Brigus Gold (BRD-T, BRD-X) has added to its gold resource at the Black Fox complex in Timmins, Ont., and reported an initial resource estimate exceeding half a million oz. gold for its 147 and Contact zones.
In the indicated category the zones host 116,710 oz. gold from 867,100 tonnes grading 4.18 grams gold per tonne. Combined with another 459,420 oz. from 5.4 million inferred tonnes at 2.61 grams gold, the resources total 576,130 oz. gold.
“These resource ounces represent near-term production opportunities given their proximity to our Black Fox infrastructure,” said Howard Bird, Brigus’ vice-president of exploration.
The zones are 4 km southeast of the company’s Black Fox gold mine. The current resource is based on 255 holes, where 169 holes were drilled into the Contact zone and 86 in the 147 zone.
To calculate the initial resource, Brigus used a 2.63 grams gold cut-off grade for a potential underground mine at Contact and 0.65 gram gold for an initial pit at the 147 zone.
Brigus is exploring the possibility of mining the 147 zone as a combined pit and underground operation, while developing the Contact zone as an underground mine.
“The 147 zone has some modest open-pit potential, while the underground could be accessed from an existing old decline nearby and would probably take twelve months to develop – suggesting first ore in mid-2013 at the earliest, subject to permitting,” Haywood Securities’ analyst Kerry Smith said in a note.
The company lowered its already-reduced production guidance at Black Fox for the fourth quarter, blaming slow ramp-up and higher-than-anticipated dilution in the underground portion.
Smith suggests underground supervision could be an issue, in a Dec. 21 note. He says the pit is delivering ounces, but the company is having problems with underground mining. “Brigus has indicated that the block model continues to track well with actual operating results, so higher dilution can only be the result of poor supervision of the underground,” he says.
In the fourth quarter, Brigus Gold expects to produce between 14,000 oz. to 15,000 oz. gold, down from 17,000 oz. to 18,000 oz. gold.
Despite the positive announcement on Dec. 15, Brigus’ shares closed down 5% to $1.04, while the S&P/TSX Composite Index lost 38.63 points to 11,504.42 points. The gold spot price also fell US$5.90 per oz., closing the day at US$1,570.60.