and an aphanitic to fine grained upper northerly margin 5-10 feet thick, the grain size was found to increase progressively to an equigranular medium-grained texture towards the base of the flow. Field examinations of the base of the flows seldom exhibited a chilled margin. Such successive flows with upper chilled contacts are well exposed on line 26W at 33 - 37 S 1 *
(3) Basic IntruBives - Amphibolite.
This rook is composed of about 95^ coarse amphibole and about ^ plagioclase. This rock does not exhibit any strong magnetism* One amphibolite dyke about 40 feet thick runs E-W and outcrops on line GOW at 8 B*.
Felsio IntruBiyes
(4) WhitjB Granitic Quartz-Porphyry
This rock weathers white in outcrops. Its most distinguishing feature is the abundant porphyritic quartz which composes 35 - 55# of the rook. The quartz grains are most commonly 3-5 mms. in diameter. The matrix is variable, it may occur as a "quartz-serioite schist" or as plagioclase (albite?) with minor quartz to form a medium grained equigranular matrix.
(5) White Granite
This rook weathers white in outcrops and is coarse-grained, equigranular in texture. The grain size is most commonly 3-5 mms. in diameter. The quartz which composes 30 - 3596 of the rook usually occurs as interstitial quartz between plagioclase feldspar, (albite* oligoclase?). In the mapped area orthoclase is relatively rare* The mafic minerals form 2 - 10# of the rook but most commonly about 5#* The mafic minerals are predominantly amphiboles, some biotite occurs with the amphibiole*
-8-
(6) Bhear Zone Schists
Several shear eones were mapped these sohists represent the altered form of the volcanic rook they crossed* If the parent rook was rhyolitet the resulting schist was light greenish and composed mainly of quartz-sericite* If the parent rook was basaltic the schist was dark greenish and composed mainly of amphibolite-chlorite together with about 5 - 10^ carbonate*
(7) C^iartz Veins
The quartz veins are large massive structures that reach up to 20 feet in thickness* The Quarts is milky-white (commonly referred to by prospectors as "snowbank" veins). The veins carry very little mineralization, only very minor pyrite WAS recognised. Borne narrow, irregular black tourmaline filled fractures occur in the quarts veins* It is one of thene types of veins that form the host rook for gold bearing ore at the Sapawe Mine. Fracturing of the white quarte was followed by the introduction of gold bearing clear blue grey quartz; to form the gold bearing lenses at the Sapawe Mine.
STHUCTUIUL G
Terrain
The terrain overlying the property is about POJi covered by a sand-gravel glacial drift, 50?o by muskeg covered swamp or lake, the remaining 50# of the terrain is composed of ridges of outcrop bare to lightly covered and intervening overburden covered valleys* The Hando Paper Company's logging operations from 1965-75 established a network of truck logging roads* Logging equipment, skidders, etc* laid much of the ridges of outcrops exposed and bare of moss* Logging was not carried out in the swamps, but the drift covered and outcrop areas have all been logged out* Helief of the outcrop to swamp borders is rugged, but does not reach more than 100 feet vertically. The logging operations on the property improved access by its network of roads, however, the widespread deep blanket of treetops and branches left over the timbered area made Geologic Mapping in the field quite difficult to traverse. Hidden wasp nests in that same brush also added to the hazards*
The volcanics form the main rook group at the property and these occur as an extrusive complex, referred to here as the "Sapawe Volcanic Complex". The complex consists of series of successive flow groups and of individual flows of basaltic rooks ae one component and these are interlayered with- individual and/or groups of successive flows of rhyolitio rooks as the other component. In addition, intrusive relationships between the basaltic and rhyolitic rocks occur locally with either type intruding the other* Chilled tops occur at
the northern edge of flows* All of these flows must have been deposited under unusual conditions of vapid deposition, followed by relatively slow cooling because the flows commonly reach medium grained textures in both the rhyolitio and basaltie rooks. Coarsely porphyritic basalt flows are also common* No evidence was noted during mapping, of flow structures such as pillowed lavas, flow breccias or agglomerate ~ tuff tops. The "Sapawe Volcanic Complex" on the property consists of about 60^ basaltic and 40# rhyolitio rocks.
The more continuous northerly contact of the volcanics occurs, running E~W near the 00-N base line across the west half of the property, at the Sapawe Mine site, this contact turns E-S-E for a distance of 1/4 mile then trends eastwards. The trend of individual volcanics within the Sapawe Volcanic Complex generally follows this northerly contact trend and BO outlines a gentle monoclinal fold of the steep northerly-dipping volcanics*
The anticlinal flexture of the monocline runs through the Sapawe mine Bhaft area with its anticlinal axis running N-N-E. The synclinal flexture of the monocline occurs about 1/4 mile E-8-E of the shaft,
Along the northerly contact of the Sapawe Volcanic Complex an E-W trending "en echelon"group of quartz-porphyry intrusions occur. The quarta porphyry intrusions individually trend in a W-N-W direction and ore coranonly 500 - 1000 feet thick and about 1/2 mile long. These intrusions have a tendency to "tongue" into the Sapawe Volcanic Complex at their E-8-E ends. Such tongues are found to occur at the minesite, 1/4 mile to the E-S-E of the mineeite, 1/2 mile to the E* of the mine ond l/? mile to the west of the mine site. The only intrusion of ouartz-porphyry mapped on the property within the Sapawe volccjiic complex ocoure on linos 10-E to 20-E at the 2J? - S base line.
Masses of largely rhyolitic volcanics occurs from 60E to 54-W to the north of the 00-N base line ae remnants between the intruding quartz-porphyry and the main mass of the Osinawi Lake Granite Batholith. The granite irregularily intrudes both the volc&nic complex tind quartz-porphyry rocks.
Quartz veins were found to occur as large white "snowbank" veine that follow the local trend of the enclosing volcanics. There appears to be an spatial and structural relationship of the quartz veins to tongues of quartz-porphyry that intrude volcanics at their E-S-E extremities* A northerly trending axis can be drawn that runs from the quartz-porphyry tongue, normal to the volcanic trends. The quartz veins trend across these axes. The anticlinal and synclinal flexures of the monoclinal fold at the minesite also have axial trends similar to these axes.
It may be that these transverse or fold axes trace "release tension flexures" formed in the layered volcanics that were later filled by the white quartz veins.
-10-
Faulting
No major single fault was mapped but mapping did traoe several patterned sets of closely parallel faults with block movements comparable to a shifting deck of cards* On line 12W 19* N one such pattern of "tight-line" parallel faults oooured from inches to four feet aparti their strike is N-650 W and they dip steeply northward* The displacements between each fault is inches to several feet each with a right hand movement looking northwards*
A similar set pattern of parallel faulting was mapped at 11.W-51.S, These vertical faults strike N-400 - the progressive movements are left-handed looking northwestwards* The displacements cross the trend of the volcanics*
In both cases the faulting appears to be of the late type, Cv 11,W ~ 51*8 the displacements are recognized by shifts of narrow bonds of rhyolitic volcanics occurring in basalt. At 12*W - 13.N. the displacement is recognized by shifts in narrow quartz-filled tension fractures.
ECONOMIC GEOLOGY
A cold deposit was first outlined on the Sapawe property by diamond drilling by Lindsay Explorations on the Sapawe Mine Zone in I960. Their calculations then estimated 158,000 tons at 1*57 ozs* Au per ton. In 1961 a three compartment shaft was sunk to a depth of 500 feet and two leveli were established at 170' and 520*. In 1965 Sapawe Gold Mines Ltd* installed a mill rated at 80 - 100 tons per day* In 1965 the shaft was deepened to 1015 feet and three new levels at 520*, 720* and 920* were opened up. Intermittent milling from 1963 - 1966 of 56,972 tone derived from development muck and stoping averaged a
i|recovery of 0.155 oz. Au per ton. The best milling results were 1 obtained in the fourth quarter of 1966 when 5,261 tons obtained from stoping averaged 0*259 oz* Au per ton. An SO.3% recovery was obtained from milling an average of 57*2 tons per day.
