Virginia plans ahead for James Bay gold camp (February 21, 2007)

Now that its acclaimed lonore deposit is on its way to making James Bay Canadas next big gold camp, explorer Virginia Mines (VGQ-T) new strategy is to boost resources at its smaller deposits in the area.

Since we are going to have mining infrastructure in James Bay, developing the resources could be strategic in the future for satellite deposits, says Virginia president Andr Gaumond.

Virginia Mines is carrying out $16 million worth of exploration this year more than the company has ever spent before.

Virginias actual 2007 financial outlay is only about $3 million after deductions of tax credits and joint venture contributions.

Gaumond says Virginias exploration team of 40 to 50 geologists will be the largest team in Quebec this year.

Last year Virginia spent about $5 million on exploration, but Gaumond says that selling the 3-million-oz. lonore property to Goldcorp (G-T, GG-N) kept the company busy for the first half of 2006. The deal was valued at more than $500 million plus a 2% net smelter return royalty for Virginia.

Gaumond says just because the companys spending more, its approach to exploration hasnt changed.

We have always spent the money that a project deserves, thats the only rule, Gaumond says. This year we have more projects than before and were going back to some of the small deposits we discovered in the past.

Virginia is focused strictly on exploration, selling projects before the development stage. The company currently has 24 projects on the go, 19 of which are grassroots.

About $4.5 million will be spent on the Poste Lemoyne Extension, Corvet Est and the Coulon projects, which will include 22,000 metres of diamond drilling.

The Post Lemoyne gold project has a resource of 203,483 tonnes grading 14.5 grams gold per tonne, or 95,000 oz. Its located along the La Grande volcanic belt in James Bay. Lemoyne is 100% owned by Virginia with a 1% net smelter return royalty held by GlobeStar Mining (GMI-V).

The 100%-owned Corvet Est gold project is also located along the La Grand belt. Goldcorp has the option to acquire 50% by spending $4 million over five years. Of note is the Marco zone, which has been traced over 1,400 metres to a depth of 350 metres and remains open laterally and at depth. Past drilling has returned 5.2 metres grading 10.10 grams gold per tonne, 7.75 metres grading 3.96 grams, 5 metres grading 4.78 grams and 1.9 metres grading 14.73 grams.

Gaumond says he is excited about the 100%-owned Coulon base metal project, also in James Bay. The property is optioned to Breakwater Resources (BWR-T) for a 50% interest for $6.5 million and $180,000 cash over 8 years. The property is host to five volcanogenic massive sulphide lenses, two of which were just discovered last fall.

However, its a base metal deposit, so that means you have to transport a concentrate. That means higher cost compared to gold, which means you need a bigger deposit, so we know it needs to be quite significant, Gaumond says.

Lens 43 graded up to 0.58% zinc, 1.37% lead, 57.14 grams silver per tonne and 0.6% copper over 3.5 metres to a vertical depth of 120 metres. Lens 44 graded up to 3.05% zinc, 1.54% copper, 21.55 grams silver per tonne, 0.21 grams gold per tonne over 11 metres to a vertical depth of 170 metres. Most of the lenses were wide open in all directions.

The company has also planned 6,000 metres of reverse-circulation drilling and 2,000 metres of diamond drilling at the Sagar project in the 100%-owned Labrador Trough in northern Quebec. Uranium Star (URST-Q) can acquire 75% in the 200 claims on the property. The exploration team hopes to trace the source of Mistamisk boulders containing over 70 erratic blocks with an average value of 1.3% U₃O₈ and 64.9 grams gold per tonne.

Gaumond knows its the development of the James Bay region that other mining companies have their eye on, though.

Weve been telling the market for thirteen years that the area has the potential to develop into a mining camp and now this is exactly what is happening, Gaumond says. A lot of companies are monitoring what Virginias doing in James Bay.