Skip to content

Gold Eagle strikes it rich with Goldcorp acquisition

Goldcorp took a decidedly NIMBY attitude when rival Agnico-Eagle staked a share in a successful junior miner with a high-grade gold deposit on the doorstep of its Red Lake complex.

Goldcorp took a decidedly NIMBY attitude when rival Agnico-Eagle staked a share in a successful junior miner with a high-grade gold deposit on the doorstep of its Red Lake complex.

When Agnico-Eagle Mines Ltd made a surprise purchase of five per cent of Gold Eagle stock by investing $50 million this past summer and offering to help develop its Bruce Channel discovery, the Vancouver mining giant stepped in quickly.

Goldcorp has sealed the deal to buy junior miner Gold Eagle Mines in a friendly $1.5 billion acquisition that consolidated the world's second biggest gold holdings along the Red Lake Trend for eight kilometres. The acquisition was finalized Sept. 25.

With only 500 hectares of island property, Gold Eagle is delivering a future mine at its high-grade Bruce Channel discovery project that is one of Canada's greatest gold finds, smack dab in the heart of the Red Lake camp.

The company is sitting on a small deposit with potentially rich tonnes that may be more than 6 million ounces.

Gold Eagle president Simon Lawrence says his company wasn't on the selling block and he wasn't fielding calls from any interested suitors. With $475.3 million in assets, they were preparing to sink the first 30 metres of an exploration shaft on McKenzie Island. "We were literally days away from blasting."

The company was well financed for an upcoming underground and surface drill program. The Agnico-Eagle bump-up improved their coffers to $148 million. And there were big plans for a $108 million mine-mill complex and a tailings facility.

A surface drilling exploration program expanding to the property's southwest is threatening to make the deposit even bigger.

Across the property line, Goldcorp has been drilling and watching a busy Gold Eagle since 2006, drilling more than 200 holes and steadily putting the Bruce Channel project together.

Lawrence says it was "shot in the arm" when Agnico-Eagle invested a significant amount to assist with advanced underground exploration. "The entry of Agnico-Eagle into this area opened a lot of people's eyes, including Goldcorp's."

The property is immediately west of Goldcorp's Red Lake and Campbell Mine complex, and is just southwest of an old producer, Goldcorp's Cochenour-Willans Mine, which closed in 1971.

Agnico-Eagle president and COO Eberhard Scherkus was familiar with the ground, having worked for another company when the Cochenor mine closed.

The currently operating high grade Red Lake mines produce well over a couple of ounces per tonne. Cochenor was mining 18 grams or recovering 0.54 ounces, "tremendously high grade," says Lawrence.

He believes the Bruce Channel is part of the same deposit that Goldcorp is drilling across the waterway on the mainland, and is linked by faults to the old Cochenor gold reef system lost in the early 1970s when the mine closed.

In the Red Lake trend, projects like the Campbell and Red Lake mines have strong vertical extensions going deep 6,000 to 7,000 feet. The Cochenor only descended to 2,200 feet, relatively shallow, but the gold reef disappeared and he believes now it has been rediscovered on the Gold Eagle property.

"We've shown this very strong vertical extension which is typical of these projects along the Red Lake trend."

Gold Eagle drilled into the top end of the structure 800 metres below surface, tracing it down 1.4 kilometres. The bulk of that old Cochenor gold structure, he says, is sitting on their property, some of which Goldcorp was drilling off.

Both Goldcorp's and Gold Eagle's board support the bid, which still requires approval from shareholders.

Lawrence, who will not have a role in Goldcorp, was unsure of his future plans beyond the September shareholders meeting.

But not everyone was thrilled with the deal.

Lac Seul First Nation expressed disappointment they were not able to strike a memorandum of understanding with Gold Eagle prior to the sale. The band says the property is on Lac Seul traditional territory and they will receive no benefits from the $1.5 billion deal.

The band was hoping to receive two per cent of Gold Eagle's exploration budget to "position itself to become an economic player in the exploration and mining industry," says Lac Seul development officer Sam Manitowabi. He adds if shareholders voted in favour of the deal in September, Gold Eagle will cease to exist.

"This is an example of why consultation has to happen early in the exploration process and why the provincial government needs to take a more pro-active role. First Nations are losing out, they are not involved in these transactions and are not benefiting from activities in their own backyard."