Timmins Gold Mine’s Long Road To Production

The Timmins West gold camp in Ontario has gotten a second life. High-grade gold in drill results from Lake Shore Gold (LSG-T, LSGGF-O) and a US$1,000-per-oz. gold price have started an area play with many junior companies staking and exploring properties all along the Destor-Porcupine fault.

Lake Shore Gold’s Timmins gold mine, which is just going into pre-commercial production, is a perfect example of the tenacity that is sometimes needed in the mining business. This deposit is actually a gold discovery that was gradually uncovered over 98 years.

It all started back in 1911, when two prospectors, McAuley and Bridge, staked three claims on a gold showing. Over the next 14 years, they managed to sink two shafts to the 50-ft. level. Then Hollinger Mines and McIntyre Mines carried out trenching and drilled two holes between 1925 and 1937. Orpit Gold Mines tried next, drilling 87 holes and calculating in 1945 a resource of 340,000 tons grading 0.15 oz. gold per ton (308,400 tonnes grading 5.14 grams gold per tonne).

In 1959, Paul Meredith bought the property from Stanwell Oil and Gas, a successor to Orpit, and in 1964, the property was transferred to Holmer Gold Mines (the name derived from the first three letters of “Hollinger” and “Meredith”). An option by United Buffadison Mines generated 10 holes on the property.

Holmer Gold became the operator in 1968 and, over the next 13 years, the junior completed stripping, channel sampling, bulk sampling and 45 diamond-drill holes on the property.

It was at this time that geologists first determined there were two gold-mineralized zones: the Western or Main zone, with a northwest strike and dipping steeply to the south (the opposite of all earlier interpretations); and the Eastern or Shaft zone, with a northeasterly strike and unknown dip.

The deposit was now estimated at 720,000 tons grading 0.124 oz. gold (653,170 tonnes grading 4.25 grams gold) in the Main zone.

Noranda optioned the property in 1984 and carried out airborne EM-Mag surveys, ground magnetics and limited geological surveys. Crews drilled four NQ holes to test gold mineralization west of a major diabase dyke, resulting in a lower resource calculation of 427,000 tons grading 0.099 oz. gold (387,370 tonnes grading 3.39 grams gold) and Noranda dropping its option.

In 1986, three veteran mining entrepreneurs crossed paths, as Stephen Ogryzlo introduced Sethu Raman to Meredith. This led to Raman and Ogryzlo, as equal partners, privately buying control of Holmer from Meredith.

Raman became Holmer’s president, and shares were listed on the Alberta Stock Exchange.

In 1987, Raman negotiated an option on the property with Chevron Canada, which carried out an extensive exploration program, including compilation, stripping, geological mapping, channel sampling, and geochemical and geophysical surveys. Eighteen holes were drilled along three fences spaced 100 metres apart on the strike of the Main showing.

The drilling identified three closely spaced, gold-bearing alteration zones — Fockler (or Main), Hanging Wall (HW) and South Holmer — hosted in strongly silicified and tourmalinized volcanics and sediments.

The Fockler zone has now been traced for over 450 metres down-plunge and it remains open. Within this alteration zone, 15 gold-bearing pods have been identified to date.

Meanwhile, the HW zone, which does not outcrop, was found to connect to the Fockler zone at depth.

In 1989, however, Chevron stopped all its exploration in eastern Canada, but maintained its 20% earned interest in Holmer’s 23 patented and leased claims.

By 1994, Holmer had bought back Chevron’s 20% interest and completed a more detailed compilation and reinterpretation of all available drill logs and assay data in level plans and sections.

One major benefit of the Chevron drilling was that it clearly identified two pods of gold mineralization in the Fockler zone, and their association with a 100-metre-wide zone of strong tourmaline/carbonate alteration.