The results of intermittent mining and milling from 1963-66 at the Sapawe Hine were a disappointment as shown in the records* The poor results were due to a number of factors. First the over simplification of the Sapawe Gold bearing structures, and the inclusion of high grade d*d. intersections without cutting the heavily weighted the resulting grade and tonnage estimates. During mining the lack of early recognition of the complex habits of gold minerali zation led to excessive dilution* The milling performanoe was very poor due to its poor recovery, high down-time due to breakdowns end its inefficiently low capacity*
The Sapawe Hine Ooid Zone haa been traced for a length of feet along a gently arcuate N-850-E to S-TO'-E course at
dips of 650 - 750 northwards* This arcuate trend follows the anticlinal flexure of a monoclinal fold* Quarts veining with carrying gold and sulphide mineralization is localised within local structures formed within the zone. The Sapawe Bone lies along the volcanic-quartz porphyry contact where overlapping tongues of porphyry occur with volcanics. The zone has been silicified with two ages of quartz veining and stringers* The earliest veining is a white milky quartz occurring in lenses from a few inches to l? feet wide and up to 200 feet long* A later blue quartz veining from an inch to 5 feet wide and up to POO foot long is found by itself but more commonly it cute across and fills breccia matrix of the earlier milky white quarts* The blue quartz ie richly mineralized with fine gold and it is directly associated with all the significant gold deposition at Sapawe.
Stoping ond development have indicated three fairly well defined "zone-shoots" in the western section of the mine. These are known as the "01", "02" and "05" "zone-shoots". These apparently plunge down N-250W at -550 . Within the "zone-shoots" there is minor thruot faulting along a number of planes that lie in an aoute angle of 50 to the attitude of the veins these thrust faults produce gaps and overlapping thicker lenses of vein that appear to rake steeply across the "zone shoots". These are termed "vein-lense-rakes". These vein lenses are the ones that must be located and followed individually by mining within the "zone-shoots" to be selective*
The surface mapping of this property by this writer was successful in locating several occurrences of milky white "snowbank" quartz veinp. A spot method of chip (sampling of each major vein did not produce any significant assay in gold, however, the milky white quarts:; veins ot the Sapawe are known to be an'earlier quarts deposition that become host rock to a later blueish quartz that carried the gold mineralization. The white quartz veins are most rocks that are potential exploration sites in the search for gold deposits*
liach of the quartz veins located have at least several of the following common characteristicst
(1) The Quartz veins are milky white*
(2) The Quartz veins follow narrow shearing usually located at volcanic-quartz porphyry contacts or intervolcanic rhyolite-basalt contacts.
(3) Quartz veins occur in volcanics and they trend across transverse axes, which extend from fold embayments of quartz porphyry Bt its E-S-E end where the porphyry intruded into volcanics*
-12-
There is commonly a "magnetic-low" anomaly associated with known occurrencea of the white quartz veins indicating some depletion of magnetite in the hydrothenaally active none of silicification*
The Sapawe mine cone occurs at the anticlinal flexure of a monoclinal fold of the Sapawe volcanic complex. The axis of the synclinal flexure of the came monoclinal fold extends across a large white quartz vein located between lines 8E to 20E trending near and along the ?5Q base line between Mark Lake and Kettle Lake* A tongue of quartz-porphyry occurs intruded in the volcanics near a basalt - rhyolite flow contact near that synclinal flexure quart* vein. The quartz vein in the synclinal flexure provides a structural mirror image of the Sapawe Mine Zone, It is known that grey quartz that carried gold mineralization at the Sapawe Mine came in along later acute angle fracturing that occurred across the white quartz veine. If that fracturing at the Sapawe Mine is structurally associated with stress adjustments of the anticlinal flexure of the monoclinal fold then there is a possibility that similar stress adjustments raay have caused fracturing in the quartz veins at fracturing in the quartz veins at synclinal flexure of the monoclinal fold* This possibility makes the quartz veins at 25S - 16E, a prime exploration target*
fifteen samples of milky white quartz from surface vein exposures were taken and assayed for gold* The hard smooth glaciated surface exposures did not allow for good channel samples without blasting* The samples taken were random chip samples, obtained across the veins* I'hese sample did not return any significant gold values as indicated below. However, further exploration of the veins is warranted because at the Sapawe Mine these white veins are host rocks to the later age blue-grey gold bearing quartz silicification* The assays were carried out by Warnock Mersey Labs in Winnipeg October 5* 1974.
width Assay OoidLab No,
10059
60
61
62
65
64
65
66
67
68
t69
70
71
72
75
Coordinates . Ft, Description
8+70S
8+758
8+60B
8+50B
8+550
21S -
4+508
8+20S
25S -
253 -
25+5S
253 ~
25+-G8
25B -
15S ~
- 59*W
- 59.W
- 58.V
- G'l-.W
- 6ft.W
46W
- P9W
- ?8W
8E
15E
- 15B
17E
~ 17E
19+40E
?8E
5'*0 White quarts miner tourmaline
5' .0 " "
6'.0 " "4'.0
5* 5 ( i "
/(.f Q II II
4t.O
5'.0 " "
5' .0 " "
5'.0 " "
6* .0 " "
6'.0 " "
B 1 .0 " "
6*. 5 " "
2J*0 " "
Os. /ton
Tract
Tract
.01
Tract
.01
Tract
Tract
Tract
.01
Tract
Tract
Trade
.01
Tract
Tract
CONCLUSIONS
The comparative economio favourability of gold deposits at the present price of gold in the 0160 - #200 per ounce range encourages the exploration of the Sapawe Mine underground and of the extensions of its zone*
Shallow exploratory surface diamond drilling should be carried out on each of the host rock white quartz veins looated by mapping, in the hope of discovering the later gold bearing blue-grey quarte mineralization, and thereafter to expand upon any good goldmineralization discovered*
The d, drill holes should be of shallow depth end of AX Core eiee. !? d. drill holes each 100 feet apart and eaoh 100* - 150* deep should be located to cross the prime target area at 1J?E to 19E near the 2J& base line. An additional 5 d* drill holes is required to test each of the other veins looated by drilling one hole per vein.
1250 feet, of diamond, .drilling Vo o'e carried" "otfif comprising 10 diamond drill holee 100 -150 feet in depth
Estimated Co r--,t Total fcl5,000.00
(Includes J).D. Contract, Engineering* Aeeaying)
20. S 9 7*Chest*? J. Consulting Qeolojs&t.
S C. J. KURYl.1V/ Sci
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0040
52BMSW0091 63.3249 SABAWI l MCCAUU 030
PRELIMINARY PROSPECTUS Dated March 24th, 1975.
No Securities Commission or similar authority in Canada has in any way passed upon the merits of the securities offered hereunder and any representation to the contrary is an offence.
"S "5 -2 E JS NEW ISSUE-Zt. C" 4 *H~" **~" y ^*g l Ir -S l ATIKO GOLD MINES LIMITED S g S B ̂ (Incorporated under the Quebec Mining Companies Act)V X tri T3co --S .52 vt o)"^ 4o/ , QJ .E
^ ^'l 0 l? 200,000 Class "A" Shares-E "o o* ^ 0^ C l -So w ^og, -fe .e fe "S. ,x ATIKO GOLD MINES LIMITED (the "Corporation") offers up to 200,000 8 o f c S -6 Class "A" shares (the "shares") of the Corporation at $1.25 per w f: o "5 " S. share on a best efforts basis through registered dealers in the rf ^ c OT ro P Province of Ontario, Quebec and Manitoba at a commission of 15*O* ;3 O ^ Q* i;-t! ja s -o p per snare.s c P t; '.e "S3 S .2 g g ,Ew .^ ]E ^ ̂ If all the shares offered hereby are purchased, the Corporation willw l . I o S receive not less than $220,000.00, before deducting expenses of theS 3 s s T o offering payable by the Corporation estimated at S8,000.00. Secondary^ w R S g "^ offerers will pay their pro rata share of the total expenses of the2 i o 8 tt l offering.X3 fc- -C o - -t:-S P ~ w ^ oOJ S O oj y k-
irt ^ i ^ Tnc offering will continue until all of the shares offered hereby3 -g o jE ^ "5 are sold unless the offering is terminated at an earlier date by the
Corporation. In order for the offering to be successful, the Crown
l"5 ts Trust Company as Trustee for the Corporation must have received the.n
s
^ "S 'li -l " c sum of $115,OOO.pO net after allowing for agents' commissions and theZ? m .g g ~s i costs of this offering (the "minimum amount") or more before the.S .S ^ l ^ g expiration of 90 days (the "initial period") from the date of the J g S w S e acceptance of this prospectus for filing by the appropriate regulatory"'5 t 0 .s " authorities. If the minimum amount is not received as aforesaid
.1 -^ S a 11 subscription money will be returned forthwith to the subscribersJ? 3s H 'S by the Crown Trust Company and this offering will be withdrawn by the~ H g 8 Corporation.fe R S tS
All subscription monies will be held in trust by the Crown Trust Company, Toronto, Ontario, for payment to the Corporation if the minimum amount or more is received by the Trustee and otherwise for return to the subscribers.
