Madsen Gold plans study of old Red Lake mine

Bringing the former Madsen gold mine near Red Lake, Ont., back into production after a 15-year absence could be a long and costly process, says James Morlock, president of Toronto-based Madsen Gold (TSE).

While Madsen still ranks second only to Placer Dome’s (TSE) Campbell gold mine as Red Lake’s second largest producer, the geology is complex and Morlock and his associates are working on a shoestring budget. One of three former mines located on 176 contiguous claims south of Red Lake, Madsen yielded 8.5 million tons of grade 0.31 oz. gold per ton between 1938 and its 1976 closing date. While the Madsen claims were mined on 28 levels, Madsen Gold is basing its geological reserve projections on data relating to the top eight levels.

Madsen has outlined 664,637 tons of grade 0.21 oz. in geological reserves. The estimate is based on information extracted from old drill logs and other geological data. Having obtained a promise of financial assistance from the Northern Ontario Heritage Fund, Madsen is preparing to go ahead with a preliminary feasibility study to determine what it would cost to resume mining.

The study will focus on the application of inexpensive longhole narrow-vein mining, and look at the cost of rehabilitating the surface plant. Morlock said he has received a letter from the Northern Ontario Heritage Fund promising $57,750 or about half of the total cost of the preliminary feasibility study.

But given the slump in gold prices, he said the company may proceed with an examination of mineralization at the old mine’s lower levels before any decisions are made on the future of the project.