Western Quebec takes Wesdome subsidiary public

Eager to raise funds for further exploration at the Wesdome gold property in Val d’Or, Que., Toronto-based Western Quebec Mines (WQM-T) is proceeding with an initial public offering of its wholly owned subsidiary, Wesdome Resources.

Wesdome owns five contiguous exploration properties — Wesdome, Lamothe, Lamothe-Extension, Yankee Clipper and Callahan — beneath and along the shoreline of northeastern Lac De Montigny.

The Wesdome property, situated directly north of McWatters Mining’s Kiena gold mine, hosts the 1.3-km-wide Snowshoe quartz-diorite intrusion, which itself is surrounded by strongly deformed mafic-to-ultramafic volcanic rocks and diorites. The intrusion is crosscut by granodioritic and tonalitic dykes and sills, with gold-bearing quartz veins cutting both the volcanic and intrusive rocks. Five of 12 known gold-bearing zones are estimated to contain a total of 2.8 million tonnes grading 4.36 grams gold per tonne, or 393,000 contained ounces (T.N.M., May 25-31/98 and Oct. 19-25/98).

The offering consists of 1-2.5 million treasury units, each of which consists of one share and a half-warrant, plus 3-5 million flow-through treasury units, each of which consists of one flow-through treasury share and one half warrant. Each whole warrant entitles the holder to buy another treasury flow-through share within 12 months.

The offering is intended to raise $9 million. The offering price is expected to be $1.40-1.70 per unit and $1.60-1.95 per flow-through unit. Closing is expected by the end of the month, at which time Western Quebec Mines (WQM) will hold about 8.4 million shares of Wesdome Resources, provided WQM fulfils its goal of spending no more than $4 million at the Wesdome project by Dec. 31, 1998.

In November, Wesdome entered into an agreement with WQM whereby the WQM will manage, for a fee, all exploration and development at Wesdome’s five properties.

Subject to a successful offering, major work at Wesdome will begin next June, when a 400-metre exploration shaft will be sunk on island No. 3. Operators would then carry out a major underground drilling campaign and drift into zone A on at least two levels.

The program is expected to cost $17 million — $7.2 million for site preparation and shaft excavation, and $9.8 million for underground development and drilling.

Over the past three decades, a series of companies, including WQM’s former partner, Placer Dome (PDG-T), have spent more than $10 million exploring the Wesdome properties. Of this total, $4 million will have been spent by WQM by year-end. In 1998, WQM carried out an exploration campaign totalling 28,600 metres in 73 holes, including six holes on the Yankee Clipper property.

Newly released drill results from zone A include: 3.5 metres (from 259 metres) of 6.27 grams gold in hole 316; 5.5 metres (from 140 metres) of 6.38 grams gold in hole 322; and 4.1 metres (from 161 metres) of 12.81 grams gold in hole 324.

WQM says the work seems to show that zone A is more extensive than indicated by previous exploration.

WQM’s other main asset is its 41% stake in gold producer River Gold Mines (RIV-T).