August 14, 2009
Donner Metals Beds Down Its Relationship With Xstrata And Begins To Look Towards New Exploration Opportunities
By Laura King / minesite.com
Junior miner Donner Metals moved a step closer to the big league on 14th July when partner Xstrata announced that it would immediately advance the Bracemac-McLeod discovery in Quebec’s Matagami region to the feasibility stage. Robin Adair, Donner’s vice-president of exploration, said in an interview that the study is a vote of confidence in the project. “Xstrata does fairly robust reviews of projects and they‘ve just completed an international scoping study that is the basis of this decision to move forward”, he said. “In the broad context, should the feasibility become a positive document there’ll be very little delay in moving Bracemac-McLeod through development and eventually production, which is