52B14SWe89! 63.3249 SABAWI t MCCAUL 030C
PURPOSE OF THE OFFERING
SECONDARY OFFERING
THE MARKET
THE CORPORATION
SPECULATIVE NATURE OF SECURITIES
MANAGEMENT OF THE CORPORATION - DIRECTORS AND OFFICERS
BUSINESS AND OPERATIONS OF THE CORPORATION
PRINCIPAL PROJECT
EXPLORATION ASSISTANCE
PRESENT ECONOMIC FAVOURABILITY OF GOLD
LEASE OF MINING CLAIMS BY THE CORPORATION FROM SAPAWE GOLD MINES LIMITED
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
SECONDARY OFFERING
PLAN OF DISTRIBUTION
USE OF PROCEEDS
CAPITALIZATION
DESCRIPTION OF SHARES
DIVIDEND POLICY
PRINCIPAL HOLDERS OF SHARES
ESCROWED SHARES
REMUNERATION OF DIRECTORS AND SENIOR OFFICERS
PAGE
4
4
4
5
5
5
6
7
12
12
12
15
15
15
16
17
18
18
18
19
19
PAGE
PRIOR .SALES 2 0
PROMOTER 2 0
AUDITORS 2 0
TRANSFER AGENT AND REGISTRAR 2 0
MATERIAL CONTRACTS 2 1
AUDITORS' REPORT 2 3
BALANCE SHEET AND PRO-FORMA BALANCE SHEET 2 5
STATEMENT OF DEFERRED EXPLORATION ANDDEVELOPMENT EXPENSES 2 6
STATEMENT OF DEFERRED ADMINISTRATIVE EXPENSES 2 7
STATEMENT OF CHANGES IN FINANCIAL POSITION 2 8
NOTES TO FINANCIAL STATEMENTS AND PRO-FORMA BALANCE SHEET 2 9
UNAUDITED FINANCIAL STATEMENTS 3 3
PURCHASER'S STATUTORY RIGHTS OF WITHDRAWALAND RECISSION 3 7
CERTIFICATE 3 8
PURPOSE OF THE OFFERING
The Corporation intends to use the funds received under the offering to continue the first phase of its agreement with Sapawe Gold Mines Limited (Sapawe) in connection with the proposed development program of the patented and unpatented mining claims and concessions in Northwestern Ontario, more specifically in Mccaul Township leased by Sapawe to the Corporation and to meet its administrative expenses and to pay the expenses of this offering, all as described under the heading "Use of Proceeds".
SECONDARY OFFERING
20,000 Class "A" Shares
There is secondary offering of 20,000 Class "A" shares at market prices prevailing from time to time through registered security dealers in the Province of Ontario, Quebec and Manitoba for a commis sion of 15C per share. The proceeds of this secondary offering will accrue to the selling shareholders and not to the Treasury of the Corporation. Particulars of the secondary offering and selling shareholders are set forth under subject heading "Secondary Offering",
THE MARKET
THE SHARES OFFERED HEREBY ARE SPECULATIVE AND THERE IS NO MARKET FOR THE SHARES OF THE CORPORATION.
Reference should be made to the heading "Business and Operations of the Corporation" and "Speculative Nature of Securities."
THE CORPORATION
ATIKO GOLD MINES LIMITED was incorporated under the Quebec Mining Companies Act by Letters Patent dated March 14, 1974 with an authorized capital of one million common shares of the par value of $1.00 each. By Supplementary Letters Patent dated the 16th day of October, 1974 the authorized capital of the Corporation was changed to $l,000,000.00 to be divided into 700,000 Class "A" shares and 300,000 Class "B" shares. The Class "A" shares have l vote per share. The Class "B" shares have 3 votes per share but in ali other respects are the same as Class "A" shares.
The head office of the Corporation is located at 1117 St. Catherine Street West, Suite 910, Montreal, Quebec, H3B 1H9, Canada.
SPECULATIVE NATURE OF SECURITIES
Mineral exploration, development and production work is speculative and involves substantial risk. There is no guarantee nor is it represented by the Corporation that the development and pro duction work on the mining claims leased to the Corporation by Sapawe Gold Mines Limited which claims are located in Northwestern Ontario, more specifically in Mccaul Township will meet with success or that the Corporation will be able to raise funds if necessary to complete further stages of development and production.
MANAGEMENT OF THE CORPORATION - DIRECTORS AND OFFICERS
Grand Holdings Corporation Limited (Grand) provides general administrative services to the Corporation. Mr. Georges La Fontaine, the President of the Corporation, is the individual who actually directs these administrative services. Reference is made to the heading "Remuneration of Directors and Senior Officers".
The names, addresses in full, all positions and offices held with the Corporation and the principal occupations within the five years preceding of each of the directors and officers of the Corporation are hereinafter set forth:
Name and Address
Eric Algot Pearson, 1214 Scott Street, Fort Frances, Ontario.
Position and Occupation
Chairman of the Board, Director Retired, 1966 to date. President, Pearson Forest Products Limited, 1946 - 1965.
Georges Albert La Fontaine,3 Burke Avenue,Dollard des Ormeaux, Quebec
President and Director.President,Bayard Resources Limited,January 1973 to date.Corporate Executive, BayardResources Limited, Nov. 1971 toJanuary 1973.Executive Vice-President,Grand Holdings Corporation LimitedNovember 1971 to date.Provincial Director,Scholarship Consultants of NorthAmerica Ltd., August 1967 toOctober 1971.
Hubert Victor Spehar, 1705 East 7th Street, Duluth, Minnesota, 55812, U.S.A.
Secretary, Treasurer and Director,President, Mattson Mfg. Inc.,April 1973 to date.Auditor, self employed 1948to date. Division Chief,U. S. Govt. Treasury, 1936 - 1948
Alwyn Keith Bayles, 23 Birch Road, Atikokan, Ontario
Director.Metallurgical Manager and Mill Superintendent, Steep Rock Iron Mines Ltd., 1969 to date. Chemical Engineer, 1946 to date.
BUSINESS AND OPERATIONS OF THE CORPORATION
The business of the Corporation, alone or in joint ventures, is to acquire mineral prospects by staking, purchasing, leasing, or transacting, obtain licences, permits and exploration concessions, and to proceed with the exploration and/or development of such prospects alone or in association with other companies with a view to commercially exploiting mineral deposits.
Should the Corporation not have, nor wish to direct the financial resources to develop on its own the mineral prospects which it holds or hopes to obtain, it may participate with other companies in the exploration and development of such prospects. The extent of the Corporation's participation shall depend on the stage of the exploration programme and management's assessment of the merits of each prospect. This may result in the Corporation abandoning a prospect, selling the whole or part of the Corporation's interest, or in retaining a royalty, carried interest or working interest in the prospect, to the extent that management deems it in the best interest
owthe Corporation. It shall be the policy of management to endeavor to acquire as large an interest as possible in each prospect at minimum cost or capital risk to the Corporation. Whenever possible the Corporation shall act as initiator, promoter, developer, licensee, concessionaire and operator of its various projects, retaining a satisfactory interest in each project while committing itself to the lowest possible capital expenditures. The Corporation may bring in partners at various stages of any project for a percentage of the costs of a particular stage of development in return for a percentage partnership interest. If an exploration programme is successful in locating a mineral deposit of apparent commercial value, such deposit may be developed to production by a new company incor porated, organized and operated by the Corporation and the partners it may have in such venture.
PRINCIPAL PROJECT
McCaul Township, Northwest Ontario
The primary business of the Corporation in 1975 shall be the exploration and development of gold prospects in North West Ontario, more specifically in the area of Atikokan and Sapawe, Ontario, where the Corporation shall concentrate its efforts toward the exploration, development, and reactivation of the former producing mine (1966) which it has leased from Sapawe Gold Mines Limited, while also investigating and if feasible, participating in the exploration and development of properties in the vicinity of the corporation's mine which may contribute, potentially, additional feed for the Corporation's mill. Should the Corporation acquire any major properties or should any other material change occur during the course of distribution of shares to the public, /an amended prospectus will be filed with the appropriate Provincial regulatory authorities.
The Sapawe Mine property consists of an existing mill, buildings, fixtures and equipment located thereon, and the following 47 contiguous mining claims (16 patented and 31 unpatented claims) located in McCaul Township.
Patented Claims
E. S.E. S.E. S.F. F.F. F.F. F.F. F.F. F.F . F .F. F.F. F.F. F.F. F.F. F.F. F.F. F.
464748
3416341734184026427540764094409641444146452445725937
Unpatented Claims
F. F.F. F.F. F. F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.
126251262612630 12688126891269012691126921269312701130851308613087130881308913090
F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.F. F.
