Agnico scores again Two new producers certain

There’s an old axiom in this business that mines are made, not found, especially gold mines. A firm believer is Agnico- Eagle’s Paul Penna.

Indeed few companies, large or small, are matching his recent successes. For close on the heels of the highly profitable Telbel operation at Joutel, it is developing two more significant new producers in northwestern Quebec that fall smack into this category — Dumagami Mines and Goldex Mines.

Both are scheduled to come into production in mid ’88 in a spanking new 2,000-ton mill, construction of which is just getting under way at the Dumagami mine site 35 miles west of this booming gold mining centre. And both will be debt free. (He hates debt).

Too, the odds are heavily in favor of Agnico coming up with a brand new silver mine 10 miles east of New Liskeard in northern Ontario known as the Langis project. This is breaking new ground that could quickly extend the famed old Cobalt camp east to the Quebec boundary. A new 1,200-ft production shaft is to be put down here.

“The main reason for Agnico’s success is the perseverance of Paul Penna,” says Anton Adamick, general manager of the company’s gold division. “This is certainly reflected in the case of Dumagami, and it seems to be repeating at Goldex,” he adds.

Another factor would be his obvious ability to choose and hold a top- notch, no-nonsense operating staff. (Turn over is extremely low). Too, he now has almost unlimited funds at his command.

It is interesting to note that the Agnico company itself has carried out no underwritings or financing since 1972, suggesting that somebody must be doing something right in that organization.

We can’t recall any gold mine in this country putting down a production shaft to 3,200 ft before turning out an ounce of metal. This is Dumagami’s modus operandi.

For with a comfortable ore position of some 5.4 million tons averaging 0.134 oz gold, this company can afford such a move during the mill construction phase. It saves money in the long run. Too, management knows that its new and all-important west zone is getting bigger and better with depth.

Working round the clock, Agnico’s own shaft crews are advancing it rapidly. Now at 2,500 ft, it should reach its 3,200-ft target by the end of June. No other work is currently being done underground. (These crews earn bonuses exceeding their $19-per-hour wage rate, grossing $6,000 to $7,000 monthly. They have been shaft sinking steadily for Agnico since 1982).

But it is a hive of activity on surface, where the new 2,000-ton mill will soon be taking shape. At the time of our visit, heavy earth moving equipment of S.E.G. Amos was clearing the site, with foundation pouring scheduled to start shortly. Flow sheet has been designed and laid out by Leslie Engineering Ltd. of Toronto, and will include facilities for recovery of a copper concentrate. Cost of the mill itself is estimated at $16.5 million, with $9 million earmarked for further underground development, $1.2 million for additional surface infastructure and $4 million working capital. Financing for the entire program has all been firmly arranged.

If all outstanding warrants are exercised (highly likely), Agnico will end up with a 21% direct interest, with closely associated Mentor Exploration & Development holding an additional 11%, bringing Agnico’s direct and indirect interest to 26%. West zone a prize

It was the development of this zone that quickly changed Dumagami’s whole economic picture and has given neighboring Lac Minerals a real lift, for this prized multi- million-ton orebody straddles their common boundary. (Operators of these two adjoining mines work closely together.) It is questionable if Dumagami would be building a mill today without this new zone.

The ore itself, which is quite uniform, looks not unlike that at Telbel, The Northern Miner noted on a trip underground, i.e. the gold is in massive sulphides. But here, the pyrite is much coarser and does contain visible gold, whereas there is no apparent visible gold at Telbel.

Dumagami has drifted almost to the boundary on the 6th and 8th levels, from which over 15,000 ft of diamond drilling has been done. (Blasting on the Lac side was heard clearly). But what really iced the cake was a deep surface drill hole it put down close to the boundary that ran 0.23 oz across a true width of 59.l ft at a vertical depth of 2,650 ft, with another hole a little higher up with 0.24 oz across 34.5 ft. A subsequent hole put down by Lac on its side returned 0.24 oz across 34.5 ft or 0.15 oz across 77 ft which add to Dumagami’s confidence that bigger and better things will develop at depth.

