TORONTO (miningweekly.com) – Dual-listed precious metals producer Primero Mining on Wednesday reported that its current drilling programme at the recently acquired Black Fox mine, located in the Timmins gold district of Ontario, had confirmed high-grade gold ore about 200 m below the current mining level, with significant exploration upside at depth.

The Toronto-based miner, which acquired the mine in March through the $220-million friendly takeover of rival Brigus Gold, said given the fact that mines in the region extend to an average depth of about 1 600 m below surface and that the Black Fox mine was currently only at 500 m, there was significant exploration potential still to be realised.

Primero CEO Joseph Conway said the company started reviewing the block model and mineral reserve and resource estimation parameters for the mine soon after closing the Brigus deal, choosing to use more conservative estimation parameters.

As a result, Primero had lifted the cutoff grade, reduced the area of influence around drill holes, used more detailed domaining, more conservative capping and had not included any drilling from 2014.

“We believe this more conservative approach is appropriate as we optimise the Black Fox operation. We were very encouraged by the increase in underground reserve grade and the large increase in ounces and grade of the inferred resource, which reflects the future opportunity we see at this mine,” Conway said.

While the new estimate had resulted in fewer reserves and resources, the advance in underground development and significant increases in definition and delineation drilling were expected to position Primero to materially increase resources and convert resources into reserves by the end of the year.

DEEPER DOWN

Primero’s current $16.8-million exploration programme covers both the Black Fox mine and the neighbouring Grey Fox exploration property.

The exploration and delineation programme included 132 100 m of drilling, broken into 55 700 m at Black Fox and 76 400 m at Grey Fox, of which 8 330 m and 22 780 m, respectively, had been drilled at each property to date this year.

In October last year, Primero announced two high-grade gold intercepts, located about 720 m below surface and about 240 m below current mining operations in the lower central zone of the Black Fox deposit. The company on Wednesday followed these up with six new high-grade intercepts, adding to Primero’s confidence that the Black Fox orebody extends at depth.

Drill holes 440-16-EB (which returned 24.4 g/t over 14.7 m), 440-24-E, 440-25-E, 645-02-W and 440-23-EB (which returned 9.9 g/t over 31.8 m), confirmed and expanded the area of known mineralisation at depth. This lower central zone would remain a focus of the company's 2014 exploration programme.

Primero also discovered a new mineralised area in the lower west zone. Drill hole 345-23-W, a step out drill hole, returned 3.5 g/t over 5 m. Despite the mineralisation interval being lower grade than other mineralisation at depth, it indicated the potential for expanding the known mineralisation at depth by up to 425 m laterally to the west. Further drilling in the lower west zone is planned in the second half of the year.

The remaining Black Fox 2014 exploration programme would continue to test the full lateral and depth potential of the mine. The lower east and Tamarack zones, both regions believed to be high-exploration-potential regions of the underground mine, would also be drilled in the second half of 2014.

The company had also started a surface exploration programme to drill the east and west extensions of the openpit, which was currently in its third push-back, with the goal of extending the openpit life.

As at December 31, the Black Fox mine had compliant measured and indicated resources, which included reserves, of 3.99-million tonnes, grading 5.1 g/t gold for 627 854 oz of the yellow metal. The deposit also had an inferred resource of 690 400 t, grading 7.6 g/t for 167 786 oz of gold.

GREY FOX POTENTIAL

Primero also on Wednesday announced recent drilling results from the Grey Fox property, located 4 km south-east of the Black Fox mine. The Contact, 147 and Grey Fox South zones all occur within close proximity of each other and provide Primero with near-term production growth opportunities as they are so closely located to the Black Fox mine infrastructure.

The Contact zone drill results show continuation of the newly identified hanging wall zone as drilling was extended to the north and east. Drilling in the second half of 2014 would continue to infill the Contact zone and these results would be included in the 2014 year-end mineral resource estimate for the Grey Fox property.

The Grey Fox South results were encouraging, as they indicated that the zone was wider than previously expected with more consistent grade than in earlier drilling.

As at December 31, the Grey Fox deposit had total indicated resources of 5.27-million tonnes, grading 3.3 g/t and containing 557 655 oz of gold, and 1.55-million tonnes, grading 4.4 g/t for 218 820 oz of gold.

Primero’s TSX-listed stock on Wednesday gained as much as C$0.22 a share to change hands at C$8.47 apiece, having chalked up gains of 65% in the last six months.