Orco’s Donalda producing gold again

The operator of the Donalda gold mining project is projecting output of about 20,000 oz. for the first year.

Orco Resources (ME) placed the project, which sits just outside city limits, into production on March 25 after completion of a successful bulk-sample operation. The Northern Miner toured the operation the day of the official opening.

The junior, part of the Morisco group of companies, brought the old mine back to life under an agreement with property owners Metall Mining (TSE) and Thunderwood Resources (TSE).

After signing a deal with Metall and Thunderwood last summer, Orco undertook a bulk-sampling program involving the extraction of 19,143 tonnes from the No. 1 vein. The ore, treated at Metall’s nearby Norbec mill, returned a grade of 7.43 grams per tonne.

Under the agreement, Metall and Thunderwood will receive (combined) a 10% net smelter royalty on the first 200,000 tonnes extracted. (Metall has a 65% interest in the property; Thunderwood, 35%.) Payment beyond that extraction level will be variable and dependent on the gold price and head grades. Metall and Thunderwood are responsible for site reclamation. Orco plans a production rate at Donalda of 350 tonnes per day. The projected operating cost, after all royalty payments, is US$240 per oz. President Michel Roy expects to attain the 350-tonne production rate by the end of April; at the time of the visit, he was still negotiating a custom-milling agreement with different parties (including Norbec). At that production rate, current reserves will last at least six years. The mine employs about 50 workers.

The Donalda property sits a few kilometres east of the mined-out Horne deposit, Noranda’s original base metal project. (The Horne smelter operation is visible from the property.) The Donalda property abuts land to the south and west belonging to Noranda, and land to the north and east belonging to Metall and Thunderwood.

“One of the reasons we’re here is (because of) the potential to increase our production,” Roy said, explaining that Orco has a verbal agreement to extract ore from adjoining Metall-Thunderwood claims under a similar royalty arrangement.

During its previous period of production, Donalda yielded 738,787 tonnes grading 5.2 grams. Most of the ore was extracted, by room-and-pillar methods, from the shallowly dipping No. 1 vein between 1948 and 1955. In 1954, the No. 2 vein was discovered about 300 metres below the No. 1 vein; a mine shutdown prevented development of the No. 2 vein. During 1969-70, the No. 2 vein was partly mined from the adjacent Quemont mine workings; 29,156 tonnes grading 6.5 grams were extracted.

The No. 1 vein was mined along a strike length of about 825 metres over a dip length of 400 meters. Previous operators believed the vein ended at the Horne Creek fault. Surface drilling in 1986 by Minnova (which was taken over by Metall) located the extension of the No. 1 vein south of the Horne Creek fault.

Taking advantage of the existing 567-metre shaft, Minnova initiated an underground exploration program in 1987 involving drifting and raising, which resulted in the delineation of a new southern section of the No. 1 vein. The host rocks of the downdip south extension consist of magnetic basalts and diorites, in contrast to rhyolites in the mined-out portion. Dewatering was required, and because Donalda was connected to the Quemont mine workings, more than 250 million gallons of water had to be pumped and treated. The Donalda mine has since been isolated from the Quemont workings. Three main rock units are present at Donalda: Quemont rhyolite, Wilco andesite and D’Eldona diabase. According to notes prepared by Orco, the first two units are hosts for gold-bearing veins while the third unit crosscuts and dilates the No. 1 vein. The host rocks are generally not schistose, except in narrow deformation zones along the faults.

Gold mineralization at the mine is restricted to narrow but extensive and continuous quartz veins (No. 1 and 2), which rarely exceed one metre in thickness.

A current preliminary reserve estimate of 661,300 tonnes grading 8.85 grams (uncut) has been calculated — 404,930 tonnes grading 7.37 grams from the No. 1 vein between the fourth and seventh levels and 256,370 tonnes grading 11.19 grams from the No. 2 vein.

Orco believes the potential for new reserves in the area of the existing workings is excellent; the eastern and western limits of the No. 1 vein have yet to be found and the No. 2 vein may continue upwards.

Mining is currently taking place between the fourth and sixth levels (the sixth level is about 300 metres below surface). The next area to be mined — production is likely by June — lies below the sixth level. Orco will then turn its attention to the No. 2 vein, for which a drilling program is being drawn up.

“I’d say in a year from now we’ll be starting some development, but production is probably a couple of years away,” Mine Manager Paul Cregheur said in reference to the No. 2 vein.

Cutting the ribbon at the official opening was Remi Trudel (Parti Quebecois), the provincial representative for the area. The riding’s federal representative, Pierre Brien (Bloc Quebecois), was also in attendance.