Aurizon inks deal to develop Douay West

An option agreement could see the Douay West gold deposit, northeast of Joutel, Que., enter production by mid-1998.

Aurizon Mines (ARZ-T) has signed a deal with owner Vior Mining Exploration (VIO-M), whereby the former can earn a half interest in the 7-claim Douay West property and another half interest in the adjoining 189 mining claims.

Aurizon must, within three months, complete a geotechnical assessment of the proposed locations for the mine shaft and ventilation raise; it then has 18 months in which to sink a 200-metre exploration shaft and complete a $5-million program of exploration and development. It can then bring the deposit into production and hold a 50% interest. Ore would be milled at Aurizon’s 50% held Sleeping Giant mine, 50 km to the southeast.

Aurizon’s expenses, plus a premium of 6%, will be recovered from cash flow once the deposit is in production. After the costs are recovered, Aurizon and Vior will split the profits.

The attraction for Aurizon is in additional exploration potential around the Douay claim block. The company hopes to increase feed for the Sleeping Giant mill, operated by partner Cambior (CBJ-T), currently running four days per week.

“The risk is in going underground,” says Aurizon’s Andrew Smith. “But we’ve also got a guaranteed return on investment if we mine anything down there at all, which we’re pretty confident of. Then we’ve got a lock on exploration potential very close to our mill, which is what we really like.” The Douay West project has reserves of 642,905 tonnes at a grade of 9.9 grams gold per tonne. Cambior held an option to earn a 50% stake in the project but dropped it in August 1995. Other Cambior projects were placing heavy demands on the company’s capital and the return did not justify the investment Cambior could foresee.

Aurizon can earn its 50% interest in the surrounding property by spending $2.5 million on exploration over the next five years. The agreement does not cover an additional 137 claims east of the Douay project.

Aurizon has also cancelled an option agreement made with Fairfield Minerals (FFD-T) on July 9. Under the agreement, Aurizon could have earned up to a 60% interest in the Siwash gold deposit near Merritt, B.C. Aurizon elected not to close the agreement after performing a due-diligence investigation.