Wesdome Gold Mines (TSX: WDO) is spending more money on exploration this year than at any other time in its 29-year history.
“This has been an aggressive exploration program for Wesdome, and we have certainly seen the dividends,” George Mannard, the company’s vice-president of exploration, says of this year’s $11.3-million budget.
The company is spending $6.3 million at its Eagle River gold mine, which consists of the Eagle River underground mine and the Mishi open-pit mine. Eagle River, 60 km southeast of Hemlo, and 50 km west of Wawa, Ont., has operated for 21 years and produced over a million oz. gold.
Duncan Middlemiss, Wesdome’s president and CEO, says the company has had “a history of replacing and adding reserves,” estimating that Eagle River’s life-of-mine based on reserves is seven years. Mishi, based on current mining rates, has 13 years of mine life left. (Mishi sends incremental mill feed to Eagle River.) Three underground drills and one surface drill are turning at Eagle River, and another surface drill is working on Mishi.
At its Moss Lake exploration project, 100 km west of Thunder Bay, Ont., in the Shebandowan greenstone belt, Wesdome will spend $1 million this year and has just dispatched a drill rig to site. The large-tonnage, low-grade gold deposit is amenable to surface bulk-mining and hosts an indicated resource of 40 million tonnes grading 1.1 gram gold per tonne and an inferred resource of 50 million tonnes at the same grade.
In April, the company bought adjoining properties to consolidate its land position and expand exploration potential.
Meanwhile, at the past-producing Kiena gold mine and mill complex in Val-d’Or, Que. — which Wesdome bought for $2 million in December 2005 — the company is spending $4 million on exploration and has four rigs turning. Earlier this year, the company made a discovery at depth.
Mining under Lac de Montigny in the North zone at Kiena dates back to the 1930s. In 1961, previous owners discovered the S50 zone, and between 1964 and 1996, a Falconbridge subsidiary, Kiena Mines, put four levels into the zone. Underground work stopped later in the decade due to tricky ground conditions and a low gold price.
When the gold price picked up in the 1970s, Kiena Gold Mines kept developing the mine, which operated between 1981 and 2003, and produced 1.56 million ounces. The mine shut down in October 2003, due to depletion of the S zone.
Wesdome put the mine back into production after acquiring it in 2005, and mined it from August 2006 to June 2013 — producing 198,747 oz. gold. The mine went into care and maintenance amidst declining gold prices and a lack of developed reserves.
Because most of Kiena’s production came from the S50 zone between 100 and 1,000 metres deep, Wesdome concentrated its exploration.
“The whole geological thesis on this deep exploration target is that things happen in repetitions, so there were indications that there would be a repetitive structure to the northeast … that was the initial thesis of this exploration program: to test the repetition of the S50 zone further at depth,” Middlemiss says, who joined the company in July after a stint at St Andrew Goldfields led to the company’s acquisition by Kirkland Lake Gold (TSX: KGI; US-OTC: KGILF) in early 2016.
Highlights from the latest drill results released on Nov. 15 include 32.32 grams gold per tonne over 1.5 metres from 438 metres deep in hole 6124B; 71.42 grams gold over 1.5 metres from 510 metres deep in hole 6124C; and 749.96 grams gold over 0.6 metre from 479 metres downhole in hole 6131A.
Other drill results released earlier in the year include 94.35 grams gold over 17.4 metres from 492 metres deep in hole 6124; 14.3 metres of 223.12 grams gold from 695 metres deep in hole 6125; and 8.2 metres of 8.43 grams gold from 469 metres deep in hole 6130A.
“The implications are that if the dimensions and the geometry are analagous to what was known and mined at the upper levels, we could have a considerable volume of mineralization and grades that are greater than what was experienced historically in the mine,” Mannard says. “The north arm … hasn’t been drilled from 600 metres down because previous work was on the southeast arm. That’s where the implications of something big are.”
Middlemiss says one of the things he likes about Kiena — apart from the high-grade drill results — is that there are already 450,000 oz. gold in the measured and indicated category, and of that, 130,000 oz. are “proximal to where these exploration results occur, so that gives a bit of a head start with resource generation.”
Kiena has measured and indicated resources of 2.5 million tonnes grading 5.59 grams gold for 449,300 oz. gold, and inferred resources of 1.6 million tonnes grading 7.97 grams gold for 400,000 contained oz. gold.
Drilling continues northeast through the massive basalts, Mannard says, noting that the goal is to “generate reasonable confidence in a critical mass to justify progressive development of a ramp system to better position drills, and eventually access both known centres of mineralization.”
Middlemiss notes that the future of the Abitibi and mines like Kiena is to explore at greater depths.
“The Abitibi … hasn’t been tested that much at depth,” Middlemiss says. “You’ve got a few exceptions — like Macassa and LaRonde — but when you look at the Abitibi, a lot of the diamond drilling stopped at 500 feet, or 150 metres, below surface. There hasn’t been a lot of deep exploration, and that’s going to be the future of the Abitibi.”
At Kiena, he adds, “1,200 metres, or 4,000 feet … is not a great depth. It’s medium.
“We have great potential on our property because much of the drilling didn’t go much beyond 150 metres deep, so it’s wide open in terms of the geological potential,” Middlemiss says.
The mine has a 930-metre production shaft and 2,000-tonne-per-day mill.
“The mine is permitted and ready to go, and we have until mid-2019 to do any necessary amendments,” Middlemiss says. “As long as we keep everything in good standing, we are fine to proceed with our program.
“We feel fortunate to have three properties, which each in their own right can add value to the company,” he says. “It’s up to us to unlock the potential.”