TORONTO (miningweekly.com) – Ontario-focused miner Kirkland Lake Gold, which operates its flagship Macassa gold mine in the historic Kirkland Lake gold camp, on Tuesday revealed that it had discovered a new high-grade zone through its ongoing surface drilling campaign.

The Kirkland Lake-based company said that this new zone, known as Zone 3, lies footwall to the previously discovered Zone 1 and Zone 2.

This phase of the surface exploration programme used one drill rig on the Macassa property, west of the South Claims property boundary, in an effort to define potential near-surface resources.

The campaign was designed to follow up on the earlier success of drilling programmes testing for near-surface mineralisation associated with the Amalgamated Break. The Amalgamated Break had seen limited historic exploration before the recent drilling campaign was started.

The new zone returned drilling highlights, including bonanza grades of 1 718.06 g/t of gold over 0.4 m, 283.29 g/t of gold over 0.3 m, and 40.46 g/t of gold over 2.2 m.

"We are very pleased with the results to date of this surface exploration programme and are excited to shortly be able to announce a reserve and resource calculation on ounces close to surface for the first time in the company's history.

“Intersections from the surface campaign to date have shown mineralisation from surface to 1000-foot depth, which have the potential to be mined from a ramp or decline. The surface programme will continue throughout the year as exploration continues both east and west from this area,” Kirkland Lake CEO George Ogilvie said.

Analysts at Desjardins Capital Markets said that they viewed the exploration results as a positive development, as they demonstrated the presence of high-grade, near‐surface mineralisation at Macassa and the potential for resource expansion at above-resource‐average grades.

“However, we note that given the early stage of exploration, the impact that Zone 3 (as well as Zones 1 and 2) will have on the mine plan for Macassa is currently unclear. Longer term, we note that operational uncertainty remains and we expect a new mine plan, emphasising a smaller scale, high-grade operation, to be released,” analyst Adam Melnyk said.

He cautioned that Kirkland Lake remained a “highly levered name to both the price of gold and the C$/US$ exchange rate”.

“We see significant potential downside risk for the company should the price of gold weaken and/or the Canadian dollar strengthen,” Melnyk said in a note to clients.

Desjardins maintained its cautious ‘hold – speculative’ rating, with a C$3.50 target price.

The company’s TSX-listed stock on Tuesday traded in a narrow band at C$4.01 apiece.