From the press release here https://www.wesdome.com/news/press-releases/index.php?content_id=323 and the subsequent conference call slides https://www.wesdome.com/_resources/presentations/2018-December-Kiena-Complex-Resource.pdf.
Big exploration program in 2019 highlighted
50k meter drilling program in 2019. They now have 5 drills, compared to 4 prior to the resource update. 1 is located in the 670 level in order to help test up plunge extension of the A zone and 4 located in the exploration ramp. This aggressive drilling program compares to the 23k meters that was completed at the October 12 cut off and compares to the 40k meter target they had previously envisioned for 2018 that they couldn’t achieve due to higher than expected development work. This development work was required to get better angles and to be better able to test the up and down plunges of the system. Wesdome indicated on the call that everything drilled from this point forward is resource upside. That’s a very large exploration commitment which lends to their internal confidence in the overall system. It is very encouraging to see tonnes and grade improving as they continue drilling and Wesdome believes that trend is expected to continue, hence the 2019 commitment on exploration.
Up plunge extension possibility
Up plunge extension possibility not only changes the size and strike length of the system but also enhances restart scenario much faster and more economically, adding to Kiena mine NAV.
First hole up plunge hit VG and Wesdome is well on their way to validate extension upwards, subject to of course more successful drilling. The first up plunge target intercepted 19.6 gpt over 5.9m, a 50m step out up plunge extension towards the VC zone, which is the old mine.
If they can extend the zone up plunge and can prove it continues up to VC, Wesdome hinted on the call that it could double or triple the size of the Kiena resource that they have right now. All eyes on this development in 2019.
Up plunge area exploration drilling from VC down and working at 1050 level. Sometime around the 1Q/2Q of 2019, if drilling proves, they will extend development over from main mine area to drill off the majority of up plunge potential, the success of which increases the likelihood A zone connects to the old mine.
The way Wesdome is approaching up plunge drilling at 670 and drilling at 1050 is as follows: 670 drilling down and 1050 is drilling up in an attempt to fill the middle of the plunge.
Potential for up plunge encouraged by drill hits but also because of the 262 gpt over 5.6m that was hit in 2017 so they have grade within that trend.
Zone flattening down plunge
A Zone flattening down plunge is a very important area. Grade is increasing in this area and at depth. This “pooling” could increase the mining rates per vertical meter. See Slide 12 of the presentation. You will see the zone plunging down while flattening and turning. This generally leads to more ounces per vertical meter and thus development of it is favorable from an economic standpoint. If it continues, Wesdome stated that this kind of opens up a new area and can start to chase it up plunge as well from there. Stay tuned for this.
Potential other zones
Michael discussed during the call that there are a lot of zones outside of the A zone that need further work. What was interesting is that they hired their own in house resource modeler to compile historical data areas around the properties to better estimate them and maybe there will be further exploration in these zones. This was the first time in Kiena’s history that they hired an in-house resource modeler indicating the potential even beyond A zone, with the priority at the moment being the A zone of course.
Key milestones 2019
Next resource update sometime in 2019 but most likely after mid-2019 provided sufficient drilling and Wesdome is comfortable with material change in resource that would have occurred but Duncan is remaining non-committal to the date. On or around this time, it should coincide with restart scenario update.
As stated before, restart scenario so much more enhanced with the up plunge extension potential as it will cut down materially on development and startup time.
Base case 100k production likely in terms of restart scenario, however, if up plunge continues to go, the baseline scenario would have to be reconsidered.
Kiena has a one-two punch with the up plunge and down plunge components. Kiena Deep A zone is something new to the deposit that they haven’t seen before. Without pointing to any particular parallels, it reminds me of what was seen at Richmont’s Island Gold; Claudes’s Santoy Gap, and Kirkland’s Fosterville, among others — that is gold grades higher than ever historically mined indicating completely different system.
On the call, Wesdome stated that the A Zone has never disappointed. They drill and get high grade. They are as happy as they have ever been with it. There has never been a bad day. They drill and they get gold and the zone gets larger. Drill drill drill, that they will do in 2019.
With in-mine resource of about 500,000 ounces, which does not include the exploration targets of 80,000 to 160,000 ounces, they are quite frankly in a very good starting position already.
The 90 gpt capping factor for future drilling confirms the high grade tenor of the deposit.
It was also very nice to see John Tumazos dial in to the call and asking questions. Seeing his interest level given his experience makes it that much more intriguing.
We will know in 2019 a lot more about Kiena and whether it will continue to transform the company. One thing is for sure, the A zone is an exciting discovery and being guided by a very strong management team in Duncan et al.
Please leave any comments / feedback below. Greatly appreciated.