Wesdome Gold Mines stock soars on new gold discovery at shuttered Quebec mine - Financial Post

Wesdome Gold Mines stock soars on new gold discovery at shuttered Quebec mine - Financial Post

When Quebec’s Kiena gold mine was shuttered back in 2013, it was believed that all the best pockets of ore were mined out.

Now that assumption is being tossed out the window.

Shares of Wesdome Gold Mines Ltd. soared 49 per cent on Thursday, closing at $2.24, after the Toronto-based miner revealed spectacular drilling results from Kiena. They included a couple of long intercepts of more than 18 grams per tonne of gold.

Kiena, which opened back in 1981, was a relatively low-grade operation throughout its life. There was no recent indication that it had this kind of high-grade potential.

“This is good news for Wesdome for sure, and it really puts a re-focus on the Kiena mine, which a lot of people have written off,” chief executive Duncan Middlemiss said in an interview.

He took over as CEO less than two weeks ago, so this was a nice way for him to begin his new role.

Kiena is located in Quebec’s Val d’Or camp, where gold mining has been going strong for more than 80 years. Wesdome’s new discovery, along with recent finds by Integra Gold Corp. and others, prove the region still has plenty of mineral potential.

“How many times have we seen this in Canadian mining?” Middlemiss said.

“You think that a mine is mined out, it’s an old dead beast. And all of a sudden you invest money into drilling, and lo and behold, you find something.”

Wesdome operated the Kiena mine for nearly a decade before shutting it down in 2013. Despite the closure, company insiders had a theory that there could be undiscovered gold in the so-called “S-50” zone, and decided to commit $3 million to drilling into it. Only three holes have been completed to date, but given the fantastic results so far, there will be many more to come.

“Although exploration is in early days and more drilling will be required, recent drill results point to potential for significant upside in valuation,” National Bank analyst Raj Ray said in a note.

Middlemiss noted that the Kiena site already has a deep underground shaft and a processing mill that is fully permitted. So if Wesdome decides it has a mineable deposit, getting into production should be relatively straightforward.

The discovery comes after a period of major turmoil for Wesdome. Last spring, the company engaged in a nasty proxy fight with activist investor Tom Stanley of Resolute Funds Ltd., who called for Wesdome to be sold. There was speculation in the market of a potential merger with Kirkland Lake Gold Ltd.

Stanley tried to get four dissident nominees elected to Wesdome’s board. But his campaign ultimately failed, as shareholder elected all of Wesdome’s nominees at an annual meeting last June. Middlemiss was named the company’s next CEO the following month.

Financial Post

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