Wesdome hikes resource estimate for Kiena mine in Quebec

Wesdome Gold Mine (TSX: WDO) has released an updated resource for its 100%-owned Kiena complex in Val-d’Or, Quebec.

The latest resource estimate, which points to an increase in gold grade and ounces, was based on an additional 140 new holes for a total of 36,050 metres drilled since Oct. 12, 2018. Of the 140 drill holes, 66 are in the Kiena Deep A zone.

Kiena’s indicated resources now stand at 679,200 tonnes grading 18.55 grams gold per tonne for 405,100 oz. contained gold, up from its previous resource estimate in December 2018 of 310,300 tonnes grading 9.95 grams gold per tonne for 99,300 oz. contained gold.

Inferred resources also increased to 676,300 tonnes grading 15.27 grams gold per tonne for 332,000 oz. contained gold, compared to 656,100 tonnes grading 11.43 grams gold per tonne for 241,100 oz. contained gold in 2018.

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 1980’s, the Kiena Mine has produced 12.5 million tonnes grading 4.5 grams gold per tonne for 1.75 million oz. contained 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.

Wesdome’s president and CEO Duncan Middlemiss says in a statement that he is pleased with the updated resource estimate, which provides the ground for the company to commence technical studies that could support a potential restart of the mine. He says he is confident that the mineral resource will increase as drilling of this high-grade area continues for the rest of the year and beyond.

Five drills are operating on the Kiena Deep A zone and remain focused on the zone’s up and down plunge potential that is not included in the resource estimate. The company will continue with infill drilling to convert inferred to indicated resources.

Development of the 79-metre-level exploration drift is also underway. The company says this will provide an improved drill platform to test the down-plunge extensions of the VC6 and VC1 zones, as well as the transition to the A zone further down along the same structure.

The company expects to complete a preliminary economic assessment in the first half of next year.

Barry Allan, a mining analyst with Laurentian Bank Securities, said in a Sept. 25 research note that Kiena’s updated resource confirms there is more than sufficient material for the company to proceed with the technical work to assess restarting the mine. “The resource at Kiena remains open and will likely expand further with additional drilling,” he added.

Allan’s price target on Wesdome is $7.75.

At press time, Wesdome’s shares were trading at $6.54 per share with a 52-week range of $3.30 to $7.81. The company has 137 million common shares outstanding for an $896-million market capitalization.