Muck samples from 700 ft. of drifting on the 8th level averaged 0.134 oz across 12 ft, while on the 6th level the 500 ft that has been drifted averaged 0.10 oz over 9 ft, representing about the top of the structure. It contains about 0.5% copper.

Just as soon as the shaft is completed drives will be pushed west on the 20th and 21st (deepest) levels, but initial production will come from above the 10th.

Work, too, will resume on the original lower grade east zone where there are developed areas that run 0.15 oz that will be mined. Of particular interest here is the most easterly face on the 6th level that was stopped in excellent ore that assayed 2.0 oz across its 12 ft width. In fact muck from that last round yielded a spectacular sample of high grade that can be seen at the company’s head office.

It is estimated that mining and milling costs will run about $40-$42 per ton at the planned 1,500-ton milling rate for Dumagami ore, with a total planned work force of 181. All development headings have been driven at least 12 ft wide for the use of large equipment. In fact there are three 5-yard J.C.I. front end loaders already on site.

The senior operating staff under Mine Manager Ebe Scherkus has already been largely selected and includes P. H. Girard, chief engineer; David Rigg, chief geologist; Camil Prince, mill superintendent; Real Racicot, master mechanic and Marcel Bordeleau, controller.

The immediate impression a vistor gets on a visit to Goldex Mines’ operation some 40 miles east of the Dumagami is that this is no mere gold prospect, for there is a fine, permanent-looking production-sized plant in full operation.

And a trip underground would just as quickly allay any remaining doubts, for ore is already being stockpiled for custom shipping to the new 2,000-ton mill being built at Dumagami, which company will reserve 500 tons of that capacity for the treatment of Goldex ore. And, if all goes according to plan, this will later lead to financing construction of Goldex’s own mill at its mine site.

The current program, under Agnico’s direction and which includes putting down a 1,500-ft production shaft and extensive drifting and drilling which is proceeding on both the 1,100 and 1,250-ft levels, has cost in the neighborhood of $6.9 million, with a further planned expenditure of close to $7 million.

Based on very extensive previous surface drilling of over 200,000 ft including 160,000 ft by four separate former operators, ore reserves prior to the current program were calculated at 856,000 tons averaging 0.209 oz. This is undiluted but with all assays above one ounce cut to an ounce and using a cut off grade of 0.15 oz, and a minimum width of 5.0 ft.

Three underground diamond drills are now at work seven days a week putting out up, down and flat holes from drill stations established at 200-ft intervals along these drives.

Some of these holes look decidedly interesting. One vertical hole, for instance, shows six separate sections with visible gold, including one almost at the collar that assayed 0.54 oz uncut or 0.37 oz cut across 17.7 ft.

While much more drilling remains to be done, the work to date certainly seems to be confirming previous estimates.

“We are getting better gold values than we had expected, but the ore occurrence itself seems more complex,” David M. Rigg, chief geologist f or both the Goldex and Dumagami told The Northern Miner. “We are seeing a lot more vi
sible gold in this deep work than in the ramp. Actually, it’s quite exciting.”

The ore occurs within a granodiorite sill in quartz-tourmaline vein clusters somewhat similar geologically and structurally to that at the nearby Sigma and Lamaque mines. In fact Goldex lies about mid-way between those two veteran producers.

This sill, which traverses the entire property, is about 500 ft wide. The vein swarms consist of numerous predominantly flat dipping veins, closely spaced together and interlinked by irregular “horsetails” or steeply dipping veins. Complex indeed] (Drilling from the 1100-4 west drill station shows the swarm to have a width of 44 ft and a vertical height of 38 ft.)

Line drives are advancing down the granodiorite, with no effort being made to keep them in ore. In fact they are being driven via laser beam, which makes them absolutely straight and uniform. Visual grade control, supported by chip and muck samples, is being used to separate development muck into two ore categories which are being stockpiled on surface, with 2,970 tons to the end of February averaging 0.112 oz. Muck samples from a 305-ft length of the drive on the 1,100 ft level averaged 0.13 oz. By the time the mill is ready to receive this ore, there should be at least 20,000 tons on hand — an excellent bulk sample.

