Placer renews Madsen drilling (June 25, 2001)

Preliminary drilling by Placer Dome (PDG-T) has intersected a possible extension to the high-grade No. 8 zone at the historic Madsen mine, in northwestern Ontario.

Four stratigraphic holes tested 975 metres of strike length along the interpreted trace of the mafic-ultramafic contact that hosts No. 8. An area halfway between the surface and the old workings was tested as well.

The drilling defined a roughly repetitive stratigraphy similar to that hosting the No. 8 zone, as well as high-grade mineraliazation similar to that found at Placer’s nearby Campbell mine and Goldcorp‘s (G-T) adjacent Red Lake mine. Also, the fourth hole averaged 0.81 gram per tonne over a 9.45-metre interval that has been tentatively connected to the No. 8 zone. The interval included 1.16 metres grading 4.1 grams.

A second phase of drilling is currently targeting the up-plunge projection of the No. 8 zone.

Madsen was one of the more successful mines to have resulted from the Red Lake staking rush. Between 1938 and 1976, it produced 2.4 million oz. from 24 levels extending 1,219 metres below surface.

The deposit is structurally controlled, as are others in the camp. Gold mineralization is hosted by parallel mafic tuff units known as Austin and McVeigh, with the former sitting in the hangingwall of the later and accounting for virtually all historic output.

In 1998, Claude Resources (CRJ-T) acquired Madsen and continued the former owner’s 3-year effort to resurrect the mine. Left-over stopes were initially targeted, only to give way to the more promising No. 8 zone in the McVeigh tuff, which was mined on a limited basis between 1969 and 1974.

In late 2000, Placer, which operates the nearby Campbell gold mine, acquired an option to earn a 55% stake in the historic producer. To do so, the major must spend $8.2 million on exploration over three years and complete a feasibility study in the following two years.

As part of the deal, Placer purchased 1 million treasury shares of Claude at 75 per share. It was the second such financing between the companies.