Wesdome discovers new gold structures at Eagle River

VANCOUVER — Toronto-based producer Wesdome Gold Mines (TSX: WDO) enjoyed a warm reception from markets following news of underground drilling success at its wholly-owned Eagle River mine located 50 km west of Wawa, Ontario. The company is targeting depth potential at Eagle River’s high-grade 811 zone, and caught investor attention when it discovered two new gold-bearing structures.

Wesdome has cranked out 20,655 oz. of gold at its Eagle River complex over the past six months — which also includes its satellite Mishi mine — at cash costs of $1,066 per oz. A big benefit for the company has been higher grades, with the average head grade at Eagle River doubling to 11.3 grams gold, while the average grade at Mishi jumped 50% to 3.4 grams gold.

Gold mineralization at Eagle River is hosted by east-west striking, steeply north-dipping laminated quartz veins. The veins occur as tabular lenses occupying discrete shear zones following the long axis of a quartz-diorite stock that runs 2 km east-west by 500 metres north-south.

“We have streamlined operations, built large stockpiles and have strong grades in the pipeline. Milling efficiencies are incrementally improving towards our goal of doubling throughput at [Eagle River],” noted president and CEO Donovan Politt.

Wesdome reported that mill stockpiles grew to about 100,000 tonnes, including about 85,000 tonnes of Mishi ore averaging 2.5 grams gold and 15,000 tonnes of Eagle River ore grading around 7 grams gold.

“We have beefed up our operating expertise and are defensively positioned with good upside. An exclusive focus on our best grade, lowest cost operations will translate into improved financial performance in the second half,” he added.

And a big driver at Eagle River has been access to the 811 zone, which has contributed ore at an average grade of 15.4 grams gold to Wesdome’s production profile. The deepest mining level at 811 is currently around 765 metres, where the zone has graded 37 grams gold over an average width of 2.13 metres and a length of 142 metres.

The company expects its high-grade mining sequence at 811 to be a significant contributor through 2015, and if recent drill results are any indication it could continue pulling ore from the zone beyond that target.

Wesdome’s first order of business was establishing a depth extension at 811, and it succeeded in doing that with hole EU-701, which confirmed the zone persists to 1,200 metres when it cut 1.73 metres true width grading 78.43 grams gold. Perhaps more excitingly, however, the company discovered two new gold structures — named the 7 and 300 zones — that could indicate a potential for parallel zones.

The 7 zone was discovered around 200 metres north of 811, when hole EU-693 cut 27 grams gold over 3.45 metres true width and hole EU-694 intersected 30 grams gold over 1.52 metres true width. The holes are situated roughly 125 metres apart and run from depths of around 387 metres to 494 metres.

The 300 zone lies roughly 400 metres north of 811, and was highlighted by three intervals, including: 21 grams gold over 2.42 metres true width in hole EU-695; 20 grams gold over 1.38 metres true width in hole EU-696; and 10 grams gold over 1.51 metres true width in hole EU-697. Thus far drill coverage at 300 remains tightly clustered near the drill collars and, therefore, the company reports more drilling is required to assess its dimensions.

“It’s still very early in the game, but we are excited about the potential implications of parallel zones and that the 811 structure persists [at depth],” commented vice-president exploration George Mannard. “We will be drilling here at least until year end in an effort to delineate and define these zones. They are visually strong, distinctive and traceable shear-zone hosted quartz vein systems – Eagle River’s hallmark.”

Wesdome’s shares benefitted from the discoveries, with the company’s stock jumping 39%, or 16¢, over the two days following its announcement en route to a 55¢ per share close at the time of writing. The company maintains 102 million shares outstanding for a $56 million press-time market capitalization.

Wesdome ceased operations at its Kiena mine in Val d’Or, Quebec, at the end of June to focus on higher-grade operations as gold prices declined. The company held $12.2 million in working capital to end June, and reported that revenue exceeded mining and processing costs attributable to sales by $7.3 million over the first six months of 2013.