With four contracts in hand, Deak planning mill expansion

Ambitious plans to turn the Kerr mill at Virginiatown, Ont., into a processing centre for gold and base metal miners in the Kirkland Lake region are rapidly taking shape.

Since it acquired the 50-year-old former Kerr Addison mine and mill from bankrupt Golden Shield Resources last year, Toronto-based Deak Resources (TSE) has spent around $2 million to refurbish and expand the mill.

Having signed custom milling contracts with four companies including LAC Minerals (TSE) and Rouyn-Resources, Deak has long-term plans to increase its daily throughput to 4,500 tons from 1,500. Rumor has it that Central Crude (TSE) President Richard Nemis has been in Toronto for talks with the Deak Resources group concerning Crude’s Eagle River gold project. But Deak director Douglas Hume declined to comment on those rumors.

While Deak is currently processing ore from LAC’s Francoeur gold mine as well as its own Kerr operation, Hume believes the 2,200-ton level can be reached next month without hindering production. The expanded capacity would enable it to take ore from properties held by Northfield Minerals (TSE) and Armistice Resources (ME) if they come into production.

When financing is available, Hume says the company will add a base metal circuit to the facility to enable it to custom mill ore from zinc and copper deposits in the region. Such a move, he says, would make sense because the demise of flow-through financing has prevented a host of companies holding partially developed mineral deposits.

Future candidates are the West MacDonald zinc-copper mine which hosts 1.2 million tons of 6.35% zinc, 0.027 oz. gold and 0.83 oz. silver per ton. Deak has been getting some outstanding results from its Magusi zinc-copper property 25 miles northwest of Rouyn-Noranda, Que., where a deposit containing 1.17 million tons of 6.71% zinc, 0.3% copper, 0.065 oz. gold and 0.6 oz. silver has been outlined. A footwall zone contains an additional 590,000 tons of 2.86% copper.

In addition, Deak recently signed an option agreement to earn 50% of Noranda Exploration’s interest in 12,000 claims in Duparquet, Destor and Roquemaure twps. which contain the former Lyndhurst and Hunter copper mines.

Meanwhile, a recent 1-day test on 1,707 tons of ore from the Kerr mine was the highest amount processed at Kerr since 1965. If everything goes according to plan, the company should produce 40,000 oz. annually from Kerr alone.

Having obtained $2.1 million from the Northern Ontario Heritage Fund, Deak is employing 157 workers at the mine and mill. Additional support is being provided through the federal Ministry of Industry, Science and Technology under the FedNor Secretariat.