Laurentian Goldfields (LGF-V) has entered into a definitive agreement to acquire a 100-per-cent interest in the Madsen gold project from Claude Resources (CRJ-T) The Madsen property comprises in excess of 4,000 hectares in the prolific Red Lake gold camp of Northwestern Ontario and hosts two former gold producers, including the Madsen gold mine, which had previous gold production of 2.4 million ounces.
Darin Labrenz, president and chief executive officer of Laurentian, stated: "Laurentian is delighted to announce the acquisition of the high-grade Madsen gold project. The transaction will transform Laurentian into a leading Red Lake gold exploration company, focused on applying contemporary science to increase the existing high-grade gold resource while simultaneously assessing a low-capital production opportunity under the direction and expertise of an experienced, proven leadership team."
Consideration payable by Laurentian consists of an initial cash payment of $3.75-million plus both additional share consideration and deferred cash payments. Closing of the Madsen transaction is expected in February, 2014, and is subject to receipt of all required shareholder, regulatory and third party consents, satisfaction of customary closing conditions, and the completion by Laurentian of a financing to raise minimum gross proceeds of $7.5-million.
Macquarie Capital Markets Canada Ltd. is acting as financial adviser to Laurentian with regard to the acquisition and financing.
Rationale:
- Indicated mineral resource of 928,000 ounces gold in 3.24 million tonnes grading 8.93 grams per tonne gold and an inferred mineral resource of 297,000 ounces gold in 790,000 tonnes grading 11.74 g/t Au;
- Establishes leading Red-Lake-focused gold explorer with third largest land position and second largest historical production in one of the most prolific gold camps;
- Potential near-term low-capital production opportunity facilitated by fully permitted 500-tonne-per-day mill, 1,275-metre shaft, and mining and tailings management infrastructure;
- Singular focus on Madsen mine trend and application of modern exploration to numerous highly prospective exploration targets and former producers along a 12-kilometre corridor, including:
- Fork zone: drill intersections of up to 10.3 metres grading 17.32 g/t Au;
- Russett South: located 1,000 metres updip from 8 zone, drill intercepts to 2.0 metres grading 29.08 g/t Au;
- Treasure Box: 2.2 kilometres north of the 8 zone along the ultramafic contact, over 200 intercepts ranging from 2.0 g/t Au to 156 g/t Au;
- Buffalo: 6.4 kilometres northeast of Madsen gold mine workings, intercepts including 16.0 metres grading 7.6 g/t Au;
- New management and board with deep Red Lake knowledge and proven technical and capital markets expertise.
Terms of transaction -- Madsen gold project
Consideration to Claude incorporates both cash payments and share consideration, consisting of:
- Cash consideration of $3.75-million at closing;
- Cash consideration of $2.5-million payable three months following closing;
- Cash or share consideration (at Laurentian's option) of $2.5-million payable six months following closing;
- Share consideration at closing representing 19.9 per cent of Laurentian's shares outstanding following completion of the acquisition and an initial $7.5-million financing.
The Madsen gold project
Laurentian is acquiring a 100-per-cent interest in the Madsen gold project, which includes two former gold producers (Madsen and Starrett-Olsen). The property consists of 237 patented and leased mining claims covering an area of 4,193 hectares and includes accompanying surface rights. The Madsen gold mine operated continuously from 1938 to 1974 and 1997 to 1999. Total recorded production is 7,872,679 metric tonnes at an average grade of 9.7 g/t Au producing 2,452,388 ounces of gold.
In 2009, SRK Consulting Inc. was contracted by Claude to calculate a mineral resource for the Madsen gold mine. SRK compiled a geological database consisting of 13,617 historical surface and underground core holes, 647 stope boreholes, and six underground core drill holes completed by Claude. Using this database, SRK estimated an indicated and inferred mineral resource for four mineralized zones accessible from the underground mine workings. The mineral resource statement for the Madsen gold mine is listed in the attached table.
