Lac, Queenston proceed on Kirkland West project

One of the most promising exploration plays in the Kirkland Lake, Ont., gold camp will undergo a major underground exploration program this spring. Following a series of discussions on a joint venture format to explore and mine the Kirkland Lake West gold property, partners Lac Minerals (TSE) and Queenston Gold Mines (TSE) finally came to terms recently.

After holding out for 50% of operating profits, Queenston appears to have settled for a 35% initial interest (until the first 400,000 oz of gold is produced) before sharing the spoils on a 50-50 basis.

Considered by Queenston to be the jewel of its exploration porfolio, the Kirkland West property is thought to contain the projected westward extension of the Kirkland Lake “Main Break” which has produced 23 million oz gold.

Located within 300 ft of Lac’s Macassa mine site, which should produce 70,000 oz gold this year, and 1,200 ft from the new No 3 shaft, it covers the famous geological anomaly for a 1-mile strike length.

Under the agreement, Lac will pay Queenston $500,000 and complete at its expense, a minimum 5,000 ft of drifting on three levels and 15,000 ft of underground diamond drilling. Amikougami fault

Starting immediately, Lac will attempt to confirm Queenston’s confidence in Kirkland West, by drifting from the 7,050-ft level across the Amikougami fault which separates the two properties and back along the 04 break.

Using the 7,000-ft No 3 shaft, Lac will also explore Kirkland West via the 6,450-ft and 5,875-ft levels, said Lac’s senior vice-president Rolly Francisco, who anticipates that the program will cost about $1.5 million.

If an economic gold deposit is identified by Dec 31, 1990, Lac can elect to acquire an interest at Kirkland West and develop the project to production. In the event of a positive decision, Lac would pay Queenston an annual licence fee of $100,000 and either produce at least 5,000 oz gold or pay a minimum $100,000 annual royalty..

Profits from the Kirkland West property will be shared on the following basis: On the first 400,000 oz gold sold from Kirkland West, Lac and Queenston will split the profits on a 65% and 35% basis respectively. Later profits will be shared on a 50-50 basis.

According to Francisco, the terms are almost identical to those tabled during discussions last August. However, Queenston elected to form a joint venture with Northfield Capital Corp. (ASE) and a private company called Canadian Ore Mining. The latter companies agreed to spend $50 million to bring Kirkland West to production by 1992. Northfield agreement

While the Northfield agreement (which was scuttled by the Oct 19 market downturn) would have given Queenston an initial 50% interest compared with an initial 35% with Lac, Queenston Chairman Hugh Harbinson appeared happy with the latest deal.

“Due to the time it would have taken to sink a shaft and drill a 6,000-ft hole, the Northfield deal posed all kinds of risks,” Harbinson told The Northern Miner.

“The beauty of this agreement is that we can get in there (to the mineralized zone) immediately and we won’t have to put up any money on the way through (to production),” said Harbinson “We also have the benefit of a $40 million production shaft and mill complex.”

As reported (N.M., April 4/88), Kirkland West was explored previously by limited surface work and by two underground holes drilled from a depth of 5,700 ft at the Macassa mine.

If Lac can find an economic gold deposit, the agreement will benefit the Kirkland Lake region, Harbinson says. “If we find what we think is contained at Kirkland West, a new deposit would extend the life of the Macassa mine and create new jobs.

“The ripple effect is significant,” he said.