127021270312704127051270612707127081270913029130301309113092130931309413095
The Corporation's chief consultant cmjinccr, Chester J. Kuryliw, M.Se., P.Eng., has prepared a report dated May 7, 1974 and revised March 14, 1975 which is available for examination at the offices of the Corporation and at the offices of the Ontario Securities Commission, 555 Yonge Street, Toronto, Ontario, at the offices of the Quebec Securities Commission, 899 Victoria Square, Montreal, Quebec, and at the offices of the Manitoba Securities Commission, 379 Broadway, Winnipeg, Manitoba, during normal business hours.
History
Intermittent mining and milling were carried on from1963 to 1966 on the properties of Sapawe Gold Mines Limited, in McCaul Township, about 20 miles east of Atikokan, Ontario, in the Thunder Bay Mining Division. A total of 36,972 tons derived from development muck and stoping were milled with an average recovery of 0.133 ounce gold per ton. Milling results were mixed in the early stages with recovery nearly nil when development muck was put through, with the best milling results obtained in the fourth quarter of 1966 when 5,261 tons from stoping with an average millhead of 0.239 ounce gold per ton were run through the mill. Average gold recovery was 80.31 and average tonnage milled was 57.2 tons per day during this last quarter.
The mine was closed down at the end of 1966 because of a lack of funds to continue explorations and operations.
In the opinion of the Corporation, the disappointing results were due to a number of factors. Insufficient knowledge of the geological structure, an oversimplification of the geology and a lack of recognition of the local complex habits of gold mineralization led to excessive dilution during mining. An independent mining contractor was paid on a tons produced basis for the first stoping carried out on the first and second levels, with heavy overdrilling into wall rock occuring, and leading to much dilution. Mill feed was at times derived solely from development muck, and there was considerable dilution in mill feed throughout the continuing operation, The mine operators apparently concluded the white quartz vein was ore, and stoped accordingly. Only later was it determined that the later- age blue-grey quartz is the gold bearer. The new awareness of this geology in the opinion of the Corporation was a factor in increasing the grade of the 301 stope in December 1966, the last month of mine operation, to 0.348 ounce gold per ton.
A program of selective mining was not instituted before the mine closed down. The extent of upgrading which the Corporation believes possible was never demonstrated.
Other contributing difficulties where the percent of downtime and poor recovery of the mill, and a poor performance of the mill in its low capacity. The mill was plagued with mechanical problems, intermittent operation, and inadequate mill feed. Metallurgical testing by the Bureau of Mines and Canadian Industries Ltd., indicated that a recovery of 9 5* should be expected, but an average of only 80. 3?; of calculated mill heads was achieved in 1966 and was not satisfactory.
In essence the mine suffered from a premature attempt to produce gold with incorrect development of the known reserves and a misunderstanding of the geological structure.
The property was extensively drilled from surface in 1960 with results purportedly justifying a 1961 three compartment shaft sinking to a depth of 500 feet with two levels established at the 170 and 320 foot horizons. A mill was installed in January 1963, with a rnt-od capacity of 90-100 tons per day. The shaft was deepened in 1965 to 1015 foot, with three new levola opened up at 520', 720', .and 920'.
The existing mine plant, mill and shaft pipe and cable installations and underground track and pipe were left in place on closing down the mine in 1966. A watchman hired and paid by Bayard Resources Limited occupied the property from the closing of operations until late in 1971. The property was unattended for a short time, then occupied again by the Ontario-Minnesota Pulp and Paper Company Limited, who used many of the buildings while carrying on wood cutting activities on the property. From the inception of the Corporation on March 14, 1974, to September 30, 1974, the date of the last audited financial statements of the Corporation, the Corporation has spent $30,611 for exploration and development expenses, details of which are given on the financial statement on page 26 of the prospectus. Total expenditures for work on the property to the end of February, 1975 are$66,453, details on page 33 of the Prospectus as part of the unaudited financial statements of the Corporation to the end of February, 1975.
All mine buildings are structurally sound and require only minor work for rehabilitation. The transformer substation is operative, and the headframe, compressor, hoist and ancillary structures also appear in good enough shape to rehabilitate. The mill building and installations are in place, though perhaps the mill setup could not handle the 100 ton per day rated capacity as indicated from past performance. The shaft and hoisting equipment however should support most certainly at least a 200 ton per day ore handling operation.
It was only near the end of operations in 1966 that there began to evolve a clarification of structures with the recognition of the localization of gold associated with blue quartz, and of the
10
angle thrust faulting that developed thickened vein lenses and vein gaps across the easterly plunge of shoots. Operations ceased at the end of 1966 when funds ran out, and the mine was closed, supposedly temporarily, while management unsuccessfully attempted to raise additional funds for new exploration and development work.
Present Ore Estimates
Many ore calculations were carried out by Engineers and Geologists for the Sapawe Mine, and in the Corporation's opinion, an accurate assessment of the potential ounces of gold present is dependent upon the first hand experience and geologic knowledge gained from mapping, sampling and experimental .selective stoping. The Corporation's Chief Consultant Engineer, Chester J. Kuryliw, M.Se., P.Eng., states from a study of records that selective mining practices should increase average grades over past mining.
Exploration Objectives
Three parallel gold bearing shoots were partially mined at Various levels. Extensions of these shoots where not mined should be investigated for a continuation of the good gold mineralization.
A fourth gold bearing shoot was developed near the end of operations in 1966 at the east end on the 4th and 5th levels. The strength of the shoot as a whole appears to increase downwards so that the known sulphide vein lense and other possible lenses in the shoot may have important dimensions below the bottom level. For 40 feet at the western end of the lense on the 5th level the sulphides widen to an average of 4.0 feet and become very heavy. The muck samples for this 40 feet of drifting averaged 1.07 ounces of gold per ton while a large composite picked sample of only the vein material from this length assayed 6.556 ounces gold, 38.460 ounces silver, Q.76% copper, 4.90% lead, and 3.12?; zinc. This small gold bearing sulphide vein lense pinches out about 35 feet avove the 5th level and the entire shoot pinches out between the 4th and 3rd levels. Because of the downward increase of the strength of the vein, there should be a thorough inve stigation plunging downward from the 5th level to verify the possible continuation of the vein and the shoot improving with depth in length and thickness. At the 5th level this appears to be within the upper portion of a shoot with rich occurrence of gold, silver and base metals offering a good target for exploration to depth.
A geologic study of the surface should be followed up by an examination of six other located veins on the property.
11Program
A two phase program is recommended in the Kuryliw Report. The first phase includes surface exploration consisting of magnetic surveying and geologic mapping, to assist in understanding structure, and surface drilling to determine if the overall possibilities of the property can be enlarged by exploration, {Part A). Meanwhile the underground mine plant and necessary buildings shall be rehabi litated, and the mine dewatered (Part B). A first hand re-examination, mapping and sampling may then be carried out. If results of phase one are encouraging as expected, phase two shall begin, consisting of a program of underground exploration, mapping, study, sampling and drilling, and a system of drives on levels and in raises to extend the structures and so dotermine the potential grades and tonnages.
Cost of Parts A and B of Phase I as recommended by the Corporation's Chief Consultant Engineer, Chester J. Kuryliw, M.Se., P.Eng., is estimated at $250,000.00 and cost of Phase II at $300,000.00. This includes 1000 feet of drifting and crosscutting, 1200 feet of raising, and 4000 feet of contract diamond drilling underground in the second phase, as well as the capital purchase or rental of mining equipment, drilling machines, mucking machinery, locomotives, etc...
The Corporation by the end of February 1975 had expended $66,453 implementing recommendations of Parts A and B of Phase I. This includes the completion of about 40 miles of base lines survey and picket line grid, magnetic surveying and geologic mapping over line grid, power line brushing, and bunkhouse, cookery, office and storage, and some electrical and mechanical rehabilitation.
Six milky-white massive type quartz veins each several hundred feet long and 4' to 20' wide were located by geologic mapping, all in addition to the Sapawe Mine zone. These white quartz veins are potential host rock to later age gold bearing silification as in the case of the Sapawe Mine, and should be diamond drilled. A weak magnetic-low anomaly commonly associated with known occurrences of the white quartz veins suggests that silification and hydrothermal activity depleted the content of magnetic minerals at the veins.
A very strong white quartz vein structure discovered by mapping about 3000 feet South East of the mine site, occurs in thick ness up to 20 feet, and appears to extend at least a half mine in length. It is a mirror image structurally of the Sapawe Mine Zone on the same monocline, and should be seriously explored with diamond drilling to determine the potential occurrence of blue-grey quartz gold bearing mineralization.
The 1974 surveying and mapping, in the opinion of the Corporation, clarified the local geology of the Sapawe property.