Table 1: Consolidated Mineral Resource Statement* for Madsen Gold Project, Ontario
| Resource Class
| Zone
| Tonnes
| Grade
(g/tonne)
| Grade
(oz/ton)
| Contained Gold (oz)
| Indicated
| Austin
| 1,677,000
| 7.92
| 0.23
| 427,000
| South Austin
| 850,000
| 9.32
| 0.27
| 254,000
| McVeigh
| 374,000
| 9.59
| 0.28
| 115,000
| Zone 8
| 335,000
| 12.21
| 0.36
| 132,000
| Total
| 3,236,000
| 8.93
| 0.26
| 928,000
| Inferred
| Austin
| 108,000
| 6.30
| 0.18
| 22,000
| South Austin
| 259,000
| 8.45
| 0.25
| 70,000
| McVeigh
| 104,000
| 6.11
| 0.18
| 20,000
| Zone 8
| 317,000
| 18.14
| 0.53
| 185,000
| Total
| 788,000
| 11.74
| 0.34
| 297,000
| ? Mineral resources are not mineral reserves and do not have demonstrated economic viability. All figures have been rounded to reflect the relative accuracy of the estimates. Reported at a cut-off grade of 5.0 g/t gold based on US$1,000 per troy ounce gold and gold metallurgical recoveries of 94 percent.
|
Existing mine and mill infrastructure on the property includes a 1,275-metre shaft, recently dewatered to below the 16 level (approximately 775 metres below surface), a 500-tonne-per-day mill and CIP gold recovery circuit installed at site in the late 1990s, and tailings storage facility, all of which are fully permitted and currently on care and maintenance. The existing permitted infrastructure provides considerable development flexibility, allowing for shortened timelines and the opportunity to leverage on exploration success.
The second former gold producer on the Madsen property is the historical Starrett-Olsen mine. A 450-metre shaft was sunk in 1945, and mining operations were carried out from 1945 to 1956. A total of 823,544 metric tonnes were mined at an average recovered grade of 6.17 g/t Au to produce 163,990 ounces of gold. The Starratt-Olsen mine does not have a current mineral resource. Only limited modern-day exploration has been conducted near the mine workings.
Exploration upside
In addition to the historical production and the mineral resource, the Madsen gold project has enormous upside exploration potential. A new understanding of controls on high-grade mineralization in the Red Lake camp has resulted in multiple recent discoveries. Opportunity exists to apply contemporary science to the Madsen mine trend, where substantive production ceased in 1974. Since the cessation of mining at Madsen, a new understanding of the role of ultramafic rocks has led to multiple high-grade discoveries in the camp, including high-grade zones at the Campbell and Red Lake mines. At Madsen, numerous high-grade discoveries have been made recently, and many of these high-grade discoveries have only been partially advanced. Additional satellite mineral resources may be defined in the near term with additional geological studies and drilling.
Some examples of exploration targets discovered postmine closure include:
Fork zone: recent discovery along the Madsen mine trend, located midway between the Madsen and Starratt-Olsen deposits
Surface drilling has intersected mineralization for approximately 700 metres along strike, defining multiple mineralized structures within a mineralized corridor about 50 to 100 metres wide, with drill intersections of up to 10.3 metres grading 17.32 g/t Au. Mineralization is open along strike, and no mineral resource is defined.
Russett South: represents a possible near-surface, updip expression of the 8 zone
Multiple drill holes have intersected mineralization with intercepts of up to 2.0 metres grading 29.08 g/t Au. Russett South is open in all directions. The 8 zone resource is approximately 1,000 metres vertically below, and the downdip extension has seen minimal drill testing.
Treasure Box: is a recent discovery located 2.2 kilometres north of the 8 zone and situated along the same geological contact that hosts the 8 zone resource
The 800-metre-by-200-metre zone was tested by surface drilling returning over 200 drill intercepts grading from 2.0 g/t Au to 155.9 g/t Au. Mineralization has been tested to 270-metre depth and is open. No mineral resource is defined.
