More Gold at Hope Bay

In a drilling program intended to increase confidence in previously known resources, Miramar Mining (MAE-T, MNG-X) has had its plans derailed by the discovery of significant new resources on the Hope Bay gold project in Nunavut.

Miramar’s new resource estimate on Hope Bay includes about half a million new ounces at the Madrid deposits, where the company is assessing the possibility of a second phase of mining beyond that already under study. Based on a cutoff grade of 1.5 grams gold per tonne, the Madrid zones now have an indicated resource of 32.5 million tonnes at an average 3.5 grams gold per tonne, plus 42.3 million tonnes in the inferred category grading 2.8 grams gold.

Two of the Madrid zones were expanded significantly by drilling south of the Suluk zone and north of the Naartok East zone. As well, gaps between Suluk, Naartok East and West, and the Rand zone were shown to have mineralization continuous enough to be added to the resource.

Two other gold deposits are known on the Hope Bay project. Boston has 2.3 million tonnes grading 10.7 grams per tonne in indicated resources, plus 2.4 million tonnes grading 9.5 grams in inferred; Doris has 1.2 million tonnes grading 19.3 grams indicated and 1.6 million tonnes grading 14.5 grams inferred.

The new BN zone, about 400 metres north of the Boston de- posit, has also been drilled and Miramar is working on a resource calculation. More drilling, which will determine whether a resource can be put together at BN, is planned.

The company has announced a $31-million exploration program for 2007 — a comparable figure to its budget in 2006, which paid for about 66,000 metres of drilling. More drilling is also planned at Madrid, both for feasibility work and for expansion of the resource at depth and along strike. There are also regional exploration programs in the works, particularly along the structure hosting Madrid and on the BN zone, near Boston.

The other priority is to update the feasibility study on Doris North and arrange production permits. Production there is to start in 2008, requiring that equipment and building materials get to the site this year. It received construction permits in mid-2006, but still needs a water licence. The Department of Fisheries and Oceans approved a location for the tailings facility in a lake, and has recommended that as an amendment to Miramar’s environmental plan; that amendment has yet to be approved by the Department of the Environment.

Construction at the project is limited by access; there is no winter road, and although the Boston deposit has an 800-metre gravel airstrip, both Doris and Madrid are about 50 km north of Boston and could not be served by it. Both, however, are reasonably close to tidewater and can be served by barge when the water is open. Much of the equipment is slated to come in before break-up, either by Hercules aircraft landing on ice or over sea-ice from Cambridge Bay.

Miramar had about $150 million in cash at year-end, with working capital of about $144 million. It had no production revenue in 2006, and posted a loss of $2 million.