Virginia Mines (TSX: VGQ) made its name, and a fortune, with its Eleonore discovery Quebec’s James Bay territory, but that doesn't mean that it is done with the region yet.
While it still holds a hefty royalty on Eleonore after selling it to Goldcorp (TSX: G; NYSE: GG) for over $400 million back in 2006, the company’s focus now is on its Wabamisk project just 65-km to the southwest.
Recent drill results from the 527 sq. km of property claims within the Eastmain Archean volcano-sedimentary belt were highlighted by 1.69 grams gold over 13.8 metres and 1.31 grams gold over 11.75 metres. Those results came out of two separate holes that both intersected what is known as the Mustang Vein. A third hole confirmed the continuity of the Mustang Vein under thick overburden with an intersection grading 18.5 grams gold over 1.9 metres.
In all, the company released results from15 new holes and two hole extensions, which in total cut 3,210 metres worth of rock.
Virginia’s focus was to extend the vertical continuity of the Mustang Vein while at the same time testing other stripped areas down to depths of between 125 and 250 metres below surface.
With the results now in, Virginia says it has confirmed the vertical continuity of the mustang down to 250 metres. It also managed to extend the lateral extension to the east by over 150 metres, and the vein is still open at depth.
And that wasn’t the only good news. Virginia says drilling also confirmed the presence of more parallel gold structures north of the Mustang Vein. Highlight intercepts from the zone included 39.05 grams over 0.9 metre; 3.61 grams gold over 4 metres; 5.24 grams gold over 2 metres and 1.73 grams gold over 7.4 metres from four separate holes.
The company says many of the intersections can be correlated together, which could point to continuity of gold structures.
The next step will be to launch a more closely-spaced grid drill program in the structures that remain open laterally and at depth.
The proving up of Wabamisk is a nice compliment to the company’s royalty on Eleonore. The mine is set to go into production in the fourth quarter of this year and is expected to turn out roughly 600,000 oz. of gold per year over its 15 to 20 year mine life.
Virginia has a 2.2% royalty on the first 3 million ounces of production and a can earn an additionally 0.25% royalty for each additional million ounces of production. That incremental royalty is capped at 3.5%.
In Toronto on May 13 the company’s stock was off 6¢ to $11.60 on 5,255 shares traded.
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