Donner Metals (CVE:DON) said the latest drill results appear to point to the huge potential of the as yet untested zone of the Bracemac-McLeod mine, on the Matagami mining camp in Quebec.
One hole into an area called the McLeod Deep Zone, which is below the McLeod Zone, intersected what the company describes as “semi-massive sulphides”.
A 12.8 metre section contained 9.42% zinc, 2.51% copper, 35.7 grams per tonne silver and 0.81 grams per tonne of gold from depth of 932.4 metres.
“This result dramatically increases the likelihood that the two zones, separated by a 200-metre un-drilled gap, are connected by continuous high-grade sulphide mineralization,” the company said in a statement to investors.
“Five surface drills and one underground drill are currently active on the project, including three surface rigs at McLeod Deep.”
The McLeod Zone has a proven and probable mineral reserve of 2.1mln tonnes grading, 9.25% zinc, 1.18% copper, 24.98 grams of silver and 0.49 grams of gold, while the McLeod Deep Zone has 2.47mln tonnes in the lower confidence inferred category.
The current programme on McLeod Deep is an aggressive 35,000-metre drill programme designed to confirm the presence of mineralization between the bottom of the McLeod Zone, currently included in the mine plan, and the top of the McLeod Deep Zone.
In the same release Donner said production from the discovered and developed part of the deposit is “imminent”.
The Bracemac-McLeod mine, in the Matagami mining camp in Quebec, has been systematically de-risked and taken to the brink of production.
This has been done on time and on budget, yet the company has received very little recognition for this from the market. In fact quite the reverse: if you look at the share price over the last two and half years it seems to have been penalised.
Donner’s partner and 65% shareholder in the project is Xstrata Zinc (LON:XTA), which may explain why it has been successfully taken to the brink of production with remarkable efficiency. So far it has cost US$111mln out of a total budget of US$160mln.
With an initial four-year mine life the operation won’t set too many pulses racing. And this perhaps is where the market misunderstands the Donner proposition.
For there is more to the company and the Bracemac-McLeod Mine than meets the eye.
The work on the McLeod Deep target has the potential to add a further seven years or more to the initial mine life.
Earlier exploratory holes pointed to a gold grade at an anomalous 1.1 grams per tonne, which is almost three times the average grade of the main deposit.
“Something is going on at McLeod Deep that hasn’t been seen in the rest of the camp,” said chairman David Patterson in a recent interview with Proactive Investors.
“We have this higher grade that points to something happening down there. It might be the heat source, but until we mine it out we won’t know.
“The geologists are pretty excited about drilling McLeod Deep. If it holds up to drill testing, then their excitement will be justified.”
The local infrastructure of the region is good, while Xstrata owns the Matagami Lake Mill, just two kilometres from the mine portal that will crush 3,000 tonnes of ore a day.