Miramar sets sights on Boston Deeps (December 09, 2002)

Vancouver – The largest drill program planned for Canada in 2003 may have gotten 9,000 metres bigger with Miramar Mining (MAE-T) now planning to test the depth potential of the Boston deposit on the Hope Bay project in Nunavut.

“The Boston Deeps program is warranted by the scale of the Boston gold system and its potential persistence to depth, a typical feature of many Archean shear-hosted gold deposits.” says Miramar’s President, Tony Walsh.

To date, the Boston mineralizing system marks the largest gold resource in the Hope Bay belt with a measured and indicated resource of some 1.4 million tonnes grading 15 grams gold per tonne. Previous reconnassiance drilling by BHP, now BHP Billiton (BHP-N) showed the gold mineralization continues to depths of at least 600 metres below surface. Archean shear hosted gold deposits often extend to depths of 2 to 3 km and so far the Boston system has only been systematically explored to depths of 350 metres. Miramar aims to test the zone to at least 1 km below surface.

In order to fund the program, the company is currently in the midst of placing, on a best efforts basis, 2 million flow through shares at a price of $1.60 each.

The additional drilling comes on top of the 34,000 metres of core drilling and 4,500 metres of reverse circulation drilling already budgeted for the project. Most of this drilling will focus on a favourable 11-km long structure, poetically called the Deformation Zone, in the Madrid area, and on structures related to it.

“The major effort to be expended on exploration of the Hope Bay belt in 2003 reflects our commitment to the systematic exploration of this prospective gold belt,” adds Walsh. “Our primary objective is to expand on the encouraging results from the Madrid area over the past two years, during which we discovered five significant new gold occurrences.”

In the Madrid area, Miramar has identified a series of deposits and gold showings over a 6 km section of the Deformation Zone from the Naartok deposit in the north, through the P112, Perrin Bulge and Matrim areas, to the 2001 Suluk discovery and the Marianas and South Patch areas in the south. The 2002 drill program identifed another 5 km of favourable strike to the Deformation Zone that needs to be evaluated.

Gold mineralization in the Madrid area occurs in veins, stockworks, and breccias, with most of the deposits at or near the hanging wall of the Deformation Zone or one of its parallel structures or splays. Two exceptions are the southern end of Suluk and the South Patch discovery, where mineralization is inside the Deformation Zone.

Drilling is expected to begin in February, with an initial 35- to 40-hole program testing the extension of the known deposits and evaluating the untested portions of the Deformation Zone. Primary targets include the depth and strike extensions to the Suluk deposit, the newly discovered Marianas gold showing, and strike extensions to the high grade South Patch discovery.

A 35-hole, 11,000-metre program will follow up the results before spring break up and another 10,000 metres of drilling is set for the summer season.

Outside the Madrid area, exploration will test a conceptual target, known as Twin Peaks. Here, Miramar is evaluating the potential for a “Timiskaming” type deposit, where gold is trapped in and below sediments and conglomerates that cap underlying intrusive and volcanic rocks. Some 6 holes tallying 1,200 metres are budgeted for the target.

Reverse circulation drilling will continue the evaluation of the Nexus area, where exploration in 2002 extended the Deformation Zone an additional 5 km to the south, as well as for testing the Inge prospect and Gas Cache alteration zone.

At last count, the Hope Bay project holds a measured and indicated resource of 3.36 million tonnes grading 15.4 grams gold per tonne, plus an inferred 6.7 million tonnes grading 12.3 grams. An updated resource for the Doris and South Patch deposits is expected by early next year.

In January, an independent scoping study on the Doris deposit alone concluded that its high-grade Hinge Zone can support a stand-alone operation with a capital investment of $26.7 million. A stockpile of 9,000 tonnes of Boston material would expand the Hinge Zone resource to 471,600 tonnes averaging 18.5 grams gold.

Including $1.3 million on permitting and feasibility work for the Doris North development project, expenditures at Hope Bay are anticipated to total approximately $17.5 million in 2003.

For the three months ended Sept. 30, Miramar posted a profit of $1.2 million, or $0.01 per share on prodcution of 31,250 oz of gold from its Yellowknife operations.

“The third quarter results represent another consecutive quarter of earnings for Miramar,” says Walsh. “However, our Yellowknife operations did not catch up as much as had been anticipated during the third quarter. Unexpected power interruptions and lower than planned grades from certain key areas, resulted in lower than planned production in the quarter. Nevertheless, we expect the 2002 production profile will be close to forecast.”

Operating cash flow came in at $6.9 million, compared to $2.7 million for the same period in 2001. Creating the boost was a change in the accounts receivable for the sale of 48 million shares of Northern Orion Explorations (NNO-T) recorded in the second quarter. Removing the impact of this transaction, cash flow from operations tallied $3.1 million.

The Con mine contributed 67,687 tonnes grading 9.95 grams gold per tonne, and the Giant mine added 15,364 tonnes grading 11.2 grams gold for processing at the Con mill.

A reassessment of the mine plan has extended the operating life to 2005. Production estimates for 2003 come in at between 105,000 and 110,000 oz., falling to 80,000 to 85,000 oz. in 2004 and dwindling to 20,000 oz in 2005. Cash costs are expected to average US$250 per oz.