MINER DETAILS — Madsen puts hope in `Mr. Chibougamau’

Our readers love to take us to task; for stories not written, for biased reporting, for outright mistakes. But we are also asked for information.

“About Red Lake Buffalo Resources,” writes A.B. from Windsor, Ont. “I would appreciate it if you would keep me informed of the company.” First, the company’s name was changed in 1991 to Madsen Gold Corp. We’ve reported on Madsen since then as the company tried to get its former producer, the Madsen mine in Ontario’s Red Lake gold camp, back into operation.

Madsen, like a lot of juniors, is short of cash — it has a working capital deficiency — but it has a well-documented resource with significant value and funding from flow-through shares to pay for exploration. Perhaps the biggest boost in the company’s recent fortunes is the addition of Ram Kanwar, “Mr. Chibougamau,” as its vice-president of operations. Kanwar, 53, is credited — by himself — with saving the Copper Rand and Portage copper-gold mines at Chibougamau from an early death. When he came to Chibougamau in 1968 from India, the two mines were owned by the Patino family of Bolivia. The family sold the mines to Northgate Explorations, a company with Irish roots, in 1981 for $80 million. Northgate operated the mines for seven years, then sold them to Australian conglomerate, Western Mining, for $160 million in 1988.

In 1968 there was only five years of ore left at the Chibougamau mines. `Find ore, or find another job,’ the mine manager told me,” says Kanwar. One drill hole, put down at his insistence in 1972, discovered the Hanging Wall zone which became the mainstay of the Copper Rand. The Portage mine, closed since 1974, was brought back into production in 1979 after Kanwar, as chief geologist, discovered the 026 zone. Both mines are still operating. Kanwar, who left the Chibougamau mines in 1991, is enthusiastic about the future of Madsen.

“I’m going to repeat my past, but at Madsen I have a head start.” There are 707,000 tons grading 0.34 oz. gold outlined at the Madsen mine, he says. Although there will be some dilution, Kanwar is confident the nugget effect will sweeten the head grade.

“It would make money, at today’s gold price of $430. The total cost would be $360 per oz. including capital, development and mining. And there’s enough for at least five years, maybe seven, of production.”

Will Madsen, once among the richest of the Red Lake gold mines, reclaim its former glory? Perhaps not, but, given good luck and good management, it might generate a profit for a few years to come.