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Comaplex has agreed to buy WMC’s wholly owned Canadian subsidiary, WMC International, and its 56% interest in Meliadine West, for US$6.75 million cash and 5.2 million Comaplex shares, representing a 15% position in the company. Comaplex will assume operatorship of the project and hold a 78% interest on the closing date of the transaction, scheduled for Oct. 1, 2003. The remaining 22% is a carried interest held by
“This is great for the property, as it allows us to move forward,” says Cumberland President Kerry Curtis, “and we retain all the rights and benefits under the original WMC agreement.”
Comaplex will now have to finance Cumberland’s portion of the exploration and development expenditures through to production on a non-recourse loan basis. The loan will be repaid only with profits from production at Meliadine West.
In addition, Comaplex will be responsible for making annual cash payments of $500,000 to Cumberland at the end of each year until commercial production has been achieved. The option payments escalate to $1.5 million in 2006. Comaplex will also be required to keep the properties in good standing.
The sale comes on the heels of a $2.1-million summer work program on Meliadine West, situated 25 km northwest of Rankin Inlet. The project has been generally inactive since 2001, following a decision by WMC to get out of the gold business. WMC has spent more than $58 million advancing the project through prefeasibility studies since becoming operator in 1995. An October 2000 resource estimate shows 1.3 million oz. gold contained in an indicated resource of 5.2 million tonnes grading 7.7 grams gold per tonne, based on a cutoff of 3 grams. Inferred resources contain an additional 3.2 million oz. gold in 16.4 million tonnes grading 6.08 grams.
GeoVector Management, a geological consulting firm led by former members of WMC’s North American exploration division, will oversee exploration of Meliadine West in 2003. A 4,700-metre, 17-hole program of infill drilling will target specific areas of the Tiriganiaq zone in an attempt to upgrade resources to the indicated category. The Tiriganiaq Main zone, the largest mineral resource on the property, hosts an indicated and inferred resource of 12.3 million tonnes grading 6.8 grams gold per tonne, equivalent to 2.7 million oz.
A more regional program will consist of ground geophysics, prospecting and geological mapping on existing gold targets in 13 separate areas, followed by 600 metres of drilling on new or existing prospects.
A 1998 independent scoping study by H.A. Simons examined the economics of a 400,000-oz.-per-year underground and open-pit operation with a 10-year mine life. The study concluded that the project needed another 1.5 million oz. based on the existing resource of 9.8 million tonnes grading 10.52 grams, equivalent to 3.3 million oz. The study assumed a combined daily milling rate of 3,750 tonnes at an average grade of 10.4 grams per tonne, with gold recoveries forecast at 94%. Metallurgical tests by Lakefield Research indicated that gold recoveries in the range of 91-96% were possible using a combination of gravity concentration and cyanide-leach techniques. Gravity separation methods alone recovered 25-45% of the gold.
Gold mineralization along the Meliadine trend is associated with a large structural zone called the Pyke fault, and a parallel iron formation package. Gold is found in quartz vein stockworks, laminated veins, and sulphidized iron formation in complex folded and sheared iron formation, sedimentary and volcanic rocks.
In the Tiriganiaq zone, gold is associated with sulphidized (pyrrhotite and arsenopyrite) iron formation and quartz veins, with an alteration assemblage of ankerite, sericite, chlorite and silica. Similar mineralization is present in four satellite gold deposits, Pump, F, Wolf Main and Wolf North, all of which are within 5 km of the Tiriganiaq zone.
Exploration drilling in 2000 suggests a potential high-grade section west of Tiriganiaq zone. Results from five widely spaced holes covering a strike length of 600 metres a depth of 350 metres include 8.52 grams over 11.4 metres, 4.87 grams across 12.1 metres, 13.2 grams over 2 metres, and 9.15 grams across 5.5 metres.
At the end of 2000, WMC hired MRDI Engineering to examine various design and operating options for Meliadine West, but this work was cut short by WMC’s decision to sell its gold assets. Curtis says WMC pushed the Meliadine West project as a big open-pit producer. “The geology just isn’t amenable to that type of concept,” says Curtis, who views the project as a more selective, high-grade, underground operation.
Exploration on the Meliadine West property was limited to surface exploration in 2001. This work consisted of a helicopter-borne magnetic survey covering 13,785 line km, limited ground geophysical surveys, and geochemical sampling (total of 692 samples).
Seven new zones were discovered or expanded during the 2001 program. Mineralized boulders running 2-125 grams were found down-ice from a projected 15-km-long shear zone in an area called the Raptor shear zone. A second area, containing the Nanook and Peregrine zones, returned values of 4.1 to 256 grams in outcrop.
In 2002, WMC carried out a limited, 2,650-line-km aeromagnetic survey over six separate blocks of leased lands.
In 2002, Comaplex earned $394,000, compared with $968,000 in the previous year. Lower earnings are attributed to a 12% decrease in production volumes and a decline in natural gas prices to $3.98 per MCF in 2002 from $5.37 per MCF in 2001. Cash flow from operations decreased to $2.2 million in 2002, compared with $3.1 million in 2001.
For the first three months of 2003, earnings totalled $611,200, versus $403,800 in the same period a year ago. Cash flow from operations rose to $1.1 million from $660,400 in 2002. At the end of the March quarter, Comaplex had 29.4 million shares outstanding and $11.9 million in working capital.
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