Goldcorp eyes Sidace Lake extension

Vancouver — Drilling success at Planet Exploration‘s (PXI-V) Sidace Lake property has prompted Goldcorp (G-T) to pick up a majority stake in two more properties in Ontario’s Red Lake camp.

The low-cost gold producer continued its strategy of taking an equity stake in select junior companies by inking a deal with Rubicon Minerals (RMX-T) to earn a 60% interest in the Red Lake North and Adams Lake properties. Under the deal, Goldcorp must spend $5 million over four years and complete a private placement in Rubicon of 1 million shares priced at $1.60 apiece. The move adds $1.6 million to Rubicon’s coffers. Goldcorp can earn an additional 10% interest by completing a bankable feasibility study on at least 500,000 oz. in gold reserves by the beginning of 2010. Rubicon will be the project operator for the first two years or until $2 million is spent.

Rubicon’s North Red Lake property comprises two claim blocks lying adjacent to the Sidace property and is considered prospective for hosting continuations of the Sidace Lake gold zone.

“Over the past year, Goldcorp has taken a major position on the north side of the camp and taken a share interest in Planet,” says Rubicon’s president, David Adamson. “And not only is Goldcorp very keen, but the zone dips on to our ground.”

The last batch of drill results from Sidace Lake were released in September: hole 39 returned 11.4 grams gold per tonne over 6 metres from the North Upper zone and 44.6 metres grading 4.1 grams gold from the Lower zone. The hole tested the downdip extension of mineralization cut in hole 26 (21.4 metres grading 7.6 grams gold).

Hole 27 was drilled 700 metres west of the Main zone to test a geophyscial anomaly returning 0.92 gram gold over 1 metre.

Hole 30 tested the updip projection of the gold-bearing quartz sericite schist horizon intersected in hole 25 (0.3 gram gold over 28.6 metres) and returned 0.42 gram gold over 20 metres.

Mineralization is hosted in two higher-grade zones in a broad section of lower-grade material. The higher-grade zone in the north appears to be associated with the northern limb of a northeast-trending fold, while the high-grade south zone marks the south limb of this fold.

“We are obviously pleased with the continued success on our Sidace Lake project,” says Planet President Ranjeet Sundher. “The gold grades and widths we’ve encountered continue to represent an exciting discovery.”

Goldcorp can earn a half-stake in the Sidace Lake property by spending and paying a total of $2.55 million over three years.

Says Adamson: “Planet put out some serious intercepts; it looks like a geologically robust system with potential for expansion.”

Adams Lake

The second property in the deal is the Adams Lake project, which covers a major fold closure 5 km east of the prolific Campbell and Red Lake mines. The new partners intend to devise an exploration program for the project shortly.

The Rubicon deal marks the latest in a string of equity-property deals Goldcorp has made over the past year. Unlike most of the major gold producers, Goldcorp has shied away from mergers as a means of expanding; instead, it has invested in junior grassroots explorers.

Along with investments in Planet Exploration (in March, Goldcorp picked up an 8.7% stake in Planet by buying 1 million units at 50 each) and, most recently, Rubicon, Goldcorp bought 1.7 million units in Candente Resources (DNT-V) at 60 apiece.

Goldcorp is interested in Candente’s Newfoundland properties, namely Linear, Virgin Arm, and Staghorn.

Earlier this year, Goldcorp acquired 5 million shares of Madison Enterprises (MNP-V) in a private placement of 11 million units priced at 20 each. A unit holds one share and half a warrant. A full warrant allows the holder to buy an additional share for 25 for one year.

Madison holds the large Mt. Kare project in Papua New Guinea and the Belencillo property in Panama, though Goldcorp is mainly interested in the Lewis project in Nevada. Lewis is contiguous with Newmont Mining‘s (NEM-N) Phoenix property.

American Bonanza

Another junior to catch Goldcorp’s eye was American Bonanza Gold Mining (BZA-V). In February, Goldcorp picked up just under 10% of American Bonanza after buying 11.4 million units in a private placement. Each unit is priced at 22 apiece and holds one share and half a warrant. A full warrant allows the holder to buy another share at 28 until Jan. 31, 2004.

American Bonanza is carrying out underground development and drilling at the Copperstone gold project in Arizona. The junior also holds an interest in the Pamlico and Gold Bar properties in Nevada.

Not restricting itself to pure gold explorers, Goldcorp picked up 1 million shares in Geoinformatics Explorations, which assists explorers in defining targets and developing strategies, at a price of $1 each. The deal gives Goldcorp an 8.3% stake in Geoinformatics.

The company also purchased 2 million units of BioteQ Environmental Technologies (BQE-V) at 50 apiece. A unit holds one share and one warrant exercisable at 65 for one year and 75 for two years. BioteQ developed the BioSulphide Process for water treatment and sulphide reagent production. The process plants allow the treatment of acid-contaminated water with concurrent recovery of salable metals from the water. The financing deal gives Goldcorp 8.6% of the outstanding shares of BioteQ.

Goldcorp’s tightly held investment portfolio was valued at US$68.5 million at the end of the second quarter.