History

The Eagle River property was purchased in 1994. In 1995, preproduction development commenced and the first gold bar was poured on October 17, 1995. Commercial production was declared January 1, 1996. The preproduction capital cost, net of gold produced during the preproduction period, amounted to $15.5 million.

The mine generated strong cash flow from the outset allowing us to purchase the mill (initially this was leased) in 1996, the Edwards property which produced from 1997-2002 and the Mishi property (currently producing).

Capital projects in the early days included mill expansion and shaft sinking. The Eagle River mine is now in its 17th year of commercial production and in June, 2012, poured its 900,000th ounce of gold. Its complete production history is tabulated below.

EAGLE RIVER MINES PRODUCTION HISTORY

YEAR TONNES MILLED RECOVERED GRADE OUNCES COMMENT
1990 60,857 4.93 9,646 Noranda – Bulk Sample
1995 28,571 10.56 9,700 Pre-Production
1996 162,075 12.38 64,523 Production
1997 156,294 8.97 45,070 Production
1998 199,464 11.79 75,629 Production
1999 163,156 9.10 47,749 Production
2000 229,262 7.03 51,843 Production
2001 246,198 8.60 68,074 Production
2002 281,603 8.17 73,938 Production
2003 241,926 9.10 70,781 Production
2004 246,012 8.34 65,977 Production
2005 198,217 8.33 53,062 Production
2006 135,100 10.05 43,669 Production
2007 76,676 13.07 32,299 Production
2008 118,961 12.98 49,660 Production
2009 132,004 14.32 60,753 Production
2010 155,554 7.23 36,172 Production
2011 183,984 4.77 28,233 Production
Total: 3,015,914 9.15 886,778
Eagle River Regional Geology

Eagle River Regional Geology

Regional Geology

The Eagle River mine is located 50 kilometres due west of Wawa, Ontario, and 60 kilometres southeast of Hemlo.

The Eagle River mine is situated in the central portion of the Mishibishu Greenstone belt which is a broad arcuate belt about 60 kilometres long and up to 18 kilometres wide. This belt is part of the 2.7 billion year old Wawa-Abitibi Subprovince. This age-correlative Subprovince of the Superior Province stretches east to Val d’Or, Quebec, and includes the famous prolific gold mining camps of Timmins, Kirkland Lake, Noranda, Cadillac, Malartic and Val d’Or. To the west, this Subprovince re-emerges from Lake Superior near Thunder Bay, Ontario, extending westwards through Shebandowan and into northern Minnesota where it is known as the Vermillion Lake greenstone belt.

These rocks are typlified by an assemblage of submarine volcanic and sedimentary rocks which were buried to depths of 3 to 8 kilometres by ancient, mountain forming events and subsequently eroded over the eons and exposed on surface.

Although the origin of the Abitibi’s gold deposits remains hotly contested amongst academics, it is generally accepted that hot, aqueous solutions containing dissolved gold ascended from deep in the crust depositing gold as solutions cooled and encountered hostrocks with chemical properties conducive to gold precipitation. Gold deposits are spatially associated with regional scale, deep-seated faults such as the famed Destor-Porcupine Break and the Cadillac Break.

Archean greenstone hosted gold deposits are known for their vertical extent with many examples extending to depths beyond current mining capabilities.

Mine Site Geology

Gold bearing quartz veins at the Eagle River deposit are predominantly hosted by sub-vertically dipping, east-west striking shear zones that constitute a structural corridor within an elliptical quartz diorite stock with dimensions of 1.8 kilometres east-west and 0.5 kilometres north-south. Zones 2,3,6,7 and 8 constitute different segments of the overall shear zone corridor and each have their own grade characteristic. The bulk of the historic production has come from Zone 8 and Zone 6, which are entirely within the intrusive quartz diorite, while Zone 2 mineralization is hosted in sheared mafic volcanic rocks just east of the stock.

Zone 8 is characterized by a series of thick, white laminated quartz vein lenses. The veins vary in thickness from one metre to 15 metres, but average about 2.5 metres. Commonly only portions of this vein system can be selectively mined with mining widths varying between 1.2 and 7.5 metres. Gold is concentrated in highly strained quartz of grey colour and in sericite-chlorite lamellae with accessory sulphide minerals including pyrite, pyrrhotite, galena, sphalerite, and chalcopyrite. The gold grade in Zone 8 has averaged about eight grams of gold per tonne with individual stoping blocks ranging from five to twelve grams of gold per tonne. Zone 8 is accompanied by a distinct, red, potassic fracture-controlled alteration in the immediate wall rocks of the veins. A distinct and discrete shear zone that forms a splay off the shear hosting Zone 8 hosts the Zone 6 mineralization. The vein varies in thickness from 0.5 metres to 2.0 metres. Locally the vein is folded back on itself forming tight S-folds or “ballrooms” which form plunging, pipe-like bodies 12 to 15 metres in diameter.

Zone 6 is high-grade averaging 12 to 18 grams of gold per tonne and has very competent wall rocks. Because of its high-grade character, Zone 6 has traditionally provided the economic backbone of the mine. The 650 Zone is in a sub-parallel southern splay from the shear hosting Zone 6, which continues eastward into volcanic rocks and hosts the 2 zone. Both the 650 and 2 Zones are characterized by sheeted veins of laminated white quartz ranging in thickness from 1.5 to 6.5 metres. These zones have good grades of 10 to 15 grams of gold per tonne.

Zone 7 is a complexly folded white quartz vein located 100 metres north of the Zone 8 shear. It contains patches of coarse pyrite containing very high grades.

