Claude hopes for Madsen joy
Claude Resources Inc CRJ
Shares issued 40,553,853 Nov 20 2001 close $.480
Tuesday Nov 20 2001
Street Wire by Will Purcell
Two drilling programs at Claude Resources Limited's Madsen, Red Lake,
property have failed to produce economic gold assays, but that was largely as
expected, as neither program tested the prime area where high-grade ore is
known to exist. Expectations are higher with the latest round of drilling, now under
way, which is apparently targeting a far more promising portion of the Madsen
property. Even if that program misses the mark, the project operator, Placer
Dome, is likely to keep working on the property for some time to come, due to
the complex nature of the gold deposits in the area.
One of the key areas of current interest at Madsen is the No. 8 zone, which was
discovered during the 1970s, just as the original Madsen mine was winding down.
The high-grade vein is quite deep, located at depths between 1,100 metres and
1,400 metres, although the zone was believed to be open both up-dip and
down-dip from there.
The recently completed second phase of drilling was designed to poke holes
further to the northwest of the known zone, to test the up-dip region for a
continuation of the gold zone. Placer drilled two holes from the surface and
wedged an additional hole off of each, completing a total of four holes into the
zone over a strike length of 500 metres. The bad news was that none of the holes
encountered rock with gold grades greater than one ounce per tonne, however all
of the holes did encounter mineralized zones containing lower gold grades. Assays
from all four holes returned gold grades of three grams per tonne to five grams per
tonne over a few metres. The holes were apparently drilled to a depth of about
900 metres.
Claude chairman, Bill MacNeill, said that Placer Dome believed that the No. 8
zone was the equivalent of the high-grade zones that Placer and Goldcorp have
discovered nearby, and that apparently prompted the attempt to locate an up-dip
extension to the Madsen high-grade zone. Mr. MacNeill said that although it
would have been nice if the drill program had been lucky and hit a high-grade
intersection, Placer's crew are nevertheless intrigued with the width of the
mineralized zone, and the results of the second round of drilling should provide
valuable information upon which future work can be based.
The first phase of drilling was simply designed to increase Placer's knowledge of
the Madsen property. About 3,400 metres of drilling was completed, not in the
quest for gold, but to gain knowledge of the structure and stratigraphy of the area.
In effect, Placer was hoping to determine if there were similarities between the
region surrounding the Madsen high-grade zone, and the similar orebodies nearby.
That program was apparently quite successful, outlining stratigraphic similarities
between the zones.
The initial phase of drilling was not designed to produce toutable assays, although
the Saskatoon-based Mr. MacNeill allowed that it would have been nice if the
drill had hit something big. In fact, Placer did hit something, although it was hardly
big. One of the holes did hit a 1.16-metre interval that returned 4.1 grams of gold
per tonne, similar to the results of the latest program.
Although the second phase seemed to produce a more organized pattern of gold
intersections, the grades were hardly toutable. "The system was there, but the
zone was not," Mr. MacNeill said. In fact, it would likely take a considerable
amount of additional drilling to prove or disprove the presence of a high-grade
up-dip extension of the No. 8 zone.
In any case, the real moment of truth could be close at hand, as Placer drills the
down-dip extension of the No. 8 zone. "We hope to get some joy out of it, for
sure," Mr. MacNeill said. Joy for Mr. MacNeill would likely consist of some
high-grade assays, possibly returning gold grades in excess of 30 grams per tonne.
He could get his wish. The drill program will probably provide at least four
attempts to intersect the zone in this area, with up to four wedges off of one pilot
hole.
Even if there is no joy for Mr. MacNeill and Claude, it is likely that Placer will
keep on drilling, although it can now technically walk away from the project at any
time, according to the terms of the deal. The company has apparently now spent
in excess of $1.2-million on Madsen, which was the minimum amount required.
Placer does appear to be a believer in the project, given the amount of drilling and
exploration that the gold major has been performing over the past several months.
In addition to the No. 8 zone, there are many areas of the large property that have
not been touched through the years, and there are other portions which produced
good grades in shallow drill holes that were never followed up. As a result, Mr.
MacNeill said that Placer would be doing a lot of additional surface work and
drilling outside of the main Madsen mine area. "These things can be fairly elusive,"
Mr. MacNeill stated.
Indeed they can. It took about 40 years to find the high-grade zone on the
Goldcorp property, and it was certainly a lengthy wait at Madsen as well.
Furthermore, the geometry of the high-grade zones is very complex, and hitting the
zone with a drill could be difficult. Nevertheless, as the first year of the deal with
Placer draws to a close without any high-grade assays to tout, Mr. MacNeill was
left with little to promote but the potential of the Madsen property.