12
EXPLORATION ASSISTANCE
There was an official announcement on July 10th, 1974 by the Ontario Ministry of Natural Resources of the addition of the Atikokan area as a designated area for the 1974 Mineral Exploration Assistance Program. The Corporation's property in McCaul Township is included in the designated area, and an application was filed with the Honourable Minister on July 30th, 1974, and ratified by contract dated November 21st, 1974. Under this program the Corporation may receive a reimbursement to one third of moneys spent on exploration activities between June 30th, 1974 and March 15th, 1975, and a report of exploration expenditures with complete technical data is now filed with the Ministry.
PRESENT ECONOMIC FAVOURABJLITY OF GOLD
The market price of gold has now risen to previouslyunprecedented levels from the fixed market price of $35.00 per ounce in 1966, and the increased price of gold encourages a new study and exploration of the Corporation's gold deposits. Although costs of mining have increased since 1966, the economic favourability of gold deposits now have, in the opinion of the Corporation, increased considerably compared to 1966.
With the price of gold having increased from the $35.00 per ounce level in 1966 to current highs, the economic feasibility terms have changed very favourably. The existing mine plant and underground shaft and development provide a relatively low capital cost opportunity to study, explore, and if feasible to develop and mine the Corporation's gold deposits in McCaul Township.
LEASE OF MINING CLAIMS BY THE CORPORATION FROM SAPAWE GOLD MINES LIMITED__________
The Corporation through Mr. Michel Cogger acting as Trusteehas entered into a lease arrangement with Sapawe Gold Mines Limited (Sapawe) of the mining claims of Sapawe together with existing mill, buildings, fixtures and equipment located thereon dated the 28th day of February, 1974 for a term of twenty-five (25) years renewable for a further term of twenty-five (25) years at the option of the Corporation on the same terms and conditions. The lease provides that development will proceed in five stages as follows:
Stage 1: Minimum total expenditures by the Corporation for reworking the property arc to be $75,000.00 within 18 months of the lease for the purpose of rehabilitation, dewatering, sampling, surface and underground drilling as recommended by the Corporation's engineers and consultants. Thereby the Corporation will earn a 103; interest in the property.
13
Stage 2: Minimum total expenditures by the Corporation are to be $150,000.00 within 36 months of the lease for the purpose of carrying on further rehabilitation , exploration and/or development work as recommended by the Corporation's engineers and consultants. Thereby the Corporation will earn a 35% interest in the property.
Stage 3: Minimum total expenditures by the Corporation are to be $250,000.00 within 54 months of the lease for the purpose of carrying on further rehabilitation, exploration and/or development work as recommended by the Corporation's engineers and consultants. Thereby the,- Corporal..] on will 'learn a 60?. JntproBt in the property.
Stage 4 : Minimum total expenditures by the Corporation are to be $400,000.00 within 72 months of the lease for the purpose of carrying on further rehabilitation, exploration and/or development work as recommended by the Corporation's engineers and consultants. Thereby the Corporation will earn a 90i, interest in the property.
Stage 5: The Corporation will continue, if necessary, by its own efforts or jointly in participation with senior financing as needed, to arrange for whatever additional sums may be needed for the purpose of establishing a mill and equipment to profitably mine and treat the ores which may be produced from the property.
The Corporation is under no obligation to expend any of the monies and may withdraw at any time. Sapawe is entitled to a leaiso renta] of $1.00 per year, plus $3. ,000 as an advance on future royalties payable when the mine comes into production. Should the mine never go into production the $1,000 will be deemed to have been paid as rent. If a mine is brought into production, Sapawe shall be entitled to a royalty of 5% from gross production to a maximum of 2 0* of the Corporation's net profit in any one year, not cumulative, until the liabilities of Sapawe and other liabilities incurred for the purpose of maintaining Sapawe are fully paid. Thereafter, Sapawe shall be entitled to a royalty of 51 of gross production to a maximum of
of the Corporation's net profit in any one year, not cumulative.
The Corporation has agreed to lend Sapawe at the discretion of the Corporation such funds as the Corporation deems necessary up to $9,000.00 per year at prevailing interest rates commencing in 1974 in order to enable Sapawe to maintain itself in good standing as a public corporation and not to repay past liabilities other than those agreed upon, which monies will be deducted by the Corporation from the royalty payments, if any, payable to Sapawe.
14
In the event the Corporation does not expend the monies set out above, the lease will become null and void subject to any interests which the Corporation may have earned in the property as aforesaid. The interest of the Corporation is subject to a floating charge debenture in favour of Bayard Resources Limited ("Bayard") in the amount of $400,000.00 together with interest at the rate of 6% por annum from November 30, 1966 which accrued interest at November 30, 1974 totals $192,000.00. The said mining claims are also subject to a 6% redeemable income bond in the amount of $15,000.00 which are owned by the Corporation. Mr. Georges La Fontaine, the President of the Corporation and a Director is President and a shareholder of Bayard.
On October 25, 1971, the Sheriff of the District ofRainy River ("Sheriff") seized all of the physical assets of Sapawe to satisfy claims of the Workmen's Compensation Board ("Board") filed with him which totalled $15,711.73. Certain assets were sold by the Sheriff and from the proceeds of such sale $3,226.85 was received by the Board in November, 1972, and a further ^950.00 in April, 1973. Subsequently, another execution Creditor of Sapawe filed an execution with the Sheriff for approximately $6,500.00 after the lease between the Corporation and Sapawe had been executed. In the opinion of the Corporation, its lease takes priority over this execution.
The Sheriff intended to proceed with the sale of theassets of Sapawe to satisfy these claims. Crown Trust Company ("Crown Trust") as Trustee under a Deed of Trust and Mortgage dated September l, 1964 made between Sapawe of the first part and Crown Trust as Trustee of the second part which Deed secures the $15,000 bonds now owned by the Corporation together with Bayard Resources Limited commenced an action in the Supreme Court of Ontario against the Board, the Sheriff and Sapawe for an injunction to prevent the Sheriff from selling these assets and for an order requiring the Sheriff to deliver up the assets to Crown Trust for sale by it pursuant to the terms of the Trust Deed and for other relief. This matter was heard in the Supreme Court of Ontario on January 28, 1975, and in a judgment signed and entered on March 6, 1975, the priority of the claim of Crown Trust and Bayard was established, and the desired orders obtained. The Corporation will instruct Crown Trust not to proceed with the sale so long as the lease is in force unless it is in the interest of the Corporation to do so.
Bayard has accepted 180,000 Class B shares and 20,000Class A shares of the Corporation as a conditional payment of $250,000 on its judgment against Sapawe in the amount of $596,000 inclusive of interest. The receipt of the said shares by Bayard is conditional on the success of the best efforts offering and in the event that it is not successful, Bayard will return the shares to the Corporation for cancellation. Bayard has agreed that it will not enforce its rights of sale of the property leased to the Corporation so long as the lease is in effect, unless it is forced to do so to protect its interest and the interest of the Corporation, but in any such event, Bayard will extract a covenant from any purchaser that such purchaser will be bound by the lease to the Corporation.
15
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
Bayard has been issued 180,000 Class B shares and 20,000 Clcifis A shares of the Corporation in exchange for a reduction of $2DO,000 on the principal amount owing on the debenture from Sapawe to Bayard. Bayard will pay to Grand Holdings Corporation Limited (Grand) its 20,000 Class A shares for services rendered by Grand for arranging the acquisition of the shares from the Corporation to Bayard and for directing the transactions between the Corporation, Bayard, Sapawe, and John W. Hatherly, Q.C. in Trust. Mr. Georges La Fontaine is executive vice-president, a director and a beneficial owner of 50% of the issued capital of Grand as well as being president and director of the Corporation and Bayard.
Bayard is the largest registered shareholder of Sapawe, owning 533,300 of the 8,296,376 issued shares of Sapawe, or e.4% of the total issued shares of Sapawe. The Corporation is unaware of any other holdings in the share capital of Sapawe greater than 5%.
SECONDARY OFFERING
The said 20,000 Class A shares to be received by Grand will be sold through registered security dealers in the Province of Ontario, Quebec and Manitoba who will be paid a commission of 15*? per share. None of the shares of the Secondary Offering will be sold until the minimum amount has been raised through the sale of the shares by the Corporation under this prospectus. Thereafter, the 20,000 shares of the Secondary Offering will be sold on the basis of one for every ten treasury shares sold by the Corporation hereunder. The selling shareholder will pay its pro rata share of the total expenses of the offering (Q.1% of total expenses, if the entire secondary issue is sold.)
PLAN OF DISTRIBUTION
The Corporation is offering up to 200,000 Class A shares on a best efforts basis at $1.25 per share through registered security dealers in the Province of Ontario, Quebec and Manitoba. The Corpora tion will pay agents a commission of 15C per share sold by them. If all of the shares offered under this prospectus are sold, the Corpora tion will receive not less than $220,000.00 before deducting expenses of the offer payable by the Corporation as estimated at $8,000.00.
