Working to return its namesake mine to production in northwestern Ontario, Madsen Gold (TSE) is planning to extract 40,000 tons of upper-level ore for gold processing in 1995.
President James Morlock says his company has been negotiating a custom-milling contract with management at the nearby Campbell gold mine owned by Placer Dome. Both the Campbell and the Madsen mine are in the Red Lake area.
Access to the near-surface ore in the 230 zone and three lenses will be via the second level.
In operation from 1938 to 1976, Madsen yielded 8.5 million tons at an average grade of 0.312 oz. gold per ton. (The more than 2.5 million oz. extracted were mainly from the Austin and South Austin zones.) It was one of several producers in the Red Lake camp which currently hosts two mines, Placer’s Campbell and Goldcorp’s Red Lake (known formerly as the A.W. White mine). The old Madsen mine began operating with a 3-compartment shaft at a rate of 300 tons per day. In 1949, the daily mill capacity was increased to 800 tons. The existing shaft extends to a depth of 4,000 ft., with 24 levels. Financial difficulties finally forced the closure of the mine. Madsen Gold acquired the property in 1988.
The company has drawn up a 3-phase development plan. The first phase calls for the dewatering of the old mine to the 12th level and assessment of underground conditions, with particular attention paid to the area below the 8th level. As of mid-December, the mine had been dewatered to 700 ft. The second and third phases will involve construction of a processing facility on the surface and dewatering to the 24th level.
The estimated capital cost for the project is $8 million.
Madsen Gold recently purchased the 500-ton-per-day mill of the former Dona Lake gold mine at Pickle Lake, Ont., for $820,000. (The purchase also includes the refinery, assay office, shop tools, office equipment, and surface and underground electrical equipment.) The company plans to dismantle and transport the mill and other equipment to its Madsen property in 1995; the estimated relocation and refurbishment cost is $3.2 million. A flow-through offering is intended to finance a 15,000-ft. drilling program, planned for early 1995. “The purpose of the flow-through funding is basically to build reserves,” Morlock says.
Madsen Gold has expanded its presence in the Red Lake camp by acquiring the Starratt-Olsen claims, purchasing the Aiken Russet property and optioning the Hager property. The company now has a land position exceeding 10,000 acres. The company reports a preliminary reserve estimate for the Madsen property of 832,900 tons grading 0.29 oz., including some 280,000 tons grading 0.296 oz. above the 12th level (or more than 2 years’ production at a milling rate of 400 tons per day).
Areas with the potential for additional ore include the downdip extensions of the Austin and South Austin zones, the deep No. 8 zone and a “No. 8 type” zone sitting 1,000 ft. away from the shaft and accessible from the deeper levels.
On-site infrastructure includes a tailings area, a concrete headframe with two hoists and a 5-compartment shaft with concrete liners below the 11th level.
Earlier this year, the company launched a lawsuit against the Ontario Ministry of Environment and Energy related to the dumping of raw sewage on the old Madsen tailings. Madsen Gold alleges that the action has rendered the tailings unfit for commercial recovery in the foreseeable future.
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