When RBC Capital Markets recently screened for undeveloped open-pit gold projects in North America with a resource of more than 500,000 oz. gold in the measured and indicated category and a grade of greater than 1.5 grams gold per tonne, it came up with 17 projects. Second from the top of the list: Eastmain Resources’ (TSX: ER; US-OTC: EANRF) Eau Claire deposit in the James Bay region of Quebec. (Sabina Gold & Silver’s [TSX: SBB] Back River was number one.)
Eastmain’s Eau Claire deposit — part of the company’s Clearwater project — is 75 km southeast of Goldcorp’s (TSX: G; NYSE: GG) Éléonore gold mine, which entered commercial production in early April. Goldcorp has an 8% stake in Eastmain and has been its largest shareholder for more than a decade. The gold major first invested in the junior in 2003.
In its first resource update since October 2012, Eastmain has defined a high-grade, open-pit constrained resource that mining analyst Eric Lemieux of PearTree Securities says “suggests that Eau Claire could be one of the highest-grade open-pit projects in Canada.”
Measured and indicated resources at Eau Claire stand at 6.8 million tonnes grading 4.05 grams gold per tonne for 885,000 contained oz. gold. Inferred resources add another 1.1 million tonnes averaging 3.12 grams gold per tonne for 110,000 contained oz. metal. In addition to gold, the deposit contains 36,000 kilograms of the rare metal tellurium (Te), at a grade of 5.38 grams per tonne Te.
“Eastmain has established a rigorous new high-grade open-pit resource that will gain market traction,” Michael Gray of Macquarie Research wrote in a client note, adding that he would be a buyer “ahead of future expansion drill results and potential for increasing mergers and acquisitions interest.” The mining analyst, who has covered Eastmain for years, also hiked his target price on the stock from 90¢ to $1.15 per share.
Donald Robinson, Eastmain’s president and CEO, acknowledges in an interview that the company already has attracted some attention and says that there are a number of companies that have looked in detail at the project. “There’s definitely interest,” he says. “We’ve had confidentiality agreements in place with different companies for the last few years.”
Since the last resource estimate, definition drilling has been focused on the upper one-third of the deposit and comprised another 183 drill holes and 189 channel samples completed on the 450 West and 850 West zones, which are exposed at surface over a large area.
“The 450 zone is exposed for a couple of hundred metres and the composite grade is 13.12 grams gold,” Robinson says. “In the 850 zone, the grade is a titch higher, but there’s more exposure to the 450 zone, which shows mineralization over an area that is about the size of two football zones end to end.”
Robinson also points out that while the measured and indicated grade is 4.05 grams gold per tonne, the measured grade is almost double at 7.29 grams gold per tonne. He says there is more room to expand the measured and indicated resource, both from open-pit material and near-pit material.
“The greatest value driver for the project is the grade and growth potential of open-pit resources in Eau Claire,” Robinson says. “In addition to significantly increasing the measured and indicated open-pit gold resources by 53%, we have cracked the geological code of the deposit, thereby providing potential for substantial and immediate growth at deposit, property and belt scales.”
The deposit is open to the east, down-plunge to the west, and at depth. The bottom of the constrained pit is 350 metres below surface, and Robinson says there should be an underground component to the project. “This is a deep-rooted system,” he says. “We’ve drilled to 900 metres vertical, and the intersections were exactly what we’ve seen at surface.
“We already know, right at the base of the bottom of the pit, there’s an area that is 300 metres long and on every 25-metre section, there is at least one intercept that came in at a grade of 30 grams gold per tonne or better,” he continues. “So we’ve already identified a sweet spot in the deposit right at the base of the constrained open-pit shell.”
Robinson believes that in addition to the deposit’s 1.8 km footprint, there could be more gold elsewhere at the Clearwater project within what he likes to call the “Eau Claire gold belt,” and where anomalous gold-bearing rock samples have been defined along a mineralized corridor for over 7.5 km.
This year the company intends to spend $2 million on exploration, which will include definition drilling below and lateral to the conceptual open-pit and underground mineral resources, as well as surface exploration along the belt to search for a second deposit on the property.
When asked if the company has staked — or plans to stake — more ground in the area, Robinson laughs, and says “no comment.” But he does say surface drilling on Eastmain ground near Clovis Lake, 4 km from the Eau Claire deposit, cut an intercept earlier this year of 7.1 grams gold over 3 metres, in the same geology. “It’s not to say it is contiguous or continuous,” he says. “It’s saying: here’s another hot spot.”
Robinson notes that both Goldcorp’s Éléonore deposit and Eastmain’s Eau Claire are related to big structures — a crustal-scale structure — on a regional scale and are associated with major breaks, just like discoveries in the Timmins and Val-d’Or camps. “I refer to our break as the Eau Claire break and I would refer to the Éléonore break as the Éléonore break,” he says.
Eastmain’s geologists can trace the Eau Claire break from airborne geophysics data, and claim that it’s at least 100 km in length. Unlike Éléonore, which is made up of sedimentary rocks at and near the margin of the volcanic assemblage, Eau Claire is hosted in the volcanic assemblage itself.
Eastmain expects to start work on a preliminary economic assessment shortly, just as soon as it selects a service provider, which Robinson is likely to be from Quebec.
At press time, Eastmain’s shares traded at 40.5¢, within a 52-week range of 16–62¢ per share.
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