In addition to the zones that have been mined, a discrete yet persistent shear zone called the No Name Lake Zone occurs sub parallel and 400 metres to the south of Zone 8. The No Name Lake Zone dips 65º north and will meet the vertically dipping Zone 8 at depth. It consists of a 0.5 metre thick quartz vein in a 1.0 metre wide shear and has been traced by drilling over 600 metres of strike length, averages 7.0 grams of gold per tonne over 1.0 metre and remains open along strike and down dip. The No Name Lake Zone remains an attractive exploration target.

Eagle River Property Geology

Eagle River Property Geology

The Eagle River deposit is an Archean Greenstone Belt hosted vein-type deposit along a regional deformation zone with discrete brittle-ductile shears localized along lithological contacts (Heather 1986 & 1991). Due to 45º to 70º east-plunging lineations, he speculates on a simple shear model with oblique-slip displacement. Work by Johnston (1990), refutes Heather’s thesis by observing “There is no evidence of a continuous and mappable domain of relatively high strain referred to as the Eagle River Deformation Zone by Heather (1986)” (Johnston, 1990, page 25). Gold-bearing quartz is highly strained and recrystallized commonly displaying stylolytic textures. Gold occurs at the quartz grain boundaries and in the stylolites. Gold predates the straining of the quartz. Structural observations over the last ten years support Johnston’s view that deformation of the mineralized zones is attributable mainly to pure strain. The current structural model invokes progressive deformation of pre-existing veins by pure shear flattening in accordion-style folding to eventually reach their current tabular geometries.

The mineralized lenses occur at a spacing of 400 metres along a 2.4 kilometre strike length. They appear to be spatially related to a series of oblique 110º striking mafic dykes, which predate mineralization and preferentially occupy the shear zones. These dykes may have been important in creating competency and chemical anisotropies which promoted vein and gold deposition.

Eagle River Longsection

Eagle River Longsection

Mining

The Eagle River orebody is a vertically dipping vein type deposit hosted in an Archean greenstone belt. It consists of a series of quartz vein lenses which to date have been traced over a strikelength of 2.5 kilometres and to a depth of 650 metres. The exploration potential is excellent both within the mine area and elsewhere on the 18 kilometre long property.

The Eagle River mine is accessed via a ramp system and a 580 metre shaft with a loading pocket at 460 metres. Currently, the deepest mining level is 720 metres. From 1996 to 2001, the primary mining method was shrinkage stoping. Since 2002, the primary mining method has been sublevel long-hole stoping. This method increased production volumes at the expense of higher dilution and development costs.

In 2007, we invested in developing the high grade western portion of the mine. As a result, 2007-2009 production grades averaged 13.5 gAu/tonne.

We expect to see the resumption of higher grades in the latter portion of 2012 through 2014 as similar high grade reserves are scheduled for production.

Longer term, the Company continues to examine alternative scenarios to gain efficiency by extending its ore handling infrastructure at depth. Deep drilling to date has identified high grade quartz vein to 1000 metres depth and has identified the presence of the main mine structure to 1300 metres depth beyond which it remains open.

Exploration

The Eagle River property remains largely unexplored despite 17 years of commercial production. Spanning 5250 hectares along an 18 kilometre strikelength, the Eagle River property has to date produced over 900,000 ounces of gold.

The deposit at the Eagle River mine has a 17 year history of replacing its reserves. Management is encouraged by this history and feels that systematic surface and underground exploration will add value as it has in the past.

Because the mine is mature, exploration has become focused underground. The objective of the exploration is to replace reserves and guide medium-term development priorities. The principle exploration strategy is, therefore, linked to development planning by applying the accumulated wisdom of more than 15 years experience.

Regionally, the exploration philosophy is driven by infrastructure capacity analysis with priority on grade and capital optimization. This conservative philosophy has served us well over time and since operations commenced in 1996 155,000 ounces of a total of 1,042,000 ounces produced has come from low capital, reasonable acquisition and development schemes from regional satellite deposits. We continually look for opportunities within 100 kilometres of our mill.

With Mishi resuming production, we now foresee 5 years of reserves ahead of us at current rates and an opportunity to examine the merits of expanding mill capacity to serve our increased resources.

We believe incremental exploration, development and expansion enables us to most reasonably tolerate the inherent high risk nature of the gold mining business.

Eagle River mill exterior

Eagle River mill exterior


Eagle River Mill

The Eagle River Milling Complex is situated 10 kilometres due north of the Eagle River mine and 2 kilometres due east of the Mishi mine. It was built in 1988 for the Magnacon Mine development. This project only operated for 2 years. This fully permitted site was leased from secured creditors in 1995 and subsequently purchased in 1996.

Since this time, Wesdome has increased the grinding circuit 50% and increased the filtration and press circuits 100%. The mill employs the Merrill-Crowe zinc precipitation process. The current mill configuration has demonstrated historic capacity of 1000 tonnes per day. Since its purchase by Wesdome until December 31, 2011, the mill has processed a total of 3,540,959 tonnes of ore from Eagle River and satellite operations for 1,042,032 ounces of gold at an average recovered grade of 9.2 gAu/tonne.

Eagle River mill interior

Eagle River mill interior

The Eagle River ore leaches well and is free of deleterious elements. Historic recoveries are above 96% and about 40% of the gold is recovered in a gravity circuit (Knelson Concentrator). The gravity concentrate averages 70% gold. The zinc precipitate is refined into doré bars averaging 80-85% gold. These are shipped to the Royal Canadian Mint for final refining. Approximately 1 ounce of by-product silver is produced for each 10 ounces of gold.

The Company’s gold is sold on international markets. The Company endeavours to settle in Canadian dollars to avoid costly exchange rate premiums.