Buffalo: showing 6.4 kilometres northeast of the Madsen mine workings and located along the Madsen mine trend
In the 1980s, a 60-metre decline ramp was established, and both surface and underground drill holes were completed to test a 500-metre-by-200-metre zone of continuous mineralization. The Buffalo zone is open to the east, west and at depth. Drill intercepts include 16.0 metres grading 7.6 g/t Au and 26.7 metres grading 3.2 g/t Au. There is no mineral resource calculated for Buffalo.
Location
A near-term focus of Laurentian will be to advance many of these exploration targets and potentially define mineral resources. Laurentian will also focus its exploration efforts on developing additional targets along the 12-kilometre-long Madsen mine trend and the 10-kilometre-long 8 zone corridor.
Proposed board of directors
Laurentian will transform its board at closing by seeking shareholder approval to add the following experienced mining professionals as a result of this transformational acquisition:
Dr. Mark O'Dea
Dr. O'Dea is the founder and chairman of Pilot Gold Inc. and executive chairman of True Gold Mining Inc. with a record of creating strong, well-financed companies built on high-quality projects and run by technical leaders. As president, chief executive officer and director of Fronteer Gold Inc. (2001 to 2011), Dr. O'Dea built the company from a $2-million start-up into a well-financed, high-profile, development-focused gold company acquired in 2011 by Newmont Mining Corp. for $2.3-billion. Over the past decade, Dr. O'Dea has raised more than $750-million through equity financings, equity investments and asset divestitures.
Graeme Currie
Mr. Currie most recently served as director, investment banking, at Canaccord Genuity Ltd., where he concentrated specifically on the junior mining sector. He retired from Canaccord in August, 2012. Prior to his role in investment banking, he was with Canaccord as a senior mining analyst, who focused, for over 22 years, on the junior mining sector. Mr. Currie has over three decades of industry experience, directed specifically on junior exploration and development companies worldwide, and has extensive knowledge of the capital markets as it relates to the mineral exploration and mining industry.
Troy Fierro
Mr. Fierro is a successful mining engineer with over 28 years of industry experience. He has previously held executive positions with Fronteer Gold, Metallica Resources Inc. and Coeur d'Alene Mines, where he has overseen the development, construction, or management of mines in Nevada, Mexico, Argentina, Chile and Alaska. At Fronteer, Mr. Fierro acted as chief operating officer, and at Metallica, he was vice-president of operations, where he played the lead role in the construction of the Cerro San Pedro mine in Mexico. Mr. Fierro was also a director of Grayd Resources and is currently a board member with Timberline Resources. Mr. Fierro graduated with a bachelor of science -- mine engineering -- from South Dakota School of Mines, where he serves on the advisory board.
Lenard Boggio
Mr. Boggio was a partner with PricewaterhouseCoopers LLP and its predecessor firm Coopers & Lybrand from 1988 until his retirement from PwC in May, 2012. During that time, he was leader of the B.C. mining group of PwC, a senior member of PwC's global mining industry practice, and an audit practitioner for publicly listed Canadian, U.S. and United Kingdom mineral resource and energy clients. The scope of his clients' activities included exploration-, development- and production-stage operations in the Americas, Africa, Europe and Asia. Mr. Boggio holds a BA and BComm from the University of Windsor in Ontario and is a member of the Institute of Chartered Accountants of British Columbia.
Quality assurance and NI 43-101 compliance
The mineral resource estimate reported herein for the Madsen gold project is set out in the NI 43-101 technical report "Mineral resource estimation, Madsen gold project, Red Lake, Ont.," with an effective date of Dec. 7, 2009, prepared under the supervision of Glen Cole, PGeo, SRK Consulting Inc., an independent qualified person, based on information provided by Claude Resources, and is available on SEDAR under the profile of Claude Resources. The Claude Resources mineral resource statement has been publicly reported in Claude's press release dated Dec. 7, 2009.
The aforementioned technical report and other exploration reports were reviewed on behalf of the company by Darren O'Brien, PGeo, a consultant to the company, a qualified person under NI 43-101. The scientific and technical information in this news release has been approved by Mr. O'Brien.
To the best of the company's knowledge, information and belief, there is no new material, scientific or technical information that would make the disclosure of the mineral resources inaccurate or misleading. |