Because of the increasing amount of visible gold in the core, all samples are being run twice. These are currently sent to a custom assayer, but will soon be going to a new assay office nearing completion at Dumagami.

No work is being done or planned for the west zone at this time. This is the area that was partially developed by a decline several years ago. It is separated from the main east zone by some 1,400 ft of unaltered granodiorite. No reserves are included from that zone. Langis Project

Agnico’s silver division at Cobalt is also chalking up another success — again a case of Penna perseverance.

This is on the property of Langis Silver & Cobalt Mining, 10 miles east of the famed old silver mining town where it has made an exciting new discovery that is certain to draw new interest to the area. A former producer, Agnico took over this company in 1979 after its owners threw in the sponge.

Although no formal decision has yet been made, The Northern Miner can say that a 1,200-ft production- sized shaft is being planned to develop this brand new mine which is in a completely new area. It certainly looks important — probably the most exciting discovery since the Penna organization moved into the Cobalt camp back in ’63.

It started with the drilling of an exploration hole from surface seeking geological information some 2,000 ft from any underground workings. After going through 100 ft of overburden and 250 ft of barren diabase, it entered the favorable Huronian sedimentary formation in which it picked up a good- looking silver vein that assayed 51 oz across 5 ft. Two 3,000-ft holes were then drilled from the bottom level of the old Langis mine, picking up the vein 500 ft on either side of the discovery hole.These assayed 61 ozs over 11 ft and 39 ozs over 31 ft.

A drive was subsequently extended to the area and considerably more drilling carried out with favorable results. But most of the intersections lie below the bottom level. Exploration shafts a mistake

Rather than deepen the small old shaft W. A. Hubacheck, the company’s consulting geologist, is recommending a brand new one. (Mr Hubacheck has been intimately associated with Mr Penna for years, and has unquestionably played a key role in Agnico’s buildup.)

He feels that most mining companies err in putting down explorati on shafts first. It costs little more to put down a production sized opening with production sized equipment “ready to go,” he says.

In Agnico’s case all the shafts they have put down (sinking steadily for the past four years) are of exactly the same design and dimensions so that all equipment is interchangeable. The plan is to bring the Dumagami shaft crews to Langis as soon as that job is completed.

Following this discovery the Agnico company purchased a considerable acreage of farm land adjoining the patented Langis ground. The new shaft will likely be collared on this Agnico ground. But most of the drill intersections are on the Langis side, entitling that company to royalties under the terms of the original Langis-Agnico agreement.

Financed by Agnico, Langis is currently carrying out some exploratory drilling to test certain geophysical targets in the Casa Berardi area. Some drilling is also planned for a nearby group of claims held by Silver Century Mines, another company in the Agnico fold.

Still another Penna-controlled company, Sudbury Contact Mines’ continues to drill on a big spread of ground in the Larder Lake gold area. “We have been working here for the past 14 years, still looking for the big one,” he tells Telbel

Agnico’s Telbel mine at Joutel, Que., is still the mainstay of the entire operation, a role it is likely to play for years to come. That gold mine enjoys a very strong ore position, though there has been some disappointment this year because of dilution being encountered in mining this deep ore, which has reduced millheads well below the reserve grade.

However, this is a temporary situation which is being corrected through a complete change in the stoping method for extracting this deep ore.

Grade is already starting to climb as the new sub-level retreating stopes come into production, bringing dilution into the normal 10%- 15% range. By year-end, grade should be right back up, W. A. Hubacheck, the company’s consulting geologist tells The Northern Miner.

Indeed it could be better, for a big new block of excellent grade ore is currently under preparation for stoping via the new method.

As soon as the dilution problem became apparent, all development crews were taken off that work and put on new stope preparation. And with the current boom in Quebec’s gold mining industry, experienced new crews are hard to come by.

But drifting east on at least two of the new deep levels will likely resume in May, it is gathered. This will include the 2,400-ft level, the most easterly heading which was still in good ore when stopped.