Aurizon Mines (ARZ-T, AZK-N, AZK-X) kicked off the month of September with a bang. On the same day it released higher-grade intercepts from its Hosco West and Heva deposits — part of the company’s feasibility-stage Joanna gold project, 20 km east of Rouyn-Noranda — it also updated the resource estimate for its Fayolle project, a joint-venture it holds with Typhoon Exploration, 35 km northeast of Rouyn-Noranda.
Highlights of the assay results at the Joanna project, which is situated along Quebec’s Cadillac Break in Joannes Township, include an intercept of 7.5 grams gold per tonne over a true width of 15.0 metres in the Heva deposit and 6.4 grams gold over a true width of 5.2 metres in the Hosco West Extension. Other notable results were 12.4 grams gold over a true width of 3.0 metres in Heva West and 6.3 grams gold over 3.0 metres in Heva East.
“The objective of the drill program was to build resources close to surface in the vicinity of the Hosco pit and evaluate underground resources,” Andrew Kaip, a mining analyst at BMO Capital Markets in Toronto, wrote in a research note. “The weighted average grade of 2.5 grams gold per tonne over 8.2 metres true width from the drill holes released is significantly higher than the Heva zone measured and indicated resource grade of 1.9 grams gold per tonne….Higher-grade intercepts at Heva demonstrate the potential for resource growth contingent on further exploration.”
The Heva zone resource inventory currently stands at 270,000 oz. gold at 1.9 grams gold in the measured and indicated category and 421,000 oz. gold grading 1.7 grams gold in the inferred category using a cut-off grade of 0.5 gram gold per tonne.
The Joanna project extends east-west for more than eight kilometres and, in places, is three kilometres in width.
Meanwhile at Fayolle, where Aurizon can earn a 51% interest subject to an underlying 2% net smelter return royalty, by spending $10 million and subscribing for $2 million in Typhoon’s common shares, over four years, results of preliminary metallurgical test work indicates recoveries of 94%-97% and a new resource estimate confirms Aurizon’s initial assumptions that the property contains previously undefined high-grade mineralization.
The new resource estimate defines an indicated resource of 1.82 million tonnes grading 2.7 grams gold per tonne for 156,000 oz. contained gold at a cut-off grade of 0.8 gram gold per tonne.
The previous resource estimate completed in 2007, by contrast, outlined indicated resources at a 0.5 gram gold cut-off grade measuring 464,700 tonnes at 2.4 grams gold for 36,081 oz. gold and inferred resources of 2.19 million tonnes grading 1.6 grams gold for 113,021 oz. contained gold.
The updated estimate was based on drill results after February 2007 — a total of 253 surface holes and 68,826 metres, of which 92 holes (30,927 metres) were drilled after May 2010, when Aurizon and Typhoon initiated the joint venture.
Aurizon says it has also identified different parallel gold-bearing structures a few hundred metres south of the Fayolle zone where it has uncovered mineralized intersections in teh range of 1-8 grams gold per tonne over thicknesses between 3 and 10 metres.
The Fayolle property consists of 39 mining claims that are 100% owned by Typhoon covering 1,373 hectares across the Porcupine-Destor Break, one of the most productive gold bearing structures of the Abitibi Belt.
Under the terms of Aurizon’s option agreement, it has already spent $8.8 million on exploration and subscribed for $1.5 million in Typhoo’s common shares.
At presstime in Toronto Aurizon was trading at $4.31 per share within a 52-week range of $3.80-$7.25. The Vancouver-based company has 164.4 million shares outstanding.
Kaip of BMO Capital Markets has a $6 price target on the stock. And he forecasts Aurizon’s gold production this year will reach 148,000 oz. at co-product cash costs of US$650 per oz. (Last year the company’s 100%-owned Casa Berardi mine in northwestern Quebec produced 163,845 oz. gold from the processing of 698,123 tonnes at an average grade of 8.0 grams gold per tonne.)
Casa Berardi entered its sixth year of commercial operation this year after restarting in November 2006. In the second quarter the mine produced 37,820 oz., up 13% over the first quarter of the year, but lower than the 41,417 oz. it produced in the second quarter of 2011. Higher unit operating costs per tonne this year raised total cash costs in the second quarter to US$671 per oz., up from US$544 per oz. in the second quarter of 2011.
Casa Berardi’s gold deposits are located along an east-west mineralized corridor stretching 5 kilometres. They include the East and West mines, and the Principal Zones. Gold occurs mainly south of the Casa Berardi Fault, and occasionally on both sides of the fault.
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