George Lake project gets new lease on life

Unable to go it alone, Kit Resources (kit-) has enlisted the aid of Kinross Gold (K-T) to develop its George Lake gold project near Bathurst Inlet in Nunavut.

Touted as one of the largest undeveloped projects in the country, George Lake hosts 6.5 million tonnes in six near-surface deposits averaging 9.76 grams gold per tonne. Nearly two-thirds of that resource is classified as indicated, with the remainder deemed inferred.

The resource, based on more than 900 drill holes, was calculated by geological consulting firm MRDI Canada using a cutoff grade of 5 grams and a cutting factor of 34.29 grams. More than 190 of those holes were sunk by Kit in 1997 (the year it purchased the project), with the remainder drilled by previous operators.

Gold mineralization is associated with iron formation similar to that exploited by Echo Bay Mines (ECO-T) at its now-suspended Lupin mine, 100 metres to the west. Metallurgical tests indicate that between 93% and 95% of the gold can be recovered by conventional milling and carbon-in-pulp extraction.

George Lake, however, remains plagued by the high infrastructure costs associated with the remote region. In late 1997, Kit tried to overcome this in an unsuccessful attempt to acquire from Inmet Mining (INM-T) the similarly encumbered, but technically feasible, Izok Lake base metal project, 230 km to the west. The combination of the two would have allowed for costs to be shared, but the deal was terminated several months later after Kit failed to pay the second installment fee in a cash-saving measure. Subsequently, all work on the property ceased and the company’s financial woes have since allowed for technical studies only. (In the recent first quarter, the company posted a modest profit of $360,183, owing to an options-for-salary-owed swap with certain officers.)

A possible light at the end of the tunnel is the recent charting of a navigable route for deep-water vessels to the southern end of Bathurst Inlet, an initiative originally spearheaded by Kit following its purchase of the project. With the port, Kit projects George Lake’s production costs at US$260 per oz., based on annual output of 190,000 oz. gold over nine years.

Kinross can earn a 70% interest in George Lake by spending $20 million over the next five years, with the first $2 million due by Nov. 30, 2000. This is in addition to the roughly $44 million already spent on the project.

Drilling is to begin in the new year, focusing on boosting resources by 50%. Several individual zones remain open at depth.