The offering will continue until all of the shares offered hereunder are sold, unless the offering is terminated at an earlier date by the Corporation. In order for the offering to be successful,
16
the Crown Trust as Trustee of the Corporation must have received the sum of $115,000.00 net or more after allowing for agents' commission and the cost of this offer {the "minimum amount") before the expiration of 90 days (the "initial period") from the date of the acceptance for filing by the appropriate regulatory authorities. If the minimum amount is not received as aforesaid, all subscription monies will be returned forthwith to the subscribers by the Crown Trust and this offer will be withdrawn by the Corporation.
All subscription monies will be held in trust by theCrown Trust for payment to the Corporation after the minimum amount or more is received by the Trustee and otherwise for return to the subscribers.
Notwithstanding the foregoing, the Corporation hasinstructed the Trustee that no money shall be released to the Corporation until the passage of sufficient time to permit subscribers to have recourse, if they so elect, to their statutory right of withdrawl (refer to the heading "Purchaser's Statutory Rights of Withdrawal and Rescission") and has instructed the Trustee to remit the amount of the subscription to each subscriber who exercises the said statutory right of withdrawal.
USE OF PROCEEDS
The minimum amount to be raised by the Corporation from this share offering during the initial period so as to continue this offering is $115,000.00 net of commissions and the expenses of this offering. The said $115,000.00 will be used as follows:
To the end of February, 1975, the Corporation has expended $66,453 towards Parts A and B of Phase I of the Exploration and Underground Programs recommended by its Chief Consultant Engineer, Chester J. Kuryliw, M.Se., P.Eng. The additional funds from the minimum amount will allow for the recommended completion of rehabilitation and for dewatering the mine, with $97,000.00 for this purpose, and $18,000.00 to pay for overhead and operating costs of the Corporation.
Any excess funds raised above the minimum amount will be used to complete all the work as recommended in parts A and B of Phase I and the beginning of Phase II if warranted and possible with cash available.
17
Also, the Corporation may acquire, study, and explore further properties in the area of its principal project from such excess money raised.
CAPITALIZATION
.'Ih.irc Authot i /oilSharoi. i ii.'.iu'ij an ofHill nuee .'Jhi'nt. cJiilod
.'j O, 1974
Slim on iEsuod if thoShares l:.surd au of Minimum Nunibur of Prospectus; Date Share;: Sold
Class with of SI
Claus wild of 51
Apar .00
H par .00
shares value
thoron value
700,000 shares (5700,000)
300 (53
,000 Pharos JO)
Nil (50)
10 (510.00)
20 (525
235 (5285
,000 ,000)
,010 ,510)
132(5165
235 (5285
,000 ,000)
,010 ,510)
If the entire best efforts offer is subscribed for, there will be 220,000 Class A shares issued (S275,000) and 235,010 Class B shares issued (5265,510).
18
Dl^RIPTION OF SHARES
Class A and Class B shares of the Corporation which have been issued and the Clnsr, A shares offered by this Prospectus will be issued as fully paid and non-assessable. The holders of Class A shares are entitled to one vote per share at all meetings of share holders of the Corporation. The holders of Class B shares are entitled to three votes per share at all meetings of shareholders of the Corporation and the number of votes is the only difference between the Class A and Class B shares.
All shares rank equally with all other shares of the Corporation in respect of dividend payments and upon liquidation, winding up or other dissolution of the Corporation. If the Class A shares are sold the percentage of the vote exercisable at share holders meetings by the Class A holders will be a maximum of 2 3.8* and the Class B shares will have the remaining 76.2%.
Two shareholders present in person holding or representing by proxy not less than 10* of the total number of issued shares of the Corporation constitute a quorum for the transaction of business at a meeting of shareholders. A resolution may be voted upon at the meeting by a show of hands, unless a poll is demanded by any share holder. On a show of hands, every shareholder (or nominee) present in person has one vote; on a poll every shareholder (or nominee) is entitled to l vote for each Class A share registered in the share holder's same, and to 3 votes for each Class B share registered in the shareholder's name. In the event of a tie in the number of votes cast on either a show of hands or a poll, the Chairman of the meeting has a second or casting vote.
DIVIDEND POLICY
No dividends have been paid or declared on any of the shares of the Corporation. As the Corporation expects to use all avaialble funds to finance the development and expansion of its business, it does not anticipate paying dividends in the foreseeable future.
PRINCIPAL HOLDERS OF SHARES
As of the date hereof the directors and senior officers of the Corporation, as a group, beneficially own directly or indirectly 3010 Class B shares.
Bayard Resources Limited, 1117 St. Catherine Street West, Suite 910, Montreal, Quebec, has been issued 180,000 Class B shares for a total consideration having a value of $225,000 being $1.25 per share and 20,000 Class A shares for a total consideration having a value of $25,000 being $1.25 per share.
19
John W. Ilathcrly, Q. C. in trust, 22 North Cumberland Street, Thunder Bay, Ontario, has been issued 55,000 Class B shares for a total cash consideration of $60,500 being ijl.lO per share. The directors and senior officers of the Corporation arc the beneficial owners of 3,000 of these shares (included in the 3,010 shares listed above) .
With the presently subscribed for B shares issued, Bayard Resources Limited beneficially owns 76.59?; of the issued B shares of the Corporation and John W. Hatherly, Q. C. in trust owns 23. 41 of the said B shares. Bayard Resources Limited owns 100% of the issued and outstanding Class A shares of the Corporation.
Grand Holdings Corporation Limited, a company of which Mr. Georges La Fontaine is the Executive Vice-President , a director and beneficial owner of 501 of the issued capital is to be issued the 20,000 Class A shares held by Bayard Resources Limited for services rendered in the event the best efforts offering is successful which shares shall constitute the secondary offering (see heading "Secondary Offering", "Interest of Management and others in Material Transactions", and "Promoter") .
There are presently 180,000 shares of the Corporation held in escrow by the Crown Trust Company being all the Class B shares owned by Bayard Resources Limited and subject to release from escrow only upon written consent of the Board ofDirectors and the regulatory bodies having jurisdiction over the sale of the securities of the Corporation. There are also 55,000 Class B shares owned by John W. Hatherly, Q. C., in trust, which are pooled and subject to release only upon the written consent of the Board of Directors of the Corporation.
REMUNERATION OF DIRECTORS AND SENIOR OFFICERS
No remuneration has been paid or is payable by the Corporation to its directors and senior officers to date. By Agreement dated the 15th day of November, 1974 Grand Holdings Corporation Limited (Grand) has agreed to provide general admini strative services to the Corporation for a period of three years from March l, 1974 expiring on February 28, 1977 for the sum of $500.00 per month. Mr. Georges La Fontaine is the individual who directs the performance of services on behalf of Grand and receives no salary from Grand.
20
By resolution of the Hoard of Directors of the Corporation at a meeting held on September 21st, 1974, subsequently confirmed by an Agreement made between the parties dated the 25th day of November, 1974, an option to purchase 40,000 Class A shares of the Corporation at the price of $1.10 per share was granted to Mr. Hubert V. Spehar the Secretary-Treasurer of the Corporation in consideration for services rendered. Said option must be exercised on or before December 31st, 1977.
PRIOR SALES
To the knowledge of the Corporation, no shares have been sold by or for the Corporation or the selling securities holder within the past 12 months except for 10 Class B shares which were issued to the incorporators of the Corporation for a total cash consideration of $10.00 and the Class A and Class B shares which have been issued as set out under the heading "Principal Holders of Shares".
PROMOTER
The promoters of the Corporation are Bayard Resources Limited (Bayard) and Grand Holdings Corporation Limited (Grand).
Bayard is accepting the 180,000 Class B shares and the 20,000 Class A shares from the Corporation as payment of $250,000 by Sapawe Gold Mines Limited (Sapawe) to Bayard on account of Sapawe's total indebtedness to Bayard in the amount of $400,000 plus interest. The receipt of the shares by Bayard is conditional on the success of the best efforts offering and in the event that it is not successful Bayard will return the shares to the Corporation for cancellation.
Grand is to receive the said 20,000 Class A shares ofthe Corporation from Bayard for services it has rendered in connection with organizing the Corporation (see heading "Interest of Management and Others in Material Transactions").
AUDITORS
The Auditors of the Corporation are Kendall, Trudel S Co., Chartered Accountants, 1015 Beaver Hall Hill, Montreal, Quebec.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the shares of the Corporation is Crown Trust Company, 302 Bay Street, Toronto, Ontario.
