Hits and misses for Virginia in Quebec

Vancouver – In its search for high-grade gold and silver veins, Virginia Mines (VGQ-T) has cut a few high-grade gold hits within numerous unmineralized cores at its Wabamisk property in Quebec.

The results come from a recently completed winter drill program the company conducted near the Opinaca reservoir in the James Bay area. Virginia released the results from 17 of the 20 drill holes that targeted the Isabelle zone at Wabamisk; of those 17 results, 13 holes were deemed to have insignificant mineralization.

The four positive results, however, were enough to propel Virginia Mines’ stock price up 59¢ or 8% on the day, to reach $8.08. The 8%-rise comes after the company’s stock price increased $1.55 or 26% over the seven preceding days of trading.

On the south end of the Isabella zone, hole 12 cut 4 metres grading 46.5 grams gold per tonne, or 18.26 grams gold cut. Roughly 50 metres north, hole 4 intersected 10 metres grading 2.75 grams gold and hole 3, cut from the same collar as hole 4, returned 7 metres averaging 2.02 grams gold. Another 50 metres north, hole 7 hit 2 metres grading 5.89 grams gold. Surrounding and between these results were the various insignificant hits.

The company says the inconsistent results are in line with the local geology, which consists of gold mineralization in an area of low-sulphide vein networks contained in zones of intense biotite-silica alterations. Surface mineralization is associated with north-south oriented quartz veins dipping steeply to the east.

The company discovered the Isabelle showing through prospecting in 2007 and then worked on mechanical stripping, detailed mapping and channel sampling on the property last summer and fall. During that work Virginia Mines channel sampled 3 metres grading 11.03 grams gold in the north end of the area and 3 metres averaging 14.98 grams gold in the new south portion. Sampling results, like the drill results, varied widely, from as high as 316.18 grams gold over 1 metre to 0.5 gram gold over 3 metres.

Virginia Mines’ initial work last year traced gold mineralization on the surface over 80 metres. Now the company’s drilling effort has extended the mineralized strike to 150 metres as well as to a vertical depth of 75 metres. The company reports that deeper drilling was not possible because of poor ice conditions on the adjacent lake.

The company holds a 100% interest in the Wabamisk property and has the option of earning a 100% interest in the adjacent Anatacau property from Iamgold (IMG-T, IAG-N) by spending $3 million in exploration work by the end of 2012. The combined property spans 495 sq. km over 941 map claims.

Besides the Wabamisk property, Virginia Mines has some degree of ownership in 20 other projects in northern Quebec. The company has often partnered with other companies as it built up its sizeable property portfolio. Partners range from major producers like Goldcorp (G-T, GG-N) and Iamgold to successful juniors like Osisko Mining (OSK-T) as well as smaller players like Breakwater Resources (BWR-T). 

The Éléonore project is Virgina Mines’ most significant discovery, which it sold to Goldcorp in 2006 in a deal worth roughly $500 million. Virginia Mines has a guaranteed payment of US$100,000 a month from Goldcorp until the project begins production, for up to 50 months, as well as a 2% variable net smelter return once production starts. The prefeasibility-stage project currently has a resource estimate of 8.2 million measured and indicated tonnes grading 11.92 grams gold and 15 million inferred tonnes grading 12.93 grams gold.

Virginia Mines’ 100%-owned Coulon property has a defined resource of 3.7 million indicated tonnes grading 0.25 grams gold, 37.2 grams silver, 1.27% copper, 3.61% zinc and 0.4% lead, as well as 10.1 million inferred tonnes grading 0.18 grams gold, 34.5 grams silver, 1.33% copper, 3.92% zinc and 0.19% lead.

Last May the company sold its Dieppe property to Agnico Eagle (AEM-T, AEM-N) for $1 million in shares, as well as a further $1 million contingent on Agnico establishing a resource of more than 1 million oz. gold.

Virginia Mines’ stock price has risen steadily from around $3.50 last July to the $8.08 closing after the latest drill results. The company has 29.8 million shares outstanding.