Free gold mixed blessing on Rand Malartic project

It’s not going to be easy to establish enough ore reserves at the Rand Malartic property about 15 km west of here to warrant a production decision, but should that decision be made, indications are that the property will outperform expectations.

In the meantime, the companies involved in this project — NSR Resources (TSE), Rand Malartic Mines and Nova-Cogesco Resources (TSE) — feel they have enough tonnage at a good enough grade to make a tidy profit even if no further development work is done beyond the current program. By the time a bulk smaple test is completed in July, they will have spent about $11 million on the project since 1981, some $7.5 million of that coming from Cogesco in order to earn a 45% interest. The other two partners split the remaining interest between them (Rand Malartic is controlled by NSR).

This will never be a property that boasts years of reserves. Free gold in the ore makes it impossible to extrapolate a large tonnage. What’s more, the deposit features mineralization associated with porphyries and much of the property’s potential lies in tying in some of the other porphyries that have not been looked at yet — a string of pearls as project co-ordinator Shahe Sabag calls them.

But the Rand Malartic property could well prove to be a mine that is able to replace extracted ore as development work continues in much the way the nearby Sigma gold mine has done for 50 years. In the past 18 months the degree of confidence in being able to increase reserves has gone up markedly says Cogesco President Stuart Lee as the secrets of the structural controls on mineralization have started to unfold. Nine out of 10 holes drilled now seem to cut good grade mineralization.

So the companies are confidently looking well beyond a salvage operation. Recouping their investment plus making a $10- 12-million profit with nothing more than the reserves so far outlined is a “worst- case scenario,” they say. Results from an extensive underground exploration program has them on the verge of putting the property into full-scale production. That could entail a shaft for ore extraction and a 300-ton-per-day operation.

Proven reserves currently stand at only 66,700 tons, but the grade is high for the Val d’Or area, 0.39 oz gold per ton. What’s more, when test milling was done, the head grade was determined to be about 0.7 oz.

That’s one of the quandaries facing the company now. Because of the nugget effect of the free gold, the only way to confidently determine what the true grade will be is through actual mining, yet mining can’t begin until the average grade for a larger tonnage can be confidently predicted.

In a brief underground tour of the operation, The Northern Miner found visible gold to be widely evident.

There are two distinct zones intersected by the ramp and lateral workings. On the 500-ft level, the 67 zone appeared as a zone of rock that has been altered and sheared then healed to form a very competent mining medium within a much larger shear zone. Mineralization is associated with quartz and tourmaline veins — black and white — so following the values is fairly easy.

When The Northern Miner inspected the 500-ft level, the zone appeared easily discernible over a lateral distance of 80 ft, the full length of the lateral workings on the level, across a width of about eight feet. The zone was visible looking up a recently completed raise to the 400-ft level, and project general manager Michel Bourret says the width swells out to 12-20 ft between the two levels.

It is from the 500-ft level that the company plans to take about 4,000 tons of material this May, add it to the 2,000 tons of stockpiled ore on surface that came from development work, for a 6,000-ton bulk sample. A contract has already been signed with Inco Gold to use a dedicated circuit at its McBean mill near Kirkland Lake. Results from the test are expected by July.

The second zone, called the 39 zone, is up the ramp and to the south of the 67 zone. It is a markedly different zone, although the differences apparently pose no metallurgical problems.

In the 39 West zone, the ramp intersects a 20-ft-wide fault zone that cuts through the porphyry at about right angles. While the fault zone itself is apparently barren, in the footwall and hangingwall The Northern Miner noted five occurrences of visible gold within quartz stringers in a very cursory examination of the wall rock.

Because of the coarse gold, however, determining any kind of consistent grade in a significant tonnage is difficult. Consulting geologist and mining engineer on the project, John Tully, says he would like to drift along the cross fault and start mining that zone right away.

The potential in the 39 West zone is to duplicate those results with other cross faults that intersect the porphyries. Indeed, seeking the cross faults could become the primary exploration target, says Tully.

Delineating a total of 500,000 tons of ore in the 67 and 39 zones combined — about half in each — is the object of the current program. That would be enough to warrant going into full-scale production on the property.

Management on this project is a peculiar mix. NSR, the operator, is essentially under control of TSE- listed Algonquin Mercantile Corp. Algonquin is involved in entirely different lines of business and NSR is its only mining interest. While as a company NSR has little expertise in mining operations, principals associated with the company — notably C. H. Franklin — go back a long way in the mining business. NSR has also assembled a staff capable of overseeing the operation. Mining is contracted out to Ross Finlay Ltd.

Nova Cogesco, the other half of the management equation, was created to make use of flow-through financings and also lacks operating experience. However, Cogesco has developed a unique method of investing flow-through funds. It has not gone out exploring properties on its own, nor has it made equity investments in other companies. Its approach has been to put up money for exploration in order to earn an interest in specific properties. The result is that while it does not manage any project, it has an interest in several promising ventures some of which are very close to production.