As a result of that potential, the Prince-Edward-Island-born Mr. MacNeill said
that he believed Placer would clearly spend the minimum amount to earn its
interest. To earn a 55-per-cent stake in the Madsen property, Placer must spend
$8.2-million over three years and complete a bankable feasibility study by the end
of 2005. As well, Placer must spend a minimum of $1.5-million next year, and that
would suggest that the company will work at Madsen more or less continuously
next year as well.
One thing going for Madsen is the size of the property, which apparently contains
up to 15 kilometres of potential strike length. Back in the 1970s, a second
high-grade zone was apparently discovered, about 300 metres to the north of the
No. 8 zone, which would seem to augur well for additional discoveries along
strike. That alone makes it a decent bet that Placer will keep looking at Madsen,
even if the current program fails to hit anything of note.
Placer's program is far more energetic than the work that had originally been
planned by Claude when it had its eye on the down-dip portion of the No. 8 zone.
After the company acquired Madsen, Claude dewatered the Madsen shaft down
to the No. 16 level, in order to drift off the No. 12 level toward the No. 8 zone.
Claude planned to set up drill chambers there to test the zone, but Placer had
none of that, choosing to do all of its drilling from the surface. One reason for the
switch is that cash is not a major concern to Placer, but drilling from surface will
also further enhance the knowledge of the stratigraphy in the area.
Also shelved, at least for now, are any plans to reactivate the Madsen mine. The
participation of Placer certainly precludes any such program, but the price of gold
is also a prime factor in Madsen remaining inactive prior to the arrival of Placer.
Claude played with the mine for a few years, conducting some drilling and
experimenting with a new method of mining, but ultimately Madsen remained in
mothballs. The mine is believed to still have some good blocks of ore with suitably
high grades of gold, but it is unlikely that Madsen would be reactivated unless gold
were to sustain a rally well above $300 (U.S.) an ounce.
Meanwhile, Claude has two other projects to keep busy with while it sits back
and watches Placer work Madsen. Things did not go well for Claude at its
Seabee mine during the first few months of the year. Mr. MacNeill described the
first quarter performance as lousy, as the mine in Northern Saskatchewan
produced just 11,000 ounces of gold. Things were not much better in the second
quarter as well, as the company managed to produce just 11,800 ounces.
Nevertheless, things have apparently improved since then. Mr. MacNeill said that
Seabee would produce about 50,000 ounces this year, not far off the original
target of 54,000 ounces, which would suggest that the mine will recover just over
27,000 ounces through the last six months, aided by a good performance in the
last quarter.
Claude keeps plugging away at Seabee and the neighbouring Currie Rose
property, and as a result, the mine has a resource that is little different than it was
when the mine first went into production in the early 1990s with a life expectancy
of about five years. As well, Claude now believes that it will find a significant
amount of ore at depth. The Seabee mine has been largely limited to a depth of
400 metres through its life, but Claude now plans to hunt for additional ore down
to the 800-metre mark.
As well, Claude will be stepping up its exploration program just west of Flin Flon.
The company currently has a 35-per-cent stake in the Amisk and Laurel Lake
project and it can double its interest by spending $14-million by the end of 1995,
although Claude apparently has received a one-year extension to the option deal.
Claude acquired the property in 1998 but it has done little work over the past two
years due to the sagging price of gold and more pressing priorities.
That now seems about to change. Claude has not laid any formal plans as yet, but
the company does hope to spend up to $700,000 on the property this winter. The
last drill program on the Laurel Lake deposit was completed in 1998, and it
resulted on some encouraging assays. One hole intersected 6.4 metres that
assayed 12.97 grams of gold per tonne, and several other intersections returned
grades of up to 10 grams per tonne over widths of several metres. Although
Claude's program is hardly carved in stone, more drilling seems likely in order to
get a better understanding of the orebody.
Claude also has oil and gas interests providing cash flow, as well as a sizable
number of shares in the Saskatoon-based diamond hunter, Shore Gold Inc. The
company is currently taking a small mini-bulk kimberlite sample from its Star pipe
in the Fort a la Corne region and contemplating a large bulk sample next year.
Shore Gold's chief executive officer is Mr. MacNeill's son, Ken MacNeill.
Claude's shareholders have been in a pessimistic mood for several months, even
as Placer drills away at Madsen. The stock peaked at 87 cents in mid-March, and
it enjoyed a second surge in May, as Placer worked away on its first drill
program. Since then, Claude has been in a bit of a slump, as investors wait for
signs of joy from the down-dip portion of No. 8. Claude closed down two cents
Monday, at 48 cents, where it remained Tuesday.
(c) Copyright 2001 Canjex Publishing Ltd. canada-stockwatch.com |
