Alexandria and the new Abitibi (November 26, 2007)

SITE VISIT

Val d’Or, Que. — Alexandria Minerals (AZX-V, ALXDF-O) might be at the early stage of the exploration game, but the 75 years of mining success stories that surround its Val d’Or gold properties have motivated the company to drill until it finds enough gold to satisfy both the market and a potential future buyer.

Alexandria will have finished 25,000 metres of drilling this year with as much or more planned for 2008.

“We just have to drill until we’ve shown this deposit is big enough,” says company president and CEO Eric Owens.

Owens is talking about the 28 Orenada claims, optioned from Aur Resources (now part of Teck Cominco [tck.b-t, tck-n) in September 2006. The land package includes 351 claims on 10 properties, of which Alexandria has the option to earn up to 100% for a total of $8.5 million in cash, shares and exploration work.

“At the rate we are spending, we could complete that in a short order of time,” Owens says, but no definite decision has been made on timing.

Orenada hosts three main gold zones and was extensively tested by 30,000 metres of drilling between the 1930s and the mid-1980s. Aur completed a 4,000-oz. bulk sample at Orenada 4, followed by extensive drill, surface and underground programs that included 18,000 metres of underground drilling, 1,100 ft. of drifting and raising on two levels and a three-compartment shaft sunk to 275 metres, but all was placed on hold in 1987.

An internal Aur study in 1990 estimated that the Orenada 4 zone hosts a historic resource of 2.17 million tons grading 0.043 oz. gold per ton (1.22 grams per ton), 60% of which is accessible by open pit.

Alexandria has reported a lot of near-surface intersections, but has also been coming across more targets at depth.

“Ideally, if the whole thing could be an open pit, that’d be great, but we are drilling deeper and deeper so we clearly have underground targets,” Owens says.

Alexandria first began drilling on Orenada at the beginning of 2007. Owens says the physical dimensions of Orenada 4 have grown substantially, with mineralization so far reaching 650 metres depth and extending the strike length to 600 metres from 350 metres.

Orenada 2, which Owens says was just a “tiny little thing,” now has a strike length of 330 metres compared with just 60 metres a year ago.

“We’ve shown minable grades and widths and at today’s gold prices, they look potentially economic,” Owens says.

Exploration

Alexandria has pumped out a steady stream of drill results from both Orenada targets over the last few months. The company has been drilling holes as far apart as 100 metres, though a few stepout holes on both deposits have stretched to 200 metres.

One of Alexandria’s first holes at Orenada 4 returned 12.6 metres grading 7.9 grams gold per tonne, including 4.1 metres grading 21.37 grams gold, and contained visible gold.

September results from Orenada 4 showed a 17.1-metre intersection grading 2.11 grams gold per tonne, including 6.6 metres grading 3.18 grams gold, with mineralization reaching 430 metres depth.

The company says results like this show that strong gold mineralization occurs down-plunge over significant widths at depth. The story is similar for Orenada 2.

Alexandria started 2007 off with a near-surface intersection of 113.1 metres grading 0.94 gram gold per tonne, including 89.1 metres grading 1.09 grams gold and 25.6 metres grading 2.89 grams gold.

More recent October assays from Orenada 2 included a 48.5-metre intersection grading 2.19 grams gold per tonne, including 8.2 metres grading 11.44 grams gold per tonne. Drilling has shown that mineralization continues to the east as well as at depth.

Alexandria would like to see its deposits multiply the way its overall land package has since its initial public offering in March 2006 — the company’s holdings have grown to 557 claims from 45 — but it was six years earlier that Alexandria first began dusting the cobwebs from several Abitibi projects.

“These things have long histories and for various reasons totally unrelated to geology, (many projects) get put on the shelf,” Owens says. “It’s a matter of getting them off the shelf, testing your ideas and ultimately at the end of the day, drilling.”

The Aur properties are part of Alexandria’s 23-km Cadillac Break group. The company picked up 90 claims on four properties from Iamgold (IMG-T, IAG-N) and 45 claims making up the Siscoe East property through options and purchase agreements with Niogold Mining (NOX-V, NOXGF-O) and Virginia Mines (VGQ-T, VGMNF-O). The properties include land between the Siscoe and Sullivan mines, which closed in 1949 and 1967, respectively, and together produced about 2 million oz. gold.

Altogether, Alexandria’s 21 properties, distributed among six projects, cover 80 sq. km of the Abitibi belt of northern Ontario and Quebec.

Owens says that he and Alexandria co-founder and vice-president exploration, Eddy Canova, always had a soft spot for the Val d’Or area.

