Cameco to start production at Contact Lake gold project

After initiating an underground exploration program on the Contact Lake gold project in northern Saskatchewan last July, Cameco (TSE) has decided to put the deposit into production.

The Contact Lake project is part of the Preview Lake joint-venture, two-thirds owned and operated by Cameco and one-third owned by Uranerz Exploration and Mining.

Contact Lake is about 45 km northeast of La Ronge, Sask. To date, total costs at the project are estimated to be about $36 million. The development plan calls for the construction of a 700-ton-per-day mill, which is expected to start producing in the first quarter of 1995 at a rate of 60,000 oz. gold per year.

The deposit contains minable reserves of 1.3 million tonnes averaging 8.0 grams gold per tonne (0.23 oz. gold per ton). The reserves are sufficient to provide feed for the mill for a 6-year period and should yield almost 340,000 oz. gold. In addition, another 336,000 oz. of geological reserves have been identified at or near Contact Lake. Cameco’s share will be 35,000 oz. yearly. The Contact Lake deposit was originally discovered following regional geochemical surveys. In 1984, a lake sediment anomaly was followed up by analyzing heavy mineral concentrates from five bulk till samples. Gold grains were traced back to an area and a shear zone was subsequently identified in 1986. A 400-metre segment of the shear zone was then tested with 11 drill holes.

The deposit was delineated in 1989 with two drill programs comprising 119 holes and totalling 18,057 metres. Reserves are contained within a 600-metre-long zone extending to vertical depths ranging from 180 to 280 metres. The deposit remains open along strike and at depth.

In 1991, while the deposit was being developed, the government of Saskatchewan approved the environmental impact statement submitted by the joint venture.

The mineralized zone is hosted within a poorly exposed regional northeast-striking shear zone that cuts granitic and granodioritic phases of the Little Deer Lake Pluton.

Within the shear zone there are zones of pyrite, sericite and hematite alteration. The gold is typically present with all phases of alteration adjacent to the structural hanging wall. Mineralized intervals range from between 1.5 and 15 metres in width and contain up to 5% quartz and sulphide veinlets.

Cameco expects to employ more than 100 people when the mine goes into production and at least half of the employees will be local residents. The work schedule at the mine will be a seven-day-in/seven-day-out routine with personnel staying at the 80-person camp located at the mine site.