The alteration on the Fockler- Main zone appears to pinch out at a depth of about 200 metres. However, drill-hole H88-24Ext on this zone intersected a second, parallel alteration zone (the HW zone) with quartz veins assaying 84 grams gold per tonne (2.5 oz. per ton) over 1.6 metres at a vertical depth of 250 metres. Raman interpreted this HW zone as an en-echelon vein structure with significant depth potential.

Holmer, now being financed by Raman and his associates, began in May 1996 to drill-test the depth potential of the HW zone. The drilling confirmed not only the depth extension of the HW zone, but also discovered the new Footwall (FW) zone, which had a width of about 25 metres and showed consistent gold values.

The FW zone contains fine disseminated gold associated with pyrite and distinct albite-silica alteration. Gold occurs in three parallel, steeply dipping zones within a major alteration/shear structure that measures up to 130 metres in width. All the zones plunge 62° to the west and are open at depth below 450 metres.

On May 6, 1997, Holmer shares graduated to the Toronto Stock Exchange with an accompanying $4.2-million public offering, and drilling continued through the year.

Most of the previous drill holes on the property were terminated as soon as they entered ultramafic rocks. But, when diamond-drill hole 97-56 intersected alteration at the mafic-ultramafic contact, Raman decided to break with tradition and extend the hole into the ultramafics, since chasing the alteration seemed to be the key.

This decision resulted in the discovery of the new, parallel, “Ultramafic Gold” (UM) zone in ultramafic rocks below the Footwall zone at a vertical depth of 800 metres. Multiple intersections included 0.27 oz. gold per ton over 12.2 ft. (9.25 grams gold per tonne over 3.7 metres), 0.23 oz. gold over 11.3 ft. and 0.18 oz. gold over 63.5 ft. The UM zone contains visible gold associated with quartz tourmaline veins and coarse pyrite in altered ultramafic and alkalic intrusive rocks.

The 1998 program generated an indicated resource of 1.96 million tonnes grading 7.97 grams gold per tonne, or 500,000 contained ounces, including an open-pit resource of 720,000 tonnes at 2.57 grams. All zones remained open down-plunge, while the UM zone was only partially tested between the 200-to 800-metre levels.

Holmer entered into an option agreement the next year with St Andrew Goldfields (SAS-T, STADF-O) to bring the deposit into production, but this option expired in November 2000 owing to the terrible gold market and resulting financing difficulties.

In early 2001, Holmer was actually being reviewed for eligibility for continued listing until Raman personally advanced $400,000 in a private placement for working capital. Holmer retained its listing.

This infusion allowed Holmer to drill another 22 holes to complete definition drilling.

In November 2002, consulting firm Watts, Griffis & McQuat estimated a total indicated resource of 232,000 contained ounces gold in 422,000 tonnes with an uncut grade of 17.78 grams gold (13.68 grams when cut) and an inferred resource of 183,000 ounces in 890,000 tonnes averaging 6.4 grams gold.

The following spring, Lake Shore Gold struck an option deal whereby it could earn a half interest in Holmer’s property by increasing the indicated resource to 500,000 oz. gold.

Lake Shore’s ensuing drilling, which focused on the partially tested down-plunge extension of the zones between the 400-and 800-metre levels, confirmed by September 2004 an indicated resource of 1.37 million tonnes at an uncut grade of 16.45 grams gold for 724,000 contained ounces gold — a 200% increase over the 2002 estimates.

On Dec. 31, 2004, Holmer and Lake Shore completed a merger to form what is now Lake Shore Gold.

Between 2005 and 2007, Lake Shore pushed the deposit over the million-ounce mark by completing a resource expansion drill program that boosted t
he estimated reserves to 3.8 million tonnes averaging 10.4 grams gold, for an impressive 1.2 million contained ounces — a culmination of 96 years of exploration effort. — The author has more than 40 years’ experience in the investment business on the brokerage side in retail, research, institutional and trading, on the public company side as a director and adviser, and in financing and marketing. He is editor of TFSA Investment Letter (www.tfsainvestmentletter.com)and Cuban Weekly News Digest (www.cubaninvestments.com).