Miramar buys into Hope Bay project

Vancouver — Vancouver-based Miramar Mining (MAE-T) has inked a deal with Cambiex Exploration (CBX-T) to acquire a half-interest in the Hope Bay gold project in Nunavut.

Miramar currently operates the Con gold mine in Yellowknife, N.W.T., and recently made a bid for the nearby Giant gold mine, previously owned by now-bankrupt Royal Oak Mines.

To acquire half of Hope Bay, Miramar is required to pay US$13.3 million when Cambiex closes its transaction with Broken Hill Proprietary (BHP-N) to acquire 100% of the project for US$17.5 million. Hope Bay became available when BHP decided to sell its gold assets and focus on its other core businesses. Miramar’s payment will be applied directly to Cambiex’s purchase of the Hope Bay properties.

“We are extremely excited about the proposed acquisition of Hope Bay,” says Miramar President Anthony Walsh. “This acquisition is in line with our strategy to grow our production base in the north, and it will fit well with our operations at the Con mine, as well as the proposed acquisition of the Giant mine.”

The agreement stipulates the following conditions:

– the companies are required to form a joint venture within 60 days of closing the purchase;

– Cambiex must fund US$1.3 million of work for the first 90 days after the deal closes;

– Miramar must fund US$2 million of work over the next 90 days;

– Cambiex must fund US$4.7 million of work during the following 180 days; and

– Cambiex and Miramar must equally fund work on the properties during the subsequent 180 days.

Once a positive feasibility study has been submitted, Miramar will arrange for third-party funding (no less than 60% of the total funds required) to bring a mine into production. Once production begins, 60% of the cash flow from the operation must be used to repay the financing.

“We believe Hope Bay is one of the best undeveloped gold projects in Canada, with in excess of 4 million oz. gold in resources already defined,” says Walsh.

Miramar and Cambiex plan to initiate an extensive exploration and reserve development program, focusing on the Boston and Doris deposits. Beginning in January, a 25,000-metre phase of surface and underground drilling will attempt to advance portions of the Boston and Doris resources into the measured and indicated category.

Currently, inferred resources at Hope Bay consist of:

– 5.7 million tonnes grading 13.1 grams gold per tonne, equivalent to 2.4 million contained ounces, in the Boston deposit;

– 2.1 million tonnes of 17.8 grams gold, or 1.2 million contained ounces, in the Doris Lake deposit; and

– 5 million tonnes of 4.3 grams gold, or 690,000 contained ounces, in the Madrid deposit.

Miramar hopes to have a final resource estimate completed during the third quarter of 2000, to be followed by a feasibility study and permitting work, if warranted.

“We envision the development of a 1,800-to-2,000-tonne-per-day gold mine producing in excess of 300,000 oz. gold per year at cash costs well below US$200 per oz.” states Walsh. “Capital costs are estimated to be in the range of US$100 million to $150 million, with the capital and operating cost estimates based on work done by BHP and consultants to Cambiex.”

The agreement also calls for a management committee consisting of two representatives each of Cambiex and Miramar to oversee all operations. Cambiex will manage exploration in areas of the properties not designated for production, whereas Miramar will oversee the feasibility study and all activities leading to, and including, production.

The 1,200-sq.-km Hope Bay properties cover an 85-km-long greenstone belt in an area 750 km northeast of Yellowknife, N.W.T.

BHP has spent more than $85 million exploring the properties since 1992. This extensive work includes 177,000 metres of diamond drilling; 2.3 km of underground development at the Boston deposit; 16,500 metres of closely spaced underground core drilling; 16,761 tonnes of bulk sampling; extensive airborne and ground geophysics, as well as metallurgical, environmental and scoping studies. The Doris and Madrid resources have only been tested from the surface.

The Boston deposit is described as hosting “classic Archean-aged greenstone-style gold mineralization” similar to the previously mined high-grade zones at the Con mine.

The Doris resources are said to occur in laterally and vertically extensive high-grade quartz veins, whereas the Madrid resource is lower grade and more complex but closer to the surface.

“The Hope Bay project has tremendous exploration potential,” says Walsh. “The main deposits are open in all directions and numerous targets remain to be tested. With control of almost the entire 85-km gold belt, we expect to see significant additions to our resource base.”

The Boston deposit has been tested only to a depth of 780 metres, and the deepest holes are said to still contain significant gold grades. Strike extensions to the north and south remain unevaluated. The high-grade veins in the Doris deposit are described as laterally and vertically extensive. The Central vein, for example, has been traced for more than 2.9 km and to depths of 590 metres. Within the deposit area, it averages 4.2 metres in thickness and grades 18.5 grams gold per tonne. The Lakeshore vein, which has been traced for 3 km and to depths of 470 metres, averages 4.2 metres thick in the deposit area and grades 15.86 grams gold.