Wesdome to add a little sweetener at Kiena

Wesdome Gold Mines (WDO-T)has come across a high-grade ore zone at its Kiena Mine in Val d’Or, Que., just in time.

The company has warned shareholders that it would be going back to mining ore that was closer to the mine’s normal reserve grade of around 4 grams gold per tonne in the second half of the year after averaging 5.2 grams gold per tonne in the first quarter.

But George Mannard, Wesdome’s vice president of exploration, says the company will develop the new area, known as the Schist zone, right away so the ore can be blended with lower grade material during the second quarter.

“It’s a positive surprise because it’s a sweetener that’ll help us through a period that we see lower grade in the mine sequence,” Mannard says.

Wesdome says the Schist zone is just 30 metres north of the VC zone, one of the areas that is being mined right now. It has good continuity from level 50 to level 59, or about 90 metres, with a strike length of 50 metres, and a minimum mining width of 3.2 metres. The zone is open above and to the east.

“It’s very coarse free gold,” Mannard says, noting that the zone is open above and to the east. He describes the rest of Kiena as an efficient low-grade bulk mining underground operation.

Highlights from drilling include 3.2 metres grading 172.3 grams gold per tonne including 2.7 metres grading 201.9 grams gold, and 3.2 metres grading 16.1 grams gold including 90 centimetres grading 56.2 grams gold.

Mannard says adding ore from the Schist zone could make a significant contribution.

The company is now working on developing access to the area, which should be both easy and fast because of its location.

“We’re cross cutting out to it now on level 59 and it’s just 30 metres away,” Mannard says.

Wesdome mined 58,000 tonnes grading 5.2 grams gold per tonne from Kiena in the first quarter, amounting to about 10,500 oz. gold and selling about 9,400 oz. In the same period in 2008, the company mined 63,000 tonnes grading 3.9 grams gold per tonne for about 7,800 oz.

Over at its other producing mine, Eagle River in Wawa, Ont., Wesdome produced almost 17,000 oz. gold in the first quarter; total production was about 27,400 oz. gold at an average cash cost of US$474 per oz. The company received an average gold price of $1,139 per oz. and earned $7.6 million, or 8¢ per share.

Wesdome forecast that it would produce 75,000 oz. of gold this year but now says it will likely exceed this because of higher than expected grades at both mines.

Wesdome shares were up 8¢ today, or 4%, to $1.95 on a trading volume of 124,000 shares. The company has a 52-week trading range between $2.28 and 40¢ and 99.7 million shares outstanding.