Drilling resumes at Meadowbank gold project

A staged $1.5-million program of drilling and surface exploration is under way at the Meadowbank gold property, near Baker Lake, Nunavut.

Cumberland Resources (CBD-T) is focusing on showings discovered in a 30,000-ha land package staked earlier this year. The new ground contains a 20-km extension to the Meadowbank trend, which hosts the project’s four known deposits: Third Portage, Goose Island, Bay and North Portage.

In 1999, Cumberland took 480 samples (grab, chip and float) along the trend, of which 128 ran greater than 1 gram gold per tonne and 60 graded in excess of 5 grams. These showings are what defines the linear structure.

Priority is being given to the Vault showing — a mineralized corridor measuring 400 metres long by 200 metres wide. Of all the showings, this is the closest to the deposits, being 5 km distant. Surface samples assayed up to 42.9 grams gold, with mineralization being held in intermediate volcanics and iron formation, similar to those hosting the known deposits.

Meanwhile, an independent prefeasibility study suggests the known deposits could support a 2,250-tonne-per-day operation over nine years. Both open-pit and underground mining methods would be employed.

Proven and probable reserves are pegged at 7.2 million tonnes grading 5.93 grams gold, including 5.5 million tonnes grading 5.44 grams; the stripping ratio is 7.5-to-1. An additional 1.6 million tonnes grading 7.55 grams gold are classified as inferred resources, though Cumberland notes that these can be converted to reserves with additional drilling. Reserves as well as resources were considered in the study, which was performed by MRDI Canada.

MRDI assumed a gold price of US$325 per oz. and a mill recovery rate of 92.4%. As part of its evaluation, MRDI supervised independent drilling, and designed and reviewed quality-control programs for assaying.

An alternative proposal would see 2,500 tonnes milled on a daily basis, resulting in an average of 157,000 oz. gold annually over the entire mine life. This approach would require a capital investment of US$93 million, including allowances for reconditioned process equipment and US$13.5 million in contingencies. Life-of-mine cash operating costs in this case would be US$187 per oz., and, with a long-term gold price of US$350 per oz., the payback period is estimated at 4.2 years.

Cumberland says both models are promising, but that it requires not only a 4.2-year payback period but a minimum mine life of 10 years, all based on a long-term gold price of US$325 per oz.