Queenston Refuels With $18M Financing

Queenston Mining (QMI-T, QNMNF-O) has big spending plans for the Kirkland Lake gold camp, in northwestern Ontario, where it’s developing four gold deposits.

The company will increase its treasury total to $30 million with the help of an $18-million financing that’s expected to close in early March.

Charles Page, Queenston’s president and CEO, says the recent uptick in the gold price — which was closing in on US$1,000 per oz. at presstime — prompted the company to get extra funding.

“We were contemplating some financing to top up our tanks,” Page says. “This way, we can give ourselves some breathing room to continue with our program advancing to prefeasibility without having to stop and wait for a financing.”

Primary Capital led a syndicate of underwriters, including Dundee Securities and National Bank Financial, in the combination of a bought-deal and a best-efforts financing.

The group has agreed to buy $10 million in hard-dollar units and flow-through shares and to raise another $8 million on a best-efforts basis.

Each hard dollar unit is priced at $3.85 per share and will consist of one share and half a warrant. A full warrant will allow the holder to buy one more Queenston share for $5 for a 12-month period from the closing date. Flow-through shares are being priced at $4.40 per share.

“We knew the flow-through market was smaller this year. . . we decided to take a crack at it and to my surprise, it wasn’t that hard at all,” Page says.

Queenston hopes to bring its four gold deposits in Gauthier Twp. into production in the next four years. The company is in the process of doing a scoping study with Micon International that will build towards a prefeasibility study to be finished in two years. The company says it would build a mill on the Upper Canada mine site. The other deposits are between 1.5 km and 5 km away.

To achieve that, Queenston plans to step up the pace at its exploration programs this year. The company has had four drills working continuously for the last two years, but Page expects to add a fifth drill soon. Currently, the company is spending about $800,000 a month.

After completing a resource estimate on the Upper Beaver deposit early last fall, the company has carried out some follow-up deep drilling that has already returned positive results.

In December, the company reported a 20.8-metre intercept grading 30.3 grams gold per tonne and 1% copper at Upper Beaver. The company is drilling beneath a past-producing mine that produced 140,000 oz. gold and 11.9 million lbs. copper over 50 years before it closed down in 1972.

The Upper Beaver deposit has an indicated resource of 1.37 million tonnes grading 8.5 grams gold per tonne and 0.43% copper for 375,000 oz. gold. Inferred resources stand at 1.06 million tonnes grading

7.7 grams gold per tonne and 0.3% copper for 262,800 oz. gold.

In January, Queenston announced drill results from the McBean property that included a 5.2-metre intersection grading 15.4 grams gold per tonne.

Queenston also has five joint ventures with Kirkland Lake Gold (KGI-T, KGI-L) surrounding the producing Macassa mine in Teck Twp. Kirkland Lake is exploring the South Mine complex, an extension of the mine.

In addition, Queenston has the 100%-owned AK property, also next to Macassa. In February, drill results from the AK property included 2.3 metres grading 31.8 grams gold per tonne.

Page expresses excitement over the discoveries beneath the Kirkland Lake break. “It’s something new, it’s a whole new style of gold mineralization altogether.”

He says the deeper orebody has a flatter dipping structure that isn’t related to quartz vein systems and shear zones like the mined-out portion above it. Instead, the gold is associated with sulphides and pyrites with a bit of quartz. Page describes the shape as more of a flat line that’s a linkage structure between two vertical structures.

After 20 years of putting all of these land packages together, Page is finally reaping some reward from the time and effort put forth.

“It’s been quite an adventure for us and it seems to be paying off, more so in the last three to four years,” he says. “There seems to be a flight back to domestic gold stories these days.”