Western Quebec sees Eagle Lake potential

The Eagle River gold deposit near Wawa, Ont., has a new investor who is keen on bringing it into production.

Western Quebec Mines (TSE) has agreed to pay $9 million to acquire control of the project from Hemlo Gold Mines (TSE). The latter has a 60% interest in Eagle Lake.

The above price also includes Hemlo Gold’s approximate 48% interest in Central Crude (TSE), which owns the remaining 40% of Eagle Lake. The deal is scheduled to close March 2. Western Quebec will buy the approximate four million shares of Central Crude owned by Hemlo Gold and buy the approximate $4.5 million debt which Central Crude owes to Hemlo Gold. “I’ve been at it for two years,” Western Quebec President Conrad Hache said of his intention to pursue the Central Crude assets. When Hemlo Gold recently announced it wanted to sell its Central Crude holdings, Hache jumped at the chance.

“It’s one of the few undeveloped gold projects left in Canada,” Hache said of Eagle Lake.

Some 50 km west of Wawa, Eagle Lake has proven reserves of 159,000 tonnes grading 6.87 grams gold per tonne and probable reserves of 1.9 million tonnes grading 8.57 grams. More than $20 million has been spent on project exploration. The potential exists for an operation producing 40,000 oz. per year.

In the Shebandowan area of northern Ontario, Central Crude has an option to acquire a 60% interest in the large-tonnage, low-grade Moss Lake gold property.

Western Quebec produces gold on a small scale at its Joubi mine, just outside of Val d’Or. It is also actively exploring its McKenzie Break gold property in the same part of the province.

Western Quebec wants to restructure Central Crude by vending Hemlo Gold’s 60% property interest in Central Crude and recasting Central Crude’s debt. Fund-raising plans are being contemplated, possibly involving the issue of new shares or bringing in a partner, Hache said.