Wheaton sells George Lake

Junior gold producer Wheaton River Minerals (WRM-T) has arranged to sell its George Lake project, near Bathurst Inlet in Nunavut, to Kinross Gold (K-T) in return for 4 million shares, worth about $6 million.

Under a 1999 option deal, Kinross has been working toward earning a 70% stake in the project by spending $20 million before December 2004. To date, the company has spent $6 million on exploration, including 11,000 metres of diamond drilling in 2000.

Kinross’s work has focused on the Goose Lake deposit, where the partners have outlined an indicated and inferred resource of 3.9 million tonnes grading 12.5 grams gold per tonne, or 1.6 million contained ounces.

This summer, the major began a 3,000-metre drilling campaign that targeted a possible down-plunge extension of Goose Lake mineralization at a depth of 450-500 metres below surface.

Deep intersections so far include 13.3 metres (at 320 metres depth) grading 23.6 grams gold per tonne. Two more intercepts in the same hole averaged 33.7 grams over 2 metres and 22.4 grams gold over 2.8 metres.

Goose Lake is the largest of six deposits at George Lake. Combined, the five other deposits host indicated and inferred resources of 3.9 million tonnes averaging 10 grams gold, or 1.3 million contained ounces.

Meanwhile some changes are occurring in Wheaton’s boardroom. Ian McDonald has resigned as chief executive officer but will remain a director, and officers Kerry Knoll, Peter Tredger and Dunham Craig have relinquished their respective posts (Knoll will also resign as director). Also, President and Chief Operating Officer John Kalmet will resign at the end of October.

Effective Oct. 1, Ian Telfer, currently a director, will take over as CEO. He served as president of TVX Gold from 1983 to 1993 and as president and CEO of Vengold from 1993 to 2000.

Telfer says the newly streamlined company is “in an excellent position to become one of the key consolidators in the mid-tier of the gold industry.”

Wheaton has $25 million in cash and no debt.

Overall, the reduction in management is expected to cut administrative costs in half. Wheaton will close its Toronto office and relocate its headquarters in Vancouver.

In August, Wheaton ended all mining and crushing operations at Golden Bear, its 89%-owned, seasonal producer in northwestern British Columbia. Decommissioning and re-vegetating are underway.

Final leaching at the mine is expected to produce about 33,000 oz. gold, exceeding an earlier 2001 production estimate by 10%.

During its life, the mine produced more than 265,000 oz. gold at a cash cost of about US$170 per oz., beating feasibility estimates that pegged lifetime production at 215,000 oz. Production peaked in 2000 at 94,000 oz.

Wheaton’s remaining assets include the Bellavista low-grade gold deposit in Costa Rica, where the company has completed a feasibility study for the construction of a moderate-sized heap-leach operation.

The project has been granted various tax and customs advantages, but, before moving forward, Wheaton intends to hedge a significant portion of production at prices higher than are currently available. Capital costs are projected at US$28 million.

The company also holds an 89% interest in the Red Mountain gold deposit in northern British Columbia, a project bought on the cheap after Royal Oak Mines’ financial collapse. A feasibility study is investigating the viability of relocating the Golden Bear mill to process a high-grade core of 700,000 tonnes grading 12 grams gold.