Detour Lake & The Monster of Timmins OntarioNORTH AMERICAN GOLD REPORTS
Detour Lake & The Monster of Timmins Ontario
By Sean Mason | 6/1/2011
Gold juniors hope to ride the coattail of Detour Lake success story more than a decade after Placer Dome closed the fabled mine.
Detour GoldCorp. (TSX: T.DGC, Stock Forum) appears set to create a “monster” gold mine north of Timmins, Ontario. The company announced recently that drilling had increased its gold reserves to 14.9 million ounces at its Detour Lake project in the northeastern part of the province. This number could surge to 25.6 million ounce if inferred resources and other area of mineralization can be converted to reserves.
Placer Dome mined the Detour Lake deposit as an open pit between 1983 and 1999, producing 1.8 million ounces, but had to shut down operations when gold fell below the US$600-$650 per ounce range used in the feasibility study.
Detour Gold acquired the property from Pelangio Mines in January 2007, and in just over three years, the company produced a positive feasibility study for a 649,000-ounce-per-year mine. Since this is low-grade deposit, though, it is highly dependent on the gold price. Detour Gold has spent $100 million developing its Detour Lake project since last November and will spend another $400 million by the end of 2011.
If Detour Gold hopes to bump its gold reserves to 25 million plus ounces, however, it will need to focus on area exploration. In that regard, the company plans to spend about $14 million on drilling this year.
Its most promising target to date is likely the Block A property held in a 50-50 joint venture with Trade Winds Ventures Inc. (TSX: V.TWD, Stock Forum), an area in which Detour Gold had budgeted $3 million for 2011 alone.
The Block A property lies immediately west of the proposed pit along the same Sunday Lake volcanic-sediment contact that hosts Detour Lake. A recent resource calculation for Block A outlined an open pit amenable, indicated resource of 1.9 million ounces gold and an inferred resource of 762,000 ounces, based on a gold price of US$1,000 per ounce and using a 0.4 gram cut off.
“What they (Detour Gold) are showing in their current drilling is that mineralization (from their main deposit) extends directly to the west and most likely comes across onto Block A on the southern portion of it,” Trade Winds Ventures CEO and President Ian Lambert told Stockhouse.
“Slightly north starting back on their property is a structure called the M Zone, that we (Trade Winds Ventures) have now traced from their property all the way out across Block A and well across most of the Gowest Property,” Lambert added, saying that the M Zone probably extends close to a kilometre back onto the Detour Gold property. Lambert noted that Detour Gold hasn’t done any drilling on the M Zone per se, focusing on their own zone and continuation of it.
The Gowest Property is 100% owned by Trade Winds Ventures and in 2009 a NI 43-101 resource of 237,953 ounces was calculated at Gowest with the gold bearing M Zone traced for more than one kilometer at depth. The near surface potential of the Gowest project is limited by presence of a lake, which restricts exploration.
“Gowest is a longer-term part of our perspective that certainly has value but probably won’t be mined for several years,” Lambert asserted. He believes Block A will be an open pit for a number of years, followed probably by an underground mine to access the high-grade ore that is at depth.
“Unlike Detour Gold, which has only got the low grade from say minus 600 metres to surface because Placer (Dome) has already mined out the better part of the underground stuff, our underground stuff still continues to exist and is very similar in nature to the total Detour (Gold) property,” he claims.
In a March 4, 2011, research report, analyst Ronald Wortel of First Canadian Securities calculated that Trade Winds Ventures is trading at an average enterprise value (EV) to total resource base of US$15 per ounce in the ground, which compares quite favourable to what he determined is the regional group average of US$79/ounce.
Weighing on Trade Winds Ventures stock price is more than 184 million fully-diluted shares outstanding. Also it would be unlikely that company other than Detour Gold would attempt a takeover of Trade Winds Ventures. Its prized Block A property is 50% option to Detour Gold and Detour Gold has already done extensive work in the area.
Detour Gold is also hoping to expand its gold reserve by exploring to the east of its main zone. TSX: V.CQR , Stock Forum ) pursuant to which Detour Gold has the right to earn a 50% interest in Conquest’s Sunday Lake Property by completing $1 million of exploration over the next two years, including a minimum expenditure of $500,000 before September 30, 2011.
Sunday Lake comprises 13 square kilometers of mine leases on the Sunday Lake Deformation Zone, the same volcanic-sediment contact that extends into Trade Winds Ventures’ Block A property.
On March 7, 2011, Detour Gold said it has begun a 2,000-metre diamond drilling program at Sunday Lake, in which the company is planning a total of 10 exploration drill holes from five drill target areas.
Also, in the same area, Conquest sold 100% of its Aurora project to Detour Gold for $2 million in cash and 100,000 Detour shares, so Conquest shareholders will continue to have a stake in Detour Gold’s success.