Queenston Mining

Gold standard┬áQueenston Mining has quality gold resources and is poised to exploit them, thanks to growing world demand and a consequent improvement in prices, CEO and president Charles Page explains to John OÔÇÖHanlon.  Gold may no longer underpin the economy, but when, as now, currencies flutter around like leaves driven in the wind, gold again begins to look like a very sound commodity to hold.   As Queenston MiningÔÇÖs president and CEO Charles Page says, metals that depend on manufacturing demand could remain low over the course of 2009, but gold is likely to hold its current high value, in the region of $880 (US) per ounce (C$1,000).ItÔÇÖs a favorable environment for CanadaÔÇÖs gold mining industry, Page says, and for Queenston Mining in particular, thanks to the companyÔÇÖs long-term strategy of building a significant landholding in the countryÔÇÖs most productive gold production region around Kirkland Lake in Ontario, close to the border with Quebec. There may not be the romance associated with gold exploitation in Africa, South America and Asia, but you donÔÇÖt have the risks either. To CanadaÔÇÖs political stability, add the fact that this camp, as gold properties are still called, is just a six-hour drive from Toronto on paved highway, and with a settled population of more than 8,000 souls, it has all the infrastructure the mining company needs.Queenston has built up its asset portfolio over many years but hasnÔÇÖt been producing gold since the mid 1980s, when the price stagnated at around $400 per ounce. Rising costs made production uneconomical right through the 1990s; however, the picture was changing radically even before the global recession struck, and the company is poised to start milling its own ore again. The salient fact here is that though mining has been going on in the area for over 100 years and the deposits near the surface are depleted, there is still plenty of gold lower down. The deeper you go, the more expensive it is to mine, but on the plus side, technology has reduced costs, and in Kirkland Lake the deeper deposits tend to be of higher grade. If the price of gold holds up at its present value, deep mining will make sense.Queenston owns four gold deposits in Gauthier Township 15 miles east of Kirkland Lake, of which the most exciting is Upper Beaver, where a new resource has been confirmed as potentially containing 700,000 ounces of gold, but which Page is confident will grow to more than a million. ÔÇ£Our strategy is to build a central milling facility and feed that from these four deposits.ÔÇØ The long-term plan, he says, is to produce annually on the order of 150,000 ounces of gold from the new facility over a 20-year period.In addition to the Gauthier projects, Queenston is involved in four joint venture operations with Kirkland Lake Gold, currently the only gold-producing company in the region. ÔÇ£Their production operations have been marginally profitable, but I believe thatÔÇÖs going to change significantly following a new discovery theyÔÇÖve made referred to as the South Mine Complex,ÔÇØ says Page. ÔÇ£One of our most significant joint ventures on the South Claims property has identified a continuation of this high-grade complex onto our 50 percent owned property that is grading well over one ounce per ton.ÔÇØ High-grade gold ores are economical, even from deep mines, at well below these levels, Page continues. ÔÇ£ItÔÇÖs very exciting; weÔÇÖre finding new gold in these old camps, in the shadow of the deposits that have already been mined. However, theyÔÇÖre at greater depths than weÔÇÖre used toÔÇödown to 5,000 feet at South Claim and 3,000 feet at Upper Beaver. ThereÔÇÖs a lot more room for that to grow as we go forward; we have to have the technology to guide us there, though.ÔÇØThe key technologies now being used to assist in finding gold have mostly been adapted from oil industry practices. Geophysical exploration analyzes the earthÔÇÖs electrical and magnetic properties to look for anomalies that might indicate the presence of ore, but until recently it only really worked down to about 300 meters. However, at Upper Beaver Queenston got Quantec Geoscience of Toronto to carry out a Titan-24 survey to identify anomalies down to 3,300 feet. This deep-earth imaging system is the most advanced electrical earth imaging technology yet developed for the mining industry. ÔÇ£It allows us to focus our deep diamond drilling on the most likely places and eliminate a lot of dry holes,ÔÇØ he says, borrowing a bit of oilmanÔÇÖs jargon.Diamond drilling is expensive, but another advantage of working close to home is that at around $100 a meter, itÔÇÖs a lot cheaper than the global rates, which average somewhere around $250. ÔÇ£Some of the best diamond drillers in the world come out of Quebec, and we get a very good rate,ÔÇØ says Page. This may be because the drillers like being able to get home to their families regularly, something they canÔÇÖt do when posted to the Congo.Once the geophysics has shown where the drills should go, Queenston brings in some very advanced equipment to make test holes. ÔÇ£Our drilling contractor, Benoit Drilling from Val dÔÇÖOr in Quebec, has provided equipment that can core-drill to depths in excess of 7,000 feet. In fact, weÔÇÖve just finished the deepest surface hole in the history of the Kirkland gold camp, down to 7,590 feet.ÔÇØ From that single hole, he explains, it has been possible to fan out with a series of directional holes from a point about 3,000 feet down, saving that amount of drilling cost each time.The whole process of deep exploration has become very sophisticated thanks to the geophysical and drilling expertise; however, there remains a problem once the hole has been drilled. ÔÇ£The holes may plot as straight lines on a map, but in fact they wiggle around down there like wet spaghetti, so we use a gyroscopic instrument provided by Halliburton Sperry Drilling Services of North Bay, Ontario, to survey exactly where the hole ended up.ÔÇØAs a professional geologist, Page appreciates having the guesswork taken out of the process, but he still gets his biggest kick from the occasional week that he is able to spare from corporate duties in Toronto to spend onsite, talking to the engineers and looking at core samples. ÔÇ£We have a long way to go. It appears that the deeper we go down in the Canadian Shield, particularly in Kirkland Lake, we experience better grades, and thatÔÇÖs very good for a company like oursÔÇöable to develop our existing assets to satisfy sustained demand at high prices, and finding even more gold in the process.ÔÇØ ÔÇô Editorial research by Ryan Kirkey┬á