Wednesday, June 1, 2016

Wesdome Gold - Are You Too Quick?

After announcing new Annual General Meeting date (June 14), Wesdome Gold Mines is preparing for the fight with its biggest shareholder, Resolute Fund.

In one of its last announcements the company has strongly criticized the measures undertaken by Resolute Fund. Apart from that, Wesdome management has set forth "Key points of growth strategy". I think these key points document very clearly what the company had made at Eagle River Complex and other properties over last years. 

Then, on May 31, Wesdome announced that it wants to start mining at its newly discovered 7 Zone of Eagle River. Well, at first glance this announcement looks good. But on second thought I am quite skeptical. Why? Let us look at the picture below:

                                         source: Wesdome Gold

The picture shows the part of 7 Zone where the company wants to start mining - it is the area between 890 m L drift (which is completed) and Next Drift (which is going to be constructed soon). In other words, it is the area between Level 890 and Level 945. When the second drift is completed the company may start the underground mining between these levels. 

However, there is a problem. There are only three holes drilled between Level 890 and Level 945. Of these holes only two are significant. Let me show the results delivered by these three holes:

Hole 900-E-88: true width 1.48 m; grade 2.95 grams per ton of ore
Hole 900-E-90: true width 2.18 m; grade 13.35 grams per ton of ore
Hole 900-E-92: true width 1.57 m; grade 55.50 grams per ton of ore (uncut)

I agree, the last hole, 900-E-92, shows a bonanza grade. The hole 900-E-90 is also nice. The hole 900-E-88 is probably waste. 
Anyway, Wesdome wants to start mining after drilling just three holes (or even only two). 

Well, either they know their deposit so well (to start mining) or they want to strengthen their position ahead of a very important Annual Meeting (promising to start mining at the underexplored part of the deposit very quickly). It looks like the decision to start mining has been taken too quickly.

By the way, the above plotted picture does not look very informative (it is impossible to spot how the holes are situated). For comparison, look at the picture below. It shows drill holes at Ixtaca gold-silver deposit owned by Almaden Minerals:

                                source: Almaden Minerals

Here everything is clear - I may easily spot:

  • where the holes are
  • the length of each hole
  • the angle at which it was drilled
  • the grades attributed to each hole
Can you tell the difference between these two pictures?


  1. Your article is fun... like solving a chess puzzle. So, does it make sense to drift west and START mining the 7 Zone at 890mL? I think so. 1) plunge and direction of the zone is well-established. Gotta start somewhere. 2) Since someone's objective is to start mining zone 7 before the Annual Meeting, to drill and get assays back to confirm PRECISE grade x width does not accomplish the objective. Hell or high water someone wants to beat the clock.

    Does make a person wonder though. This is a very small operation. Every penny counts. If keeping costs down is critical, why not drill a few holes and confirm values before committing to an expensive drift? Somebody must feel bonanza grades are guaranteed.

    1. So what is your opinion? To drill extra holes or not to drill?

    2. It won't matter for such a small exercise. Since Archean lode gold is pinch and swell in shear zones, the 890mL could be mostly a blank based on values up-plunge and west - but even if the high grade values (of hole's 90 and 92) show up only on the east side of the drift and fade, the mine geologist can stop the mining process from drifting any farther west. (My premise for saying this is that half the drill core is still available for holes 90 and 92, and the alteration which hosts the gold would likely show substantial differences (ie more chlorite, silicification and sulfides in high grade vs. less of the same in low grade))

    3. My bad: "890mL" needs to be replaced with "945m L" for my reply to make sense... but the idea being that since 890m L has already been mined, there is enough confidence from three high grade (> 8 g/tn Au) drill holes between 890m L and 945m L, plus a pierce pt at 9200E within proposed 945m L of at least 5g/tn Au that would give the drift the green light.

    4. Thanks for your opinion. Impressive.