Northern Star proves up Midway project

Vancouver — Encouraging drill results from its Midway gold property, west of Val d’Or, Que., have prompted Northern Star Mining (NSM-V) to acquire another 688 acres.

Dubbed Cadillac, the new property is on the eastern edge of Agnico-Eagle Mines‘ (AGE-T) Lapa project (4 million tons grading 0.25 oz gold per ton) and only 6 miles east of the LaRonde mine (115,162 oz. gold produced in the first six months of 2003).

The price tag for the property amounts to 800,000 shares plus $40,000 payable in stages over one year. The vendors retain a 1.5% net smelter return royalty (NSR), which can be purchased for $500,000.

“Recently, with the discoveries made by Agnico-Eagle at LaRonde and Lapa, there has been renewed interest in the Cadillac Break area,” says Michel David, Northern Star’s vice president of exploration.

As a one-mine producer, Agnico Eagle has been leading the exploration revival in the district. Agnico recently inked a deal with Barrick Gold (ABX-T) to buy the Bousquet property, immediately west and south of its wholly owned LaRonde operation. Included in the deal were used machinery and equipment from the now-closed Bousquet mines.

The company also boosted to 100% its stake in the Bruce property, 1 mile east of LaRonde. The company is also considering acquiring some of Barrick’s exploration properties in the region, including Orion B-1, Orion B-2, Joannes North, Orion South and Norgold, all of which are south and west of Cambior‘s (CBJ-T) Doyon mine.

The purchase price for the projects is $7 million, including $2 million in shares. Barrick will retain a 2% NSR on the properties.

“With this transaction, we now control more than fourteen miles of contiguous favourable geology along the prolific Cadillac-Bousquet gold belt and have the dominant land position on the Cadillac-Larder Lake Break, immediately to the south,” says Agnico-Eagle President Sean Boyd. “The first priority will be to integrate the twenty-five years of geological information on Bousquet into the LaRonde Mine database, which will allow us to evaluate our regional exploration and development options.”

At the Lapa gold property, 7 miles east of LaRonde, Agnico-Eagle has five rigs turning and expects to have a prefeasibility study in hand by year-end.

For its part, Northern Star has been drill-testing the nearby Midway property, which hosts the number 1 shaft of the past-producing Malartic Gold Fields mine. In production from 1939 to 1962, the mine produced nearly 2 million oz. gold, with mining extended down to the 2,400-ft. level. Historical geological reports give the Midway project an indicated resource of 420,504 tons grading 0.2 oz. gold per ton. The inferred resources total 255,268 tons grading 0.2 oz. gold. Some 451,943 tons grading 0.16 oz. gold are classified as geological resources, and these are adjacent to the old mine workings.

Northern Star has focused on the southern portion of the property, which straddles the Cadillac structural break. Gold mineralization occurs in en echelon veins in gabbro bodies associated with sulphides, mainly pyrite. Lower-grade gold mineralization is also found in quartz monzonite intrusives.

“The higher-grade mineralization and the later intrusive are contained in the gabbro, which we believe is responsible for bringing in the gold,” says David.

So far, Northern Star has drilled nine widely spaced drill holes into the property, its intention being to boost resources in the upper 700 ft.

“We put together a nine-hole program that explored previous mineralization some fifteen-hundred feet from the mine area,” says David.

Highlights are as follows:

— Hole 1 — 20.1 ft. grading 0.18 oz gold;

— Hole 2 — 21.3 ft grading 0.33 oz gold;

— Hole 4 — 22.9 ft grading 0.09 oz gold;

— Hole 6 — 51.6 ft grading 0.3 oz gold;

— Hole 7 — 46.2 ft grading 0.3 oz gold;

— Hole 8 — 22.1 ft grading 0.58 oz gold.

“We hit nine out of nine, with grades of around 0.3 ounce gold over good widths,” states David “This is not a discontinuous quartz vein system but, rather, large continuous lenses.”

The latest results — combined with previous drilling, which demonstrated that gold mineralization is present below the lowest levels of the mine — has prompted the junior to expand its drilling program.

“The next phase is a much bigger program — upwards of thirty-thousand feet,” says David. “We will explore the zone at greater depths and laterally along strike.”

The new drilling program is expected to be completed by year-end, with an updated resource calculation due in the first quarter of 2004.

Northern Star has 17.5 million outstanding shares and trades at around 50.