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Eastmain Set for Interesting Year as Eau Claire Approaches Development Stage

Eastmain Resources Inc (TSX: ER) set themselves a clear business philosophy: Bring their high quality mineral projects to the development stage, whereby a current producer can take over while Eastmain enjoy the royalties, having limited costs and risks.

The first of these deposits set to reach this stage is Eau Claire, part of their flagship Clearwater Gold Project located in the James Bay region of Northern Quebec. Eau Claire has undergone extensive exploration and drilling, defining a one million ounce resource that is due to be updated, likely to expand both total size and confidence levels for this key asset. With this in mind, Eau Claire may very well now be reaching the stage where prospective companies may begin to show an interest, and leaves Eastmain with potentially a very interesting year ahead.

Eastmain is a Canadian based exploration company that has a proven 15-year track record listed on the Toronto Stock Exchange (TSX), in which time it managed to successfully raise C$65 million.

With no debt and C$25 million still in the treasury, the company are well placed to finance their ongoing exploration efforts, and it is worth noting for the C$40 million spent, they have two high grade gold deposits to show for it (Eau Claire and Eastmain).

Focused in Quebec, one of the best jurisdictions for mineral exploration in the world, the company enjoys the benefits of a good geopolitical backdrop, inexpensive power and infrastructure, and more recently a rebate program from the Provincial government that allows companies to reclaim almost half of exploration costs in the region.

The company has a pipeline of projects, at varying degrees of exploration, with some currently on the backburner due to come forward in time as the company’s lead projects advance to the development stage.

It is also worth noting that the economics of Eastmain’s two deposits were attractive when gold prices were at $325/oz. Needless to say, with gold prices trading at record highs, now near $1,400/oz, these deposits offer a lot of upside potential for the future owner.

The James Bay mining district has been hitting the headlines more and more this year, after Goldcorp (who hold a 8.5% stake in Eastmain Resources) bought the region’s largest deposit from another junior, which it is now bringing to production. Eastmain owns the second and third largest deposits in the region. According to the company, the best place to explore is underneath a 100% owned deposit, or next to a giant one in an area previously unexplored; Eastmain’s projects tick both of these boxes.

The Eau Claire deposit is facilitated by excellent infrastructure, located 2 kilometers (km) away from a permanent road and 5kms from power. Previous drilling completed at Eau Claire defined a NI 43-101 compliant resource estimate of 310,000 ounces Indicated, and 680,000 ounces Inferred. Much of the company’s efforts over the past three years have been to expand this resource, significantly upgrade the resource classification and search for additional resources both east and west of the known deposit.

To this end Eastmain have completed almost 40 km of drilling in 181 holes as of 2009 and another 32 holes recently, and fully expect an improved resource update to be forthcoming. They currently have two drill rigs working 24/7 peripherally to the deposit, having identified 31 high grade veins with bulk tonnage potential, stacked and averaging around 1.7 meters at 10 grams per tonne (g/t) gold. This is in addition to areas of lower grade material, averaging between 30 to 60 meters. 

Furthermore, in addition to the property’s strong gold mineralization, there are by-product metals such as tellurium within the deposit, providing additional credits from this rare and valuable by-product. Eastmain fully intends to continue drilling until around mid December, reopening operations as soon as possible in mid January.

Again the Eau Claire deposit is fast approaching the point where, as Eastmain put it, it will be ready to find a home. A move by a larger, producing company, may lead to an offer coming Eastmain’s way, while maintaining a royalty for future cash flow. The company would then spin off its other properties collectively into a new entity, that current shareholders would receive a partial share in.

To this end, and with Eau Claire now reaching the point where it is hitting the radar screens of potential buyers; Eastmain Resources may indeed have a very interesting year ahead.