Drill results from Wesdome Gold Mines’ (TSX: WDO) Kiena complex in Quebec have confirmed high-grade gold mineralization in the Kiena Deep A zone.
The 65 sq. km Kiena complex, 10 km from the city of Val-d’Or, includes a fully permitted mine, a 930-metre shaft and a 2,000-tonne-per-day mill.
Wesdome operated the Kiena mine from August 2006 to June 2013, during which time it produced 1.8 million tonnes grading 3.38 grams gold per tonne for 198,708 oz. gold. Since the 1980s, the Kiena Mine has produced 12.5 million tonnes grading 4.5 grams gold per tonne for 1.75 million contained oz. gold.
The mine was placed on care and maintenance due to decreasing recovered grades and persistent industry cost pressures.
Wesdome has been exploring Kiena since 2016, and intersected high-grade gold mineralization in what is now known as the Kiena Deep A Zone.
“We are very pleased with the ongoing definition drilling that continues to confirm the overall continuity of the Kiena Deep A zone, which has now been defined over 700 metres along plunge,” says Duncan Middlemiss, the company’s president and CEO.
The Kiena Deep A zone is deeper than the past-producing S-50 zone, the main orebody at Kiena, but occurs on a distinct structure that connects to subparallel regional shears, namely the Marbanite and Norbanite shears.
The S-50 style of gold mineralization comprises stockworks of quartz-carbonate veins and veinlets hosted in basal, typically yielding less than 10 grams gold per tonne. The Kiena Deep A zone consists of visible gold within shear veins along the mafic–ultramafic contact and within the ultramafic rocks in shear zones. The A zone is divided into four subparallel subzones that form a plunging fold nose.
Highlights from its ongoing drill program in the Kiena Deep A zone reported in July included hole 6456, which returned 68.2 grams gold per tonne over 19 metres starting from 183 metres’ deep.
Other highlights included 126.3 grams gold per tonne over 4 metres from 94 metres in hole 6450; 44.5 grams gold per tonne over 9 metres from 57 metres in hole 6449; and 52.4 grams gold per tonne over 5 metres from 500 metres in hole 6505.
Kiena has measured and indicated resources of 3.1 million tonnes grading 5.81 grams gold per tonne for 582,600 contained oz. gold. Inferred resources add 4.1 million tonnes grading 7.57 grams gold per tonne for 1 million contained oz. gold.
Michael Michaud, Wesdome’s vice-president of exploration, says things started to come together in late 2017, when the company enhanced its drill platforms at the bottom of the mine from a 1,000-metre depth.
“Now we understand the controls on gold mineralization, and we have extended the zone over 700 metres up- and down-plunge — that is a very significant size,” Michaud says.
The high-grade intercepts were “dramatically different from what we have historically mined,” which were brecciated and did not have a lot of visible gold, Middlemiss says.
The company has four drills turning on the 1,050-metre level exploration ramp to complete the infill and immediate plunge extension drilling in the Kiena Deep A zone.
A fifth drill is located on the 670-metre level and continues to return high-grade intersections along the interpreted up-plunge extension of the Deep A zone towards the VC zone area, with one hole (6531) returning 31.1 grams gold per tonne over 5 metres from 530 metres.
The VC zone resides between the 670-metre and 1,000-metre level. The Deep A Zone sits below the VC zone, between the 1,000-metre and1,600-metre level. Drilling has revealed that the structure of the Deep A zone is folded like an inverted “U,” as it extends up-plunge to intersect the VC1 and VC6 zones.
“So it is part of the same structure,” Michaud explains. “The structure that holds the A zone is expected to continue up towards the VC zones.”
The company is considering driving an exploration drift near the 790-metre level to better drill the area, which could help development and production from the Kiena Deep A and VC zones.
The company has drilled 30,000 metres of its 50,000-metre underground exploration program this year, and updated the resource for the Kiena complex on Sept. 25. The global resource, below a 100-metre-thick crown pillar, now stands at 2.83 million measured and indicated tonnes grading 8.67 grams gold per tonne for 788,100 oz. gold. Inferred resources add 2.92 million tonnes grading 8.51 grams gold for 798,100 oz. gold. The resource included drill data as of Aug. 6 and includes another 140 drill holes, for a total of 36,050 metres drilled since Oct. 12, 2018.
A preliminary economic assessment will be completed in early 2020. The company will continue with exploration and focus on bringing Kiena back into production.
Wesdome aims to become a mid-tier gold producer, which calls for at least 200,000 oz. production per year. “The Kiena mine will certainly be another production pillar to that,” Middlemiss says. “Kiena is … 50% of our market cap right now.”
In the meantime, Wesdome’s production comes from its flagship asset, the Eagle River complex, 50 km west of Wawa, Ontario. The complex has two operating gold mines — the Eagle River underground mine and the Mishi open-pit mine, which in the second quarter produced a total of 22,437 oz. and generated $6.7 million in free cash flow, of which $5.5 million was reinvested in the Kiena complex.
The Eagle River mine has been in production since 1995, and Mishi since 2002. Ore from both operations is sent to a central mill.
Wesdome also owns the Moss Lake gold project, 100 km west of Thunder Bay. Moss Lake has measured and indicated resources of 39.8 million tonnes averaging 1.1 grams gold for 1.38 million contained oz. gold, and inferred resources of 50.4 million tonnes grading 1.1 grams gold for 1.75 million oz. gold.
A 2013 PEA estimated that the Moss Lake project has a 10-year mine life (including four years of preproduction), a $196-million, after-tax net present value at a 5% discount rate (based on US$1,546 per oz. gold), a 12% after-tax internal rate of return and a 1.75-year payback period.
At press time, Wesdome’s shares were trading at $6.21 in a 52-week range of $3.30 to $7.81. The company has 137 million common shares outstanding for an $851-million market capitalization.