Slowly but surely,
Situated just east of here, Madsen was one of the more successful mines to arise from the Red Lake staking rush earlier this century. Between 1938 and 1976, it produced 2.4 million oz. from 8.4 million tons and was worked to 4,000 ft. below surface on 24 levels.
Geologically, Madsen is similar to other mines in the camp in that its gold is structurally controlled, but it differs in that the mineralization is non-refractory. Mineralization is hosted by parallel mafic tuff units known as Austin and McVeigh, with the former sitting in the hangingwall of the latter and accounting for virtually all historic output.
In 1998, Claude acquired the mine by merging with then-owner Madsen Gold and thus took over that company’s 3-year attempt to resume production.
Initially, Claude began test-mining various old stopes, but it quickly switched to the essentially untouched West McVeigh zone after drilling deemed it promising. By year-end, 144 holes were sunk, and a portal was collared to allow mineralization to be assessed underground.
“A combination of the nature of the infrastructure in the old mine and the fact that we were picking the bones rendered [Austin] uneconomic at US$255 gold,” President Neil McMillan told The Northern Miner, which recently toured the site. “The big potential for us rests at depth and with parallel structures, of which McVeigh is the most significant.”
The switch appears to be making headway, most recently in 28 definition holes sunk in West McVeigh. Of those, 15 returned intercepts exceeded the mine’s minimum cutoff grade (0.1 oz. gold per ton), including: * hole 2M-379, which returned 3.28 ft. grading 0.17 oz. gold; * hole 4M-181, which returned 6.4 ft. of 0.29 oz., 4 ft. of 0.18 oz. and 2.1 ft. of 0.24 oz.;
* hole 4M-166, which averaged 0.47 oz. over 4.4 ft.; and
* hole 4M-202, which returned 1 oz. over 0.98 ft.
Claude says the results show mineralization continues below the fourth level and indicate (when combined with previous holes) a potential for 300,000 tons grading 0.22 oz. in the upper seven levels. The estimate excludes material mined historically and recently (204,300 tons averaging 0.15 oz.), plus promising showings immediately to the west.
West McVeigh is now accessible via ramp to the second level. The company plans to connect the upper seven levels by a decline that will branch off as a drift on the seventh level to facilitate exploration.
Another area bearing fruit is what is described as a near-surface, detached segment of the Austin zone, dubbed East Austin. Similar in alteration pattern, it lies above the rake (the angle a structure makes in the plane of another) of the known zone, from which it is separated by a granodiorite dyke.
Twenty-three holes have tested the zone so far, of which 13 traversed the system. Gold values ranged from 0.15 to 0.8 oz. (comparable to historic grades); mineralized intervals, from 2.49 to 14.99 ft. in core-length.
Highlights include:
* 14.99 ft. grading 0.45 oz. in hole 16950B;
* 14.21 ft. grading 0.34 oz. in hole 17100B;
* 11.9 ft. grading 0.4 oz. in hole 16200A: and
* 2.49 ft. grading 0.16 oz. in hole 15900A.
Claude notes that tighter-spaced drilling is needed to assess continuity in individual shoots but states that historic and recent results already indicate potential for 250,000 tons grading 0.22 oz. Similar to West McVeigh, the company would drive a ramp from surface to develop stopes.
Ultimately, Claude hopes to block out 1 million tons in the upper levels to support a 1,000-ton-per-day operation, which, if successful, would double its annual output to 120,000 oz. with the inclusion of the Seabee mine in northern Saskatchewan. To meet this objective, another 270,000 ft. of drilling are budgeted for the next 9-12 months.
“The biggest issue here has been gold price,” said McMillan. “If we had to do it over, knowing what the price was going to do, I don’t think we would have started the mill up [in June], and, instead we would have begun then what we are doing today.”
Meanwhile, the company will attempt to raise more than $5 million by issuing 3.35 million units at $1.50 each. A unit consists of one share and half a warrant, with one full warrant exchangeable for one share within 18 months of the deal’s closing, at $1.85 each. The underwriters retain the option of purchasing another 2 million units, also priced at $1.50, until the offer closes on Oct. 12.
Some of proceeds are earmarked for delineation drilling at depth, notably extensions to the South and Main Austin zones. Also to be tested is the higher-grade No. 8 zone, which was briefly mined in the 1970s but forgotten as it sat deep in the footwall, at the deepest levels of the mine.
(Earlier this year, ACA Howe International pegged the mine’s proven and probable reserves at 221,708 tons grading 0.25 oz. per ton, and its total resources at 931,674 tons grading 0.3 oz. The former material occurs above the sixth level, whereas most of the resources occur below that level.) Unlike Austin and McVeigh, the No. 8 zone is associated with quartz-carbonate structures at the contact of mafic and ultramafic rocks.
Such zones are known in the Red Lake camp for their higher grades. Indeed, Claude’s current estimate for the No. 8 zone is 200,000 tons exceeding 0.65 oz., based on historic information.
To facilitate the program, Claude has resumed dewatering of the shaft and expects to reach the 16th level by year-end. (The 13th level had been dewatered by the time of The Miner’s visit.) Once there, a crosscut will be driven 850 metres north from an existing drift.
The program should be completed in 18 months.
Down the road, Claude is well-positioned for more discoveries as it holds 10,000 acres of surrounding ground. Within those holdings are the old Starratt Olson and Buffalo mines, which churned out a combined 165,000 oz.
gold during their relatively short lifetimes.
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