21
R T ̂ -!^N JJ^TS
The following is a summary description of the material contracts to which the Corporation is a party:
1. Lease Agreement dated February 28, 1974 made between Sapawe Gold Mines Limited (Sapawe) and Mr, Michel Cogger acting as Trustee for the Corporation and Adoption Agreement dated as of March 15, 1974 made between the Corporation, Sapawe and Michel Cogger whereby the Corporation adopted the said Lease and Sapawe and Atiko released Mr. Cogger from his obligations thereunder.
2. Agreement dated the 28th day of February, 1974 made between Sapawe, Michel Cogger as Trustee for the Corporation, and Bayard by which Bayard agreed to accept 200,000 shares of the Corporation as constituting a principal payment of $250,000 on the Debenture referred to on page 14.
3. Agreement dated as of the 15th day of November, 1974, between the Corporation, Bayard and Sapawe, modifying Agreement No. 2 by which Bayard agreed to accept 180,000 Class B shares of the Corporation and 20,000 Class A shares of the Corporation as constituting the principal payment of $250,000 on the Debenture in Agreement No. 2.
4. Agreement dated as of the 15th day of November, 1974 between Crown Trust Company and the Corporation wherein Crown Trust is appointed as Trustee in connection with this offering described under the heading "Plan of Distribution".
5. Agreement dated as of the 15th day of November, 1974 between Grand Holdings Corporation Limited (Grand) wherein Grand agreed to provide general administrative servives to the Corporation for a period of threeyears expiring on February 28, 1977, described under the heading "Remuneration of Directors and Senior Officers".
6. Agreement dated as of the 25th day of November, 1974made between the Corporation and Mr. Hubert V. Spehar, described under the heading "Remuneration of Directors and Senior Officers."
22
7. Exploration Assistance Agreement dated the 21st day of November, 1974 between the Corporation and the Minister of Natural Resources of Ontario providing government support for exploration activities is described under the heading "Exploration Assistance".
Copies of the foregoing Agreement.1; may bo inspect odat the principal office of the Corporation during ordinary business hours while the securities offered by this prospectus are in the course of distribution to the public.
23
KENDALL, TRUDEL 8t C O.CHARTERED ACCOUNTANTS - COMPTADLES AGREES
1015 BEAVER HALL HILL * MONTREAL, QUEBEC H2Z 1S1 * T EL.: 866-8563
AUDITORS' REPORT
To the DirectorsAtiko Gold Mines Limited(No Personal Liability)
We have examined the balance sheet and pro-
forma balance sheet of Atiko Gold Mines Limited (No Personal
Liability) as at September 30, 1974 and the statements of deferred
exploration and development expenses, of deferred administrative
expenses and of changes in financial position from the inception of
the company to September 30, 1974. Our examination included a
general review of the accounting procedures and such tests of
accounting records and other supporting evidence as we considered
necessary in the circumstances.
In our opinions
a) The accompanying balance shuct presents
fairly the financial position of the company as at September 30, 1974;
b) The accompanying pro-forma balance sheet
presents fairly the financial position of the company as at September
30, 1974 after giving effect to the changes set forth in Note 1;
24
-2-
c) The accompanying statements of deferred
exploration and development expenses, of deferred administrative
expenses and of changes in financial position present fairly the
results of the operations of the company for the period from its
inception to September 30, 1974;
all in accordance with generally accepted accounting principles.
CHARTERED ACCOUNTANTS.
MONTREAL, Quebec March 18, 1975
ATIKO GOLD MINES LIMITED 2 5 (No Personal Liability)
BALANCE SHEET AND PRO-FORMA BALANCE SHEET
AS AT SEPTEMBER 30, 1974
ASSETS Pro-FormaBalance Balancesheet sheet^^^
CURRENT ASSETS (note T)~"
Cash l 48,601 $l28, 128 Accounts receivable 3, 700 _3, 700
52,301 131,828 DEPOSIT WITH PUBLIC UTILITY Z OO ZOO
INVESTMENT, at cost (Note 2) l, 500 l, 500LEASEHOLD INTEREST (Note 3) 250,000 250, 000FURNITURE fe OFFICE EQUIPMENT, at cost 789 789OTHER
Deferred exploration and development expenses 30,611 30, 611 Deferred administrative expenses ^10, 78?. 18, 782
-Hl!-!21 49".~393
g 3 46, 183 fe33,710
LIABILITIES
CURRENT LIABILITIES Accounts payable $ 35,673 $
SHAREHOLDERS' EQUITY CAPITAL STOCK - (Note 4)
Authorized700, 000 -class "A" common shares at $l.
par value, with l vote per share 300, 000 - class "B" common shares at $l.
par value, with 3 votes per share
BALANCE SHEET 255, 010
PRO-FORMA BALANCE SHEET ~,, n. rt•So?, 010CONTRIBUTED SURPLUS 55, 500 A^-iZPJL
310,510 433,710
. 183 &I33.710
THE BOARD:
Director.
Director.
26
ATIKO GOLD MINES LIMITED (No Personal Liability)
STATEMENT OF DEFERRED EXPLORATION AND DEVELOPMENT EXPENSES
FROM TOE INCEPTION OF THE COMPANY (MARCH 14, 1974) TO SEPTEMBER 30, 1974
Prospecting and line cutting
Geological and magnetometer surveys
Field salaries and expenses
Engineering salaries and expenses
Engineering fees and expenses
Employees ' benefits
Field maintenance
Travel
Licenses and taxes
Light and power
Telephone
General
27
ATIKO GOLD MINES LIMITED (No Personal Liability)
STATEMENT OF DEFERRED ADMINISTRATIVE EXPENSES
FROM THE INCEPTION OF THE COMPANY (MARCH 14, 1974) TO SEPTEMBER 30, 1974
Management fees $ 3, 500
Office expenses 281
Advertising and promotion 741
Telephone and telegraph l, 118
Stationery, printing and postage 431
Professional fees l, 843
Travel l, 945
Interest 743
General expenses 180
$10,782
28
ATIKO GOLD MINES LIMITED (No Pereonal Liability)
STATEMENT OF CHANGES IN FINANCIAL POSITION
FROM THE INCEPTION OF THE COMPANY (MARCH 14, 1974) TO SEPTEMBER 30, 1974
SOURCE OF FUNDS
Capital stock issued for cash $ 10 Capital stock subscribed for cash 60, 500
$60, 510
APPLICATION OF FUNDS
Deposit with public utility 200 Purchase of bonds l, 500 Purchase of fixed assets 789 Deferred exploration and development expenses 30, 611 Deferred administrative expenses 10, 782
43,882
INCREASE IN WORKING CAPITAL AND WORKING CAPITAL AT END OF YEAR $l6, 628
29
ATIKO GOLD MINES LIMITED (No Personal Liability)
NOTES TO FINANCIAL STATEMENTS AND PRO-FORMA BALANCE SHEET
AS AT SEPTEMBER 30, 1974
NOTE l - PRO-FORMA BALANCE SHEET.
The pro-forma balance sheet as at September 30, 1974 is after giving effect to the following:
a) The issue of the minimum of 112,000 class "A"shares of the capital stock of the company for a total cash consideration to the company of $l23, 200.
b) I - The repayment of all accounts payable of $35, 673.
II - The payment and charge to deferred administrative expenses of estimated share issue expenses of $8, 000.
III - The increase in cash by $79^ 527.
NOTE 2 - INVESTMENT.
6^0 redeemable income bonds of a par value of $l5, 000, due September l, 1971 in Sapawe Gold Mines Limited. There is no market value available for these bonds.
NOTE 3 - LEASEHOLD INTEREST.
On February 28, 1974, the company entered into a lease agreement with Sapawe Gold Mines Limited, where, for the sum of $l per annum and a minimum of $l, 000 per annum described below, Atiko Gold Mines Limited will lease mining claims in the Rainy River District of the Province of Ontario. On the same date, the company entered into an agreement with Bayard Resources Limited and Sapawe Gold Mines Limited to issue 20, 000 class "A" shares and 180, 000 class "B" shares at $l. 25 per share for a total of $250, 000 to Bayard Resources Limited.
30
ATIKO GOLD MINES LIMITED (No Personal Liability)
NOTES TO FINANCIAL STATEMENTS AND PRO -FORMA BALANCE SHEET
AS AT SEPTEMBER 30, 1974
NOTE 3 - CONT'D
A condition of the lease is that Atiko Gold Mines must spend the following amounts before these dates, which will allow .it to acquire the following interest in the property:
Period from Percent interestAmount date of lease to be
{cumulative) expendable acquired -—-—^-—
Stage l $ 75, 000 . 18 months 10 07oStage 2 $150, 000 36 monthsStage 3 ^250, 000 54 monthsStage 4 $400, 000 72 months
Under the terms of the lease, Atiko Gold Mines Limited may withdraw at any time from the development of the property, which would automatically terminate the lease. The expiry date of lease is February 28, 1999 and Atiko Gold Mines Limited has the option to renew the lease for a further period of 25 years.