As they watched the gold industry go international in the 1990s, companies were looking for bulk-tonnage, potentially open-pit targets in areas that hadn’t seen Western-style exploration.

“We felt the Abitibi belt was sort of under-appreciated and misinterpreted,” Owens says. “Even at that time, there were signs that companies ought to look (again) at the geology and past exploration activities and reinterpret the data.”

Historically, the Abitibi has been a gold district of underground, narrow-vein gold mines — open-pit mining wasn’t very common, but there have been a few exceptions in recent years.

As 60 years of underground mining at the Sigma-Lamaque complex in Val d’Or came to an end in 2003, an open pit allowed production to continue. Fast forward to today, and current operator Century Mining (CMM-V, CMNZF-O) has returned to the past. The open pit was recently shut down, but new gold resources have been discovered underground with 65,000 oz. gold production expected for this year.

The Dome open-pit mine in Timmins, Ont., shares a similar story. Depleted in 2005, the mine property is now a part of Goldcorp’s (G-T, GG-N) Porcupine Joint Venture, which includes three operating gold mines. Continual operations since 1910 have produced more than 16 million oz. gold.

Meanwhile, a large-scale open-pit mine is what Osisko Exploration (OSK-V, OSXLF-O) hopes to achieve at its Canadian Malartic property, west of Val d’Or, where more than 5 million oz. gold was mined between 1935 and 1979. Currently, Osisko is upgrading an inferred resource of 8.4 million oz. gold with a 150,000-metre drill program.

Owens says Kirkland Lake Gold’s (KGI-T, KGI-L) acquisition of five historic mines that had produced 22 million oz. gold overall, shows that re-evaluating the Abitibi is worth the effort. The company bought the properties after the downturn of the late 1990s and early 2000s. Exploration has proved successful — Kirkland Lake Gold plans to produce 60,000 oz. gold this year.

Owens and Canova were inspired to continue this Abitibi revival in the Val d’Or area, where historic gold production exceeds 25 million oz. gold so far.

‘Matter of spending’

“We think there’s as much gold in the Abitibi as anywhere else the world, probably more than most places, and we think it’s a matter of spending time, effort and money on it,” Owens says.

Alexandria has been spending money, but consciously so, over the last six years. Owens and Canova initially began the company with their own savings, avoiding debt, before getting seed financing.

“It’s a fair bit of risk to go into these things,” Owens says. “So we put our own money in and away we went.”

As of November, Alexandria had about $5 million in the bank and was still debt-free. The company raised about $7.65 million through a private placement in May, and has been spending the money accordingly.

Alexandria has been trading in the 20-30 range, with a 52-week rolling high of 42.
5 and a low of 17.

The company has received most of its financial support in Vancouver and Germany.

“Smaller companies have less success at inspiring investors in Toronto,” Owens says. “Now we’re getting to a size where we are seeing more interest here (in Toronto).”

Back at Orenada, the source of this newfound interest, Alexandria has slowed drilling down to just one rig from two to allow time for assay results from the summer to catch up with exploration. The company went two months without seeing a single result, but turnaround has shortened to about a month.

Although Alexandria plans to have a second rig going again in January, the rate that it advances the project is affected by both the mining industry labour shortage and the company’s bank account.

But the stage of the deposit also plays a role.

“We could bring in five rigs, but at this stage it’s better to try to see how much volume of rock is actually affected by gold mineralization,” Owens says. “It’s more cost effective now just to use a couple of drill rigs until we get that information.”

Still, Owens says the site could see more action in the future.

“We’d like to speed things up in the next three to six months,” he says, “because we want to take advantage of the current market.”

Other targets

The Orenada claims might be the company’s focus, but Owens has his eye on a few other less-developed areas of the Cadillac Break Group.

Alexandria has plenty of geophysical targets and historical data waiting for follow-up, including the Akasaba property and the Sleepy claims on the Block-Sud property, but there hasn’t been enough time to do the work.

The company plans to drill Sleepy, half covered by a lake, this winter when things are frozen.

In late 2006, Alexandria drilled about 2,500 metres on Siscoe East and the nearby Stabell property, but Orenada will be getting the most attention in the near future.

“It’s important to bring one of these assets forward,” Owens says.

Alexandria plans to have 3-D mapping done soon to help visualize some of the different trends and a Titan geophysical survey the company had done over Orenada will help find drill targets as deep as 1,500 metres for future programs.

Owens says a National Instrument 43-101 resource estimate could be in the works for the latter half of 2008, but the company’s main focus will be to increase the size of the deposit.

“We want to build the deposit big enough so that a mining company will buy it from us,” Owens says.