Junior Goes to Two Camps
As the old adage goes, the best place to find a mine is in the shadow of a headframe. The odds, then, seem stacked in favour of Alexis Minerals, which is poking around behind 60 such structures in the historic Val d’Or and Rouyn-Noranda mining camps in northwestern Quebec.
The company’s 212-km2 land package in Val d’Or is the camp’s largest, and hosts eight formerly producing gold and base metal mines.
In 2004, Alexis signed an option deal to acquire 17 base metal and gold properties from Aur Resources. The 110-km2 package straddles 25 km of strike extension of the favourable Val d’Or Formation.
This year, Alexis consolidated the Aurbel property by acquiring Aur’s 50% stake along with the 1,400-t/day Aurbel gold mill for $3 million. Alexis also forked over $550,000 for Aur’s exploration office and core shacks in Val d’Or.
The Aurbel mill with gravity separation and Merrill-Crowe gold recovery was a bargain. An independent insurance evaluation pegged its replacement value at $35.8 million, and estimated market value at $8.8 million. Alexis plans to spend $3 million to rehabilitate the mill, idle since 1998. Thereafter, recommissioning would take around six weeks.
The Aurbel property covers around 100 km2 of the Bourlamaque Batholith, and hosts the advanced Lac Herbin quartz-vein gold project, 1.8 km northwest of the mill and 10 km northeast of Val d’Or. This is where Alexis’ efforts are currently focused underground, where inferred resources stand at 1.07 million tonnes running 7.3 g/t Au, for around 250,000 contained ounces. That gold is found in veins of quartz-chlorite-pyrite (and occasionally tourmaline) hosted in eight zones along shears crosscutting the batholith.
The company’s confidence that it can double existing resources seems well-founded, especially with the recent discovery of a new style of flat, quartz-tourmaline-pyrite-gold tensional veins adjacent to the S1 West (S1W) zone. Exploration drifting on the 200 level suggests the system could measure up to 7-m thick.
Alexis plans more exploration drilling on the tensional veins once the current delineation drilling program wraps up. Drifting to facilitate ongoing bulk sampling has already encountered a huge “flat swarm”. The veins will not be included in a resource estimate currently being updated, as they have yet to be fully delineated.
Material is being excavated from the Hangingwall (HW) and S1W zones. A total of 20,000 tonnes will be collected and sent through Richmont Mines‘ nearby Camflo mill in October to confirm grades, cutting factors, metallurgical characteristics and mill recoveries.
Ongoing work is in anticipation of a feasibility study at Lac Herbin later this year, with a production decision to follow by the end of the year. A scoping study in early 2005 concluded that the deposit could support a 500-t/day underground operation to produce around 35,000 oz gold annually at a cash cost of US$224/oz over 5.3 years. The study was based on a gold price of US$400/oz, and pegged capital costs to bring the mine to production at US$4.4 million. Production startup is planned for 2007.
Meanwhile, in the nearby Rouyn-Noranda camp, Alexis has wrapped up a review of historic data derived from some 42,656 m of surface and underground drilling, more than a kilometre of ramp development, and nearly 300 m of lateral drifting at the Lac Pelletier property. Alexis inked a three-year option deal to pick up the property from Thundermin Resources in late 2005. Thundermin retains a 2.5% net smelter return royalty (NSR); Falconbridge has an underlying 1% NSR.
Based on its reinterpretation, Alexis figures measured and indicated resources at 1.2 million tonnes running 6.1 g/t Au, for around 242,000 contained oz of gold. Another 491,140 tonnes of inferred material runs 5.2 g/t Au, for 81,637 contained oz. The estimates employ a cutoff grade of 3 g/t Au.
In the 1990s, former operators Soquem and a subsidiary of Mining Italianna pegged measured and indicated resources at 484,799 tonnes running 7.84 g/t gold, based on a 5-g/t cutoff.
Aligning the cutoff grades, Alexis’ measured and indicated figure rises to 618,514 tonnes at 8.2 g/t Au. The increase arises from Alexis’ revised model of Lac Pelletier, which is more steeply dipping than Soquem had envisaged. Alexis says its new model clarifies the relationship between many previously unrelated mineralized intersections.
Looking ahead, Alexis has applied for a transfer and modification of existing permits to reopen the ramp and dewater the underground workings. It figures dewatering should take around three months; underground exploration and drifting would follow.
Alexis envisages Lac Pelletier starting up at an annual rate of 20,000 oz in 2008. Ore would accompany Lac Herbin material through the Aurbel mill (perhaps supplemented by custom feed). The company plans to build a road to link Lac Pelletier to the nearby highway to avoid trucking ore through the adjacent residential area.
Combined annual production from Lac Herbin and Lac Pelletier is pegged at 55,000 oz, with cash operating costs forecast at US$250/oz. A new scoping study to determine the preliminary economics of the deposit is underway.
Base metal strategy
Alexis is also teamed with Falconbridge/ Xstrata in the hunt for base metals in the prolific Rouyn-Noranda camp, which historically produced 2.4 million tonnes of copper, 1.9 million tonnes of zinc, 19.5 million oz of gold and 94.4 million oz of silver.
The partnership paid dividends in early 2005, with the discovery of the West Ansil deposit 1.8 km southwest of the past-producing Ansil mine. The partners are examining the deposit’s potential economics before planning the next phase of exploration.
The 825-km2 landholdings include the past-producing Horne and Quemont deposits, the Amulet, Gallen, Ansil, Newbec, East Waite and Old Waite mines and numerous base metal occurrences and showings. It is situated 2 km northeast of the Horne mine, which produced 59.2 million tonnes averaging 2.2% Cu, 0.17% Zn, 6.2 g/t Au and 13 g/t Ag between 1927 and 1976.
In all, Alexis plans some 60,000 m of drilling in 2006. The company is well funded with $8.1 million in cash, and no debt. It also enjoys a low-cost working environment in Quebec, where the government reimburses up to 47% of exploration spending. Alexis figures these rebates could amount to $11.7 million during 2006-07.
Concludes Philippe Cloutier, the vice-president of exploration for Alexis: “If the Alexis team can’t find a major deposit in these two camps in the next two years, there’s a major problem.”
Ryan Walker is a writer on the staff of The Northern Miner.