The lease also provides that the company will pay to Sapawe Gold Mines Limited, a royalty of 5^o of the gross value of production, provided that such payment is not greater than 20^o of Atiko's net profit (15^o after Sapawe's accounts payable are paid).
The company shall pay to Sapawe Gold Mines Limited $l, 000 per annum as an advance on future royalties. Should the mine not go into production, such sums shall be deemed to have been paid as rent.
The company shall also advance to Sapawe Gold Mines Limited, at the company's discretion, up to $9, 000 per annum as advances on royalties. In addition and as soon as possible, an additional advance will be made by the company to Sapawe Gold Mines Limited of up to $10, 000 to repay advances made by Bayard Resources Limited (N. P. L.) and Grand Holdings Corporation Limited to Sapawe Gold Mines Limited.
31
ATIKO COLD MINES LIMITED (No Personal Liability)
NOTES TO FINANCIAL STATEMENTS AND PRO-FORMA BALANCE SHEET
AS AT SEPTEMBER 30, 1974
NOTE 4 - CAPITAL STOCK
Since the inception of the company on March 14, 1974, shares in the capital stock have been issued arid subscribed for as follows:
Issued and fully paidNumber ofshares Consideration
Subscribed for and paidNumber ofshares Consideration
Class "A" For leasehold
interest Total
Class "B" For cash For leasehold
interest
10
10
$10
$10
20.00020,000
55,000
180,OOP 235,000
$ 25,000 i 25,000
$ 60,500
225.OOP $285,500
Total consideration for class "A" and class "B" shares $310,510 NOTE 5 - SHARE OPTION AGREEMENT ^^^
By an agreement dated November 25, 1974, the company granted Mr. Hubert V. Spehar a director of the company an option to purchase 40, 000 class "A" shares of the company at $l. 10 per share, such option exercisable on or before December 31, 1977.
NOTE 6 - CONTRACTUAL OBLIGATION
By an agreement dated November 15, 1974, Grand Holdings Corporation Limited will provide general administrative services to the company for a period of three years expiring on February 28, 1977, for the sum of $500 per month.
32
ATIKO GOLD MINES LIMITED (No Personal Liability)
NOTES TO FINANCIAL STATEMENTS AND PRO-FORMA BALANCE SHEET
AS AT SEPTEMBER 30, 1974
NOTE 7 -SUPPLEMENTARY LETTERS PATENT
By supplementary letters patent granted October l 6, 1974, the company 1 s authorized capital stock was changed from l, 000, 000 common shares at $l. 00 par value to 700, 000 class "A" common shares at $1.00 par value and 300,000 class "B" common shares at $1.00 par value. The 700,000 class "A" shares and the 300,000 class "B" shares are entitled to one and three votes each respectively.
ATIKO C, OLD MINES LIMITED
(No Personal Liability)
BALANCE SHEET
AS AT FEBRUARY 28, 1975
33
ASSETS
CURRENT ASSETS
CashAccounts receivable
DEPOSITS WITH PUBLIC UTILITY
INVESTMENT, at coat (Note 2)
LEASEHOLD INTEREST (Note S)
FURNITURE A OFFICE EQUIPMENT, at coat
OTHERDeferred exploration and development expenses Deferred administrative expenses
L I A B J L I I E S
CURRENT LIABILITIES Accounts payable
SHAREHOLDERS' EQUITY CAPITAL STOCK (Note 5)
Authorized 700,000 - class "A" common shares at &1
par value, with l vote per share 800,000 ~ class "B" common shares at Si
par value t 'with 3 votes per share
BALANCE SHEET
CONTRIBUTED SURPLUS
SIGNED-THE BOARD:™ LF OF
""'Director
. (^Director
# 2 , 430 5,110 8,140
400
1,500
250,000
1,44s,
66,45322, 26888, 7 21
8350, 203
39,693
255,010
55,500310,510
835O, 203
(unaudited)
34 ATIKO GOLD MINISS LIMITED
(No Personal Liability)
STATEMENT OF DEFERRED EXPLORATION AND DEVELOPMENT EXPENSES
FROM THE INCEPTION OF THE COMPANY (MARCH 14, 1974) TO FEBRUARY 28, 1975
Prospecting, line cutting and brushing 4? 1 1,256
Geological and magnetometer syrveys 7, 754
Field salaries 8,408
Engineering salaries and expenses 14, 256
Engineering consulting fees and expenses 2 ,456
Employees' benefits 642
Field maintenance 680
Travel 8,292
Licenses and taxes 92
Light, heat and power 733
Telephone 925
General expenses 448
Small tools and supplies 991
Buildings rehabilitation 19,192
Field office expenses 68
Workmen's compensation ____265
8 66,453
( Unaudited)
35
ATIKO GOLD MINES LIMITED
(No Personal Liability)
STATEMENT OF DEFERRED ADMINISTRATIVE EXPENSES
FROM THE INCEPTION OF THE COMPANY (MARCH 14, 1974) TO FEBRUARY 28, 191/5
Management fees 8! 6, 000
Offioe expenses 644
Advertising and promotion Z, 9 97
Telephone and telegraph 2, 0 07
Sationery, printing and postage 1,129
Professional fees ft, 9,69
Professional fees re: Prospectus 2 ,000
Travel S, 846
Interest and bank charges 2,489
General expenses _____5-4-923,380
LESS: Interest income 1,112
8 22,268
(Unaudited)
36
ATIKO GOLD MINES LIMITED
(No Personal Liability)
STATEMENT OF CHANGES IN FINANCIAL POSITION
FROM THE INCEPTION OF THE COMPANY (MARCH 14, 1974) TO FEBRUARY 28, 1975
SOUJiCE OF FUNDS
Capital stock issued for oash Capital stock subscribed for cash Interest income
1060,500
861,622
APPLICATION OF FUNDS
Deposits with utility 8 400Purchase of bonds 1,500Purchase of fixed assets 1,442Deferred exploration & development e cep. 66^-4-53Deferred administrative expenses 28, 880 98,175
DECREASE IN WORKING CAPITAL 831,553
( Unaudited)
37
PURCHASER'S STATUTORY RIGHTS OF WITHDRAWAL AND REMISSION
Sections 64 and 65 of The Securities Act (Ontario) and Sections 63 and 64 of The Securities Act (Manitoba) provide, in effect, that where a security is offered to the public in the course of distribution:
(a) A purchaser will not be bound by a contract for the purchase of such security if written or telegraphic notice of his intention not to be bound is received by the vendor or his agent nor later than midnight on the second business day after the prospectus or amended prospectus offering such security is received or is deemed to be received by him or his agent, and
(b) A purchaser has the right to rescind a contract for the purchase of such security, while still the owner thereof, if the prospectus and any amended prospectus offering such security contains an untrue statement of a material fact or omits to state a material fact necessary in order to make any statement therein not misleading in the light of the circumstances in which it was made, but no such action to enforce this right can be commenced by a purchaser after the expiration of 90 days from the later of the date of such contract or the date on which such prospectus or amended prospectus is received or is deemed to be received by him or his agent.
Reference is made to Sections 64 and 65 of The Securities Act (Ontario) and to Sections 63 and 64 of The Securities Act (Manitoba) for the complete text of the provisions under which the above-mentioned rights are conferred.
38
CERTIFICATES
The foregoing constitutes full, true and plain disclosure of all material facts relating to the securities offered by this Prospectus as required by Part VII of The Securities Act (Ontario); by Part VII of The Securities Act (Manitoba) and The Securities Act (Quebec) and the respective regulations made under the said Acts.
DATED: March 24, 1975.
Executive Officer Chief Financial Officer
On benalf of the Board of Directors'fa
Director Director
PROMOTERS
GRAND HOLDINGS CORPORATION LIMITED BAYARD RESOURCES LIMITED
J^L:- ^y~ *~yExecutive Vice President President
Georges La Fontaine is a beneficial owner of 501 of the issued capital of Grand Holdings Corporation Limited, and Sam Herscovitch, Chairman of Bayard Resources Limited, is the beneficial owner of the remaining 501 of the issued capital.
Georges La Fontaine and Sam Herscovitch are the joint owners of 540,500 shares of Bayard Resources Limited, being 12.2?, of the total issued shares of 4,433,415. The Corporation is unaware of any other beneficial owners of shares of Bayard whose holdings exceed 5 ?,.
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52B14SW8891 63.3249 SABAWI t MCCAUL
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