Plans by Canada's second-biggest gold-miner, Goldcorp, to buy explorer Gold Eagle Mines, for C$1,5-billion, locked into place an “important piece” of the company's future, and, in particular, its soon-to-be announced plans to optimise its presence in the Red Lake gold camp, said president and CEO Kevin McArthur.

Gold Eagle's main asset is the Bruce Channel discovery (BCD), a high-grade ore deposit located directly adjacent to Goldcorp's flagship Red Lake mine, in north-west Ontario.

Flagging output levels and surging metal prices are sending the world's gold-miners out with shopping bags in hand, in search of both early-stage and near-development prospects.

Last week, another Canadian miner, Kinross Gold, announced that it would buy explorer Aurelian Resources, to get its hands on the smaller company's large Fruta del Norte project, in Ecuador.

Although an initial resource has yet to be established for the BCD, the discovery had already drawn the attention of mid-tier bullion producer Agnico-Eagle Mines, which last month paid C$50-million for shares and warrants that would give it a 7,16% holding in Gold Eagle on a fully diluted basis.

Agnico-Eagle could not be reached for comment on Thursday, and McArthur said that, although he had discussed the offer with Agnico CEO Sean Boyd, the Toronto-based company had not made any commitments regarding whether it would sell its shares.

Goldcorp is currently working on an optimisation review for its Red Lake camp, which include studies into building an openpit mine, and the addition of the BCD represented the final piece of the puzzle, said corporate development VP Charles Jeannes.

The Gold Eagle acquisition, which requires approval from shareholders holding two thirds of Gold Eagle, is expected to close in September, after which Goldcorp plans to provide details of its broader plans for the camp, he said.

Goldcorp's 700 600-oz/y (and expanding) Red Lake gold mine is the largest in Canada, and the highest grade producer in the world.

Goldcorp has combined Red Lake with the equally high-grade Campbell mine – formerly owned by Placer Dome but acquired from Barrick Gold in 2006 – and is considering adding an open pit to lift output from the complex to one-million ounces a year.

A third mine, Goldcorp's Cochenour-Willans operation, closed in 1971, after the known gold reef was mined out.

The BCD is located directly to the south-west of the Cochenour-Willans property, and both Gold Eagle and Goldcorp agree that the discovery is likely the downdip structure of the Cochenour deposit, part of which has also been identified on Goldcorp's side of the boundary.

The deposit remains open in all directions, and Gold Eagle has so far identified a mineralised envelope about 1,1-km deep, with a horizontal footprint of some 720 m by 450 m.

Couchenour-Willans had a recovered historical grade of 18,5 g/t, and drilling at the BCD had produced comparable numbers, Jeannes said.

Goldcorp is currently working on dewatering and rehabilitating the Cochenour shaft, and will then be able to start extending drifts, probably during the summer of 2009.

The company expects to establish an initial resource on what it will call the Cochenour mine by the end of next year “at the earliest”, McArthur said.

Gold Eagle had planned to start sinking an exploration-slash-production shaft, and Goldcorp has similar plans, although it will move the shaft's location onto the mainland.

Goldcorp will pay C$1,5-billion in cash and shares for Gold Eagle, which has agreed to a C$44-million break fee if the deal does not succeed.

While both McArthur and Jeannes refused to be drawn on the potential size of the resource contained in the BCD, the “all-in” cost of a mine was estimated at below $650/oz.

This figure included the acquisition, capital and operating costs.

The offer represents a 19% premium to closing prices on July 30 and a 36% premium to the 20-day volume-weighted average prices for each company, the firms said.

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