Northfield bets heavily on Kirkland West claims

Northfield Capital Corp. of Toronto and a private company called Canadian Ore Mining are about to take a $50-million gamble which they assume is a safe bet.

In signing a letter of intent to earn a 50% interest in Queenston Gold Mines’ 100% owned Kirkland Lake West gold property, Northfield is betting that the property will prove mineable by 1994.

Regarded by many as the potential jewel of Queenston’s exploration portfolio, the property is thought to contain the western extension of the so called Kirkland Lake “Main Break” which has produced over 23 million oz of gold.

Located 300 ft west of Lac Minerals’ Macassa Mine near Kirkland Lake, Ont., and 1,200 ft from Macassa’s new No 3 shaft, the property covers the projected westward extension of famous geological anomaly for a strike length of one mile. It is also in an area which has supported seven gold mines since the Toburn mine went into production in 1913.

Under the terms of the proposed deal, Northfield Capital has tentatively agreed to spend $50 million over five years to bring the property to a positive feasibility stage. Cash Payments

According to President Robert Cudney, the agreement calls for committed and optional cash payments to Queenston of $5 million and committed and optional expenditures of $45 million to earn a 50% interest in the property.

“We were after a kick at Kirkland West and now we’ve finally got it,” said Mr Cudney who was an unsuccessful bidder for control of Queenston when it was up for grabs in April. With a 45% stake on the Cheminis project near Larder Lake, Northfield is attempting to acquire a substantial presence in the Kirkland Lake gold camp.

Mr Cudney believes that it was a matter of timing which prevented his company from obtaining a 42% controlling interest in Queenston when the Canadian Imperial Bank of Commerce tendered four million Queenston shares at $2 per share.

He says he was six weeks behind HSK Minerals President Hugh Harbinson who successfully raised $4.5 million needed to give HSK and partner Joutel Resources control of Toronto-based Queenston. Mr Harbinson was later appointed Queenston chairman.

However, not to be outdone, Mr Cudney and business partner Joseph Van Bastelaar (president of Canadian Ore Milling) approached Mr Harbinson in September with their proposals for a possible joint venture. Surface Exploration

Under the terms of the proposed agreement, Northfield will spend $1 million and later $3 million on surface exploration before Dec 31, 1988.

Scheduled to begin in January, the program will consist of between 30,000 ft and 50,000 ft of surface drilling. “This should confirm what we believe is there,” said Mr Cudney who doesn’t anticipate any financing problems.

His optimism is based on recent drill results and the proximity of the property to Lac’s Macassa mine workings. In October, 1986, a couple of surface drill holes tested for hangingwall splay structures. The first hole intersected 110 ft grading 0.02 oz gold per ton, including 12 ft at 0.10 oz and 8 ft at 0.06 oz. The second hole, 200 ft further east, intersected 5 ft of average 0.12 oz.

A mere 2,000 ft northeast of these drill holes, Lac is currently developing new production levels between 6,450 ft and 7,050 ft where ore is being mined to a pillar which separates the mine from Kirkland Lake West.

Since Lac’s No 3 shaft at 7,225 ft is the deepest single-lift shaft in the western hemisphere, the Kirkland West drill program will test to the 6,500 ft level.

“If we come up with what we think is there, underground exploration will follow,” said Mr Cudney. Feasibility Report

Under the deal, Northfield must complete the $50 million cash payments and expenditures by Dec 31, 1992. To retain a working interest, Northfield must also produce a feasibility report by the end of 1994. If the feasibility report is positive, the companies will form a joint venture to operate what could be one of North America’s first full-scale deep gold mines.

” This agreement means that as operator, Queenston can bring the mine to production without spending a cent,” said Dale Hendricks, chief geologist at the Macassa mine.

“We think it’s a hell of a deal,” added Mr Harbinson when asked for his reaction. He said the potential of the Kirkland West property was the thing that twigged his interest in Queenston Gold Mines back in April.

According to Mr Harbinson, between now and early December, when the paper work is expected to be complete, the companies will set up a 6-member management committee to run the operation. While committee members haven’t been selected yet, both companies will have equal representation.

“There will be a lot of technical interplay between the two groups,” said Mr Harbinson.