Building Canada’s Next Intermediate Gold Producer

Drill results? Check. Mill working? Check. Obligatory pre-feasibility study underway? Check. Government permits in motion? Check.
When you talk to Wesdome President and CEO Duncan Middlemiss about the company’s plan to add a third producer to its fleet, you get the sense that the mining gods have been making sure nothing gets in the way of the Kiena restart. Mostly nothing.
“As we all recognize, it’s been challenging times with COVID,” said Middlemiss in an exclusive interview with Mining Life. “The operating mine, producing mine, Eagle River located just outside of Wawa has been able to continue on with their production. We’ve been very fortunate with our effectiveness of our COVID protocols. We haven’t had any interruption whatsoever, in terms of, where we stand.”
“What we do see though is a little bit of a cost-creep on the cash costs. The all-in sustaining should be at around $1,350 Canadian per ounce, which is the high end of our guidance, but it’s at the top end, so we are still within guidance. And we really do attribute that to COVID right now.”
“The inefficiencies that you start getting and I’ll give you an example. Like over at Kiena, it’s shaft access to the mine and we normally have 12 guys on the cage going down, now we have four. And the same thing applies at Eagle River where you’ve got man carriers going down, it’s ramp access. You know, we don’t have 8, or a 10-man carrier, it’s 4. So, it just takes a little bit longer and things like that, there starts to become some inefficiencies.”
Like everyone else, Middlemiss says Wesdome is waiting for Ottawa to approve vaccines. “We’re obviously waiting anxiously for the vaccine like everybody else. But no, I’d have to say we’ve been successful in terms of keeping our people safe, number one, most importantly. And number two for everybody involved with the company and the shareholders, obviously, that we’ve been able to maintain your production. Of course, pretty fantastic price of gold so far in 2020, right. So, we’ve almost averaged $2,500 in terms of our gold sales. So, it’s been a great time. We’ve added a lot of money to the bank as a matter of fact.”
Middlemiss says Wesdome started 2020 with about $35 million in the bank and the last quarter (2020 Q3), they reported 73 million. “And we’re spending a lot of money at Kiena in order to bring that asset on. So things are a little more restricted at Eagle, I’ll just stay with that one for the time being. It’s a camp situation, so we’d have to reduce the numbers in the camp in order to allow for social distancing.”
Middlemiss says the biggest hit that came about was the diamond drill program. “When the March pandemic hit, we had to cease all diamond drilling. There’s a lot of people associated with that, all contractors. We kept the focus on our development and our production abilities and how to lessen that. So, at that point, we had five underground drills and two surface drills. And we’re just at that point now where we’re layering back in, and we’ve got about four underground drills and one on surface, so we’re five out of seven. We do have aggressive exploration programs again for 2021. And so, depending on what you see, in terms of the pandemic, as to when the vaccines actually going to take place or whatever, I would imagine we’d have probably one quarter for sure, maybe two quarters that would be very impacted by the pandemic.”
In the meantime, Wesdome fully expects to have a pre-feasibility study on their 100%-owned Kiena Mine near Val D’or finalized by the end of June. The company announced initial results in late November from underground development on the “A” Zone.
In addition to the ongoing definition drilling, sill development is currently being completed on the Kiena Deep A Zone on 111 Level. The development will provide an opportunity to confirm the geologic interpretation of the deposit, test for spatial and grade continuity of the mineralized structures, validate key assumptions of the mineral resource estimate, and assess the rock quality characteristics.
This information will assist the ongoing Prefeasibility Study, expected to be completed by H1 2021, which will determine timing and details of the restart of the mine.
To date (end of 2020), approximately 123 metres of 3.7 m x 4.0 m lateral development have been completed on the A and A1 zones. The initial development has confirmed the continuity of the “A” Zone high grade gold mineralization along strike.
On the technical side, the company says visible gold is associated with folded quartz veins which are located within an overall zone of strong amphibole alteration. The amphibolite is located at the contact between basalt/feldspar porphyry dyke and ultramafic rocks.
The Kiena mill has been restarted and is currently processing waste rock and low grade mineralization in preparation to process the Kiena Deep “A” Zone development material. The development material will come from two zones, namely the A and A1 Zones. “At this time we expect to process the estimated 6,000 tonnes of the combined zones. The milling results will be used to reconcile gold production with development muck and chip samples, as well as reconcile the production with grade estimated by three-dimensional block modelling and the forecast ounces of gold, thus validating key parameters of the resource estimate,” said the company in a late 2020 statement.
Mr. Duncan Middlemiss, President and CEO, commented, “We are very pleased with the initial development, which has thus far confirmed the high-grade nature and continuity of the A Zone. Everything learned from this development will be used in support of the prefeasibility study currently underway.”
“We are also very encouraged with the recommissioning of the Kiena mill, that is now processing waste rock and low-grade material in advance of the A Zone development material. It confirms the readiness of the mill for future production. Initial results from the uncapped muck and chip samples indicate the grades compare with the uncapped grades in the block model, which are higher than the reported capped mineral resource and which could be very positive.”
“In addition, we remain focused on continued drilling underground with 7 drills in the Kiena Deep and VC zones. This drilling has continued to confirm the overall continuity of the geometry and the high-grade gold mineralization of the A Zone that now extends down plunge in excess of 880 m. We have also commenced our surface exploration program with 2 drill rigs to test targets adjacent to the Kiena Mine Complex. In 2021, we expect to continue our aggressive exploration program both underground and on surface to test the numerous targets that remain underexplored, and also, to progress the A Zone development ramp for drilling and future production.”
Middlemiss says the company’s “best guess” right now as to what’s happening at Kiena is that the picture is changing. “And there’s a zone of transition and above the sort of this thousand-meter level, it’s sort of sulphide, rich mineralization, but lower grade. And I mean, Kiena miners, repeating it again, it was a 4.5 gram mine. So now all of a sudden, what we’re seeing is totally different style of mineralization down below that transition zone, where it’s gone to more of the quartz vein and the visible nuggety gold within that.
“We’ve got about 65 square kilometers, and we’ve got resources and past producers all around. But we knew that in order to support the mine restart decision, let’s have a look within a one to 1.5 kilometre radius in and around the headframe, where we have the existing infrastructure.
As far as the big picture goes, Wesdome’s investors are counting on Middlemiss and his team to bump the numbers. “So really, as it is right now, as the PEA suggested, there’s about a seven year mine life, getting up to that sort of hundred thousand ounces, I think that that can be conservative. So, coupled with what we see at Eagle right now, Eagle’s sort of doing about 100,000 ounces - you layer in Kiena and all of a sudden, we’re sort of 200,000 ounces just with those two assets. And I believe there’s optimization available for Eagle, which brings that up to maybe 125, and I think Kiena is a little bit conservative, so I could say 125, forward looking, of course. But so, it’s all of a sudden, Wesdome doing 250,000 ounces, up from the 50,000 ounce kind of run of late, we had pre-2017.”

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