Typhoon winds down on resource estimate (January 29, 2007)

It isn’t the reception a junior looks for when it announces a resource estimate, but Typhoon Exploration (TOO-V, TPHXF-O) found its shares falling 20% recently on the release of an estimate from its Fayolle gold property in Quebec.

The company’s shares fell 8 to 32 on the day of the news, Jan. 19.

The Laval, Que.-based company had stoked the Street’s expectations just two days prior by announcing a drill intersection of 51.3 metres grading 2.81 grams gold — including 13 metres of 8.43 grams gold.

But the National Instrument 43-101-compliant estimate, prepared by InnovExplo, failed to meet those expectations.

With a cutoff grade of 1 gram gold, the estimate pegged the inferred resource at Fayolle at 287,200 tonnes grading 3.5 grams gold for 31,982 oz., with just over 1 million indicated tonnes grading 2.6 grams gold for 86,726 oz. gold.

Raising the cutoff to 3 grams lowers the indicated resource to 106,900 tonnes grading 6.4 grams gold, or 21,976 oz. gold, and the inferred resource to 218,800 tonnes grading 6.3 grams gold, or 44,648 oz.

With a 0.1 gram cutoff, the indicated resource rises to 848,000 tonnes grading 1.4 grams gold, or 39,397 oz. gold, and an inferred resource of 6.5 million tonnes grading 0.7 gram gold, or 148,609 oz. gold.

While those numbers weren’t enough to lift the company’s shares, its president and CEO, David McDonald, said in a release that resources can still be expanded.

“This resource is more in keeping with near-surface development scenarios rather than just a global resource,” McDonald said.

In the past, the company had said Fayolle had an inferred resource of roughly 800,000 tonnes grading 6.19 grams gold.

Located at the periphery of the Rouyn-Noranda mining camp, the Fayolle and Aiguebelle-Goldfields extend over 8 km along the Porcupine-Destor fault.

In March 2006, Typhoon signed an agreement with Agnico-Eagle Mines (AEM-T, AEM-N) whereby it can earn a 51% interest in Aiguebelle-Goldfields by spending $1 million on exploration and delivering 250,000 of its shares to Agnico.

The company says mineralization at Fayolle extends from surface to a vertical depth of 250 metres and has been delineated over a strike length of about 400 metres and a width of up to 300 metres.

Typhoon plans to push ahead with its 20,000-metre diamond drill program through the winter. It is targeting mineralization at depth and towards the west, and the extensions of Aiguebelle-Goldfields with the aim of linking the two zones over a minimum distance of 800 metres.

The company also announced the completion of an access road that will give it year-round access to the property.