Goldcorp on the cusp of announcing details of updated study for lonore

When Goldcorp (G-T, GG-N) acquired Éléonore in March 2006 from what is now Virginia Mines (VGQ-T) in a US$425-million deal, the project had no reserve or resource estimate, just a lot of speculation on how big it was going to get as it represented a major new grassroots discovery in central Quebec.

At the time, Goldcorp’s director of project development publically stated, “We honestly believe that we have acquired the core of the best new Canadian gold discovery since Hemlo.”

Five years later, Goldcorp has published its first ever proven and probable ore reserve estimate for Éléonore after converting a good portion of the previously calculated measured and indicated resources. Ore reserves show over 3 million oz. contained gold, based on 12.5 million tonnes grading 7.56 grams gold per tonne.

While just 480,000 oz. gold remain in the measured and indicated category, based on 1.4 million tonnes of 10.95 grams, inferred resources contain another 4.2 million oz. in 12.2 million tonnes averaging 10.6 grams. Inferred gold resources decreased by 33% from the 2009 estimate.

“Our messaging to the market over the last four years has been, yea we really like Éléonore but we need to do more work,” explained Chuck Jeannes, Goldcorp’s president and chief executive officer during a recent presentation at CIBC’s annual institutional investor conference.

“It has been difficult. It has taken a long time to figure out that ore body. It’s very steeply dipping and it’s hard to get information about the deepest parts of it, parts of which happen to be the highest grade,” Jeannes said.

“We are on the cusp of announcing an updated feasibility study that is a dramatic increase over what our previous prefeasibility numbers that we put out last year,” confided Jeannes.

The initial prefeasibility study, details of which were released in March 2010, suggested Éléonore could sustain a long-lived underground mine. Based on a daily processing rate of 3,000 tonnes and a mined grade of over 10 grams gold, production would average 330,000 oz. annually over a 16-year life at cash costs below US$400 per oz. Initial capital costs to build the operation were estimated at US$800 million.

The prefeasibility study was based on the 2008 resource estimate, which showed a total of 5.3 million oz. indicated and inferred at an average grade of over 11 grams gold.

“We are now working on a plan to dramatically improve the previous prefeasibility plan and we’re nearly done. We are just finalizing a collaboration agreement with the Cree grand council and our intent is to have all that information available for our year-end report on February 24,” said Jeannes. “It will be better than people expect.”

Drilling on the deposit has identified a deep zone of high-grade gold to the north of the Roberto zone and recent scoping efforts have focused on accessing this high-grade material earlier in the mine life to further enhance project economics.

“It is becoming increasingly apparent that this project is poised to be another key cornerstone mine for Goldcorp,” remarked Jeannes during the company’s third quarter conference call.

Meanwhile, Goldcorp is in the process of sinking a 725-metre deep exploration shaft at Éléonore that is down more than 70 metres to date. The shaft is expected to be completed by the end of 2011. It will be used to provide drill platforms to test the deeper portions of the deposit.

Exploration drilling in 2010 continued to concentrate on identifying and defining new ore zones in the hanging wall stratigraphy close to the exploration shaft. The drilling program also focused on the definition of the edge of the main Roberto zone.

Project permitting activities are continuing and a project construction permit is expected to be in place at the end of the second quarter of 2011. The project environmental and social impact study was submitted in January 2010. A key milestone was reached during the third quarter of 2010 that was several years in the making, with the delivery of grid power to the site, significantly reducing power costs.

A surface exploration program was carried out in the third quarter of 2010, with the objective of identifying new drill targets on the Éléonore concession outside of the main Roberto ore body. As the project transitions into the mine development stage, exploration in 2011 will focus on what Goldcorp describes as a number of compelling regional targets in Canada’s new gold district.

“The Éléonore deposit is a major new gold discovery in a relatively unexplored area in the province of Quebec, located in the core of what Goldcorp believes to be a promising new gold district in North America,” states Goldcorp’s 2009 annual report.

The Éléonore project is located in the Ell Lake area in the northeastern part of the Opinaca Reservoir in the James Bay region of Quebec. It is 320 km northeast of the town of Matagami and 190 km east of the Cree community of Wemindji.

The area can be reached by a 65-km-long gravel road off a paved road connecting Matagami to Radisson. It is then a 40-km-long journey by barge during the summer months. The Nemiscau airport, 100 km due north, provides easy access by helicopter or light plane. Site access was enhanced in 2009 through the construction of a winter road and a temporary airstrip.

The Éléonore property comprises 480 claims covering a 251-sq.-km area that has been subdivided into two blocks. A contiguous irregular block of 364 claims form the main Éléonore project, which is centred on the Roberto mineralized system – a series of steeply dipping, sub-parallel gold zones hosted in a strongly altered sedimentary package.

The remaining 116 non-core claims were transferred in June 2006 into a three-way joint venture called Éléonore South, with Eastmain Resources (ER-T) and Azimut Exploration (AZM-V) as partners. Last fall, Eastmain and Goldcorp jointly funded a $1.6 million, 3,300-metre exploration drilling program designed to test the extensions of the sedimentary hosted JT gold prospect, as well as other priority targets. Results from that program have yet to be made public.

The Éléonore South project consists of 282 claims covering 147 sq. km along the southern boundary of Goldcorp’s Éléonore property. The JT prospect lies just 12 km southeast of the Roberto gold deposit. Previous trenching and drilling identified a 1.2-km long by 100-metre wide succession of gold-enriched sedimentary rocks similar to those hosting the Roberto deposit.

Drilling has intersected wide intervals of altered, gold-enriched sediments and felsic intrusive rocks forming a 1.2-km-long geochemical halo in the JT target area. Three parallel gold enriched zones have been encountered in arsenopyrite-bearing sediments. The most significant drilling results to date include 1.5 grams gold across 5.7 metres and 1.4 grams over 10 metres.

Last year’s 3,300-metre drill campaign was designed to test a large gold-arsenic geochemical plume extending north of the JT zone in search of ore-grade material.

Azimut declined to participate in funding its share of the 2010 exploration program and will dilute its interest in Éléonore South to 27%. Eastmain and Goldcorp will each hold about 36.5%.

Regionally, the Éléonore project area occurs in the Lower Eastmain belt, straddling the contact between two major tectonic stratigraphic assemblages, namely the volcanic rocks of the older La Grande sub-province to the south and younger sedimentary rocks of the Opinaca sub-province to the north. In the vicinity of the Opinaca Reservoir, these rocks are intruded by syn- to late-tectonic diorite and granodiorite plutonic suites. This assemblage of rocks is more than 25 km long and 3-4 km wide.

The
Éléonore property is centred on a discrete diorite-tonalite intrusion measuring 10 km in diameter at the northern margin of a vast batholithic complex and in the contact zone between the La Grande and Opinaca sub-provinces.

Éléonore is a grassroots find. While evaluating the former Ell copper showing in 2002, Virginia discovered a large, angular boulder of intensely-altered metasediments that assayed 22.9 grams gold. Additional boulders of mineralized metasediments were found in an area measuring 4 by 2 km on the northern shore of Ell Lake during follow-up in 2003. Several of these boulders contained anomalous gold, with values as high as 18.6 grams.

A stripping program in 2003 exposed a limited portion of the probable source area – a highly altered and mineralized sedimentary sequence at the margin of the Ell Lake diorite intrusion. The first trenches in the area returned several grab samples of better than 1 gram gold, including 29 grams, whereas the results of channel sampling yielded 37 metres of 0.81 gram and 5.2 metres of 2.42 grams.

The summer 2004 campaign began with further prospecting and hand-stripping in an area where a grab sample had delivered 10.2 grams gold. This resulted in the discovery of the Roberto showing, which returned 4.29 grams across 12 metres and 15.8 grams over 3 metres in the first two adjacent trenches. The Roberto outcrop lies some 6 km to the northeast of Ell copper showing.

Using an excavator, Roberto and the nearby East Roberto zone were exposed at surface over a lateral distance of 250 metres in a north-south direction. Diamond drilling began in September 2004; the grade and consistent nature of the mineralization hole to hole quickly made obvious the importance of the discovery.

By the time Goldcorp acquired Éléonore, Virginia had completed 212 drill holes on the discovery. More than 70% of the holes had yielded intercepts exceeding 10 grams gold. The Roberto mineralized system had been traced over a lateral distance of more than 1.9 km and to a vertical depth exceeding 900 metres.

Goldcorp has drilled more than 440 additional holes to the end of 2009, successfully confirming the mineralization continuity in the previously identified zones, while extending the limits of the deposit laterally and at depth.

Drilling in the Bay area intercepted high-grade gold mineralization in the deepest parts of the deposit. A 2008 hole intersected a 3-metre section grading 17.1 grams at a downhole depth of 1,815 metres in hole 08-610, while hole 09-639 returned 31.2 grams across 2.8 metres at a downhole depth of 1,467 metres.

The Roberto deposit comprises numerous gold zones, including the main Roberto and East Roberto lenses. The Roberto system is stratabound and hosted in deformed sedimentary rocks close to the Ell Lake intrusion. The host rock is usually a thinly bedded greywacke. The mineralized zones consist of quartz vein stockworks containing tourmaline, actinolite, arsenopyrite and pyrrhotite.

Virginia Mines holds a 2-3.5% sliding scale production royalty on the Éléonore deposit. The junior explorer has been receiving advance royalty payments of US$100,000 per month since April 2009.