‘Not a one-hole wonder’

Alexis Minerals’ (AMC-V, AXSMF-O) latest drill results at its Lac Herbin property in Val d’Or, Que., have injected some gold fever into both management and shareholders.

The company’s share price nearly doubled in the two days after it reported a new intersection grading 35.42 grams gold per tonne over 9.2 metres starting at 300 metres depth (80 metres below any past drilling in the area). That intersection included 7.7 metres grading 41.93 grams gold and 1.2 metres of 231 grams gold.

The company is awaiting results from a second hole, 60 metres from the first, with a strongly mineralized 12.5-metre intersection that showed a predominance of visible gold. The new zone parallels one of the principal orebodies in the current resource.

“I’ve seen a lot of exploration and this, in my mind, is one of the best discoveries I’ve seen at an existing gold camp,” said chairman Stan Bharti. “You can see this is not a one-hole wonder.”

Alexis held its first-ever teleconference on Jan. 25 — the day following a 48% jump in its share price. The stock kept rising, eventually peaking at $1.20 before slipping to just under a dollar in the days that followed. Shares in Alexis had been trading consistently in the 50-range for months.

Earlier in January, measured and indicated resources at Lac Herbin were increased to 495,000 tonnes grading 7.83 grams gold per tonne or about 125,000 oz. gold. The inferred resource was upgraded to 678,000 tonnes at 7.69 grams gold — an additional 167,000 oz. gold.

Lac Herbin, 100% owned by Alexis, is next to the past-producing Ferderber and Dumont gold mines. The style of mineralization at Lac Herbin is not the patchy pyrite that has typically been seen at Ferderber and Dumont, the company says. Instead, a very fine-grained pyrite is present throughout the structure, with consistent grades outside of the high peaks associated with the visible gold.

“The width of the vein is double what we normally see at Lac Herbin,” said Alexis geologist Richard Roy. “We believe we are basically touching the tip of something that’s happening below that and we definitely hope that tonnage will increase, considering the width.”

The company plans to drill additional holes in the new zone at 40-metre intervals so it can add to inferred resources at the project.

By the end of March, 445 metres of ramping, 1,180 metres of raising and drifting and 8,000 metres of diamond drilling will be completed.

Lac Herbin is 1.8 km from the 1,400-tonne-per-day Aurbel gold mill, which Alexis recently purchased. The company plans to start production by the end of this year at Lac Herbin, shipping 500 tonnes per day to Aurbel. In 2008, the nearby Lac Pelletier gold project, in Rouyn-Noranda, Que., will begin producing an additional 600 to 700 tonnes for the mill. Lac Pelletier has a measured and indicated resource of about 485,000 tonnes grading 7.84 grams gold, or 122,000 oz.

Scoping study results released in March 2005 found that Lac Herbin had the potential to produce about 35,000 oz. gold per year at a cash cost of US$224 per oz., but the company plans to update these results in the next feasibility study. It was estimated Lac Pelletier would contribute an additional 20,000 oz. gold. The company has yet to dewater the ramp at Lac Pelletier to gain access underground.

Alexis will spend about $14 million to bring Lac Pelletier, Lac Herbin and the Aurbel mill into production.

The company also has a 50-50 joint venture with Xstrata (XTA-L, XSRAF-O) in Rouyn-Noranda for an 800-sq.-km property that hosts 20 past-producing mines. As well, the company has a 55% interest with Novicourt, looking for an extension of the Louvicourt mine in Val d’Or, which produced 15.65 million tonnes of ore grading 3.42% copper, 1.54% zinc, 25.78 grams silver per tonne and 0.92 gram gold.

The company completed about 60,000 metres worth of drilling on its projects (all in Quebec) in 2006 and received about $11 million in rebates from the Quebec government.

In late January, the company announced a $20-million private placement led by Sprott Securities and including CanaccordAdams, CIBC World Markets, Loewen Ondaatje McCutchen and Orion Securities for 20 million shares at $1 per unit. Each unit consists of one common share and half a share purchase warrant. Each warrant is exercisable for one common share at $1.35 per share for two years following closing. Sprott will be entitled to a cash commission of 6% of the gross proceeds of the offering and will have the option to buy 5 million more units at the issue price before closing on Feb. 13.

The net proceeds will be used on exploration and development of the Lac Herbin deposit, as well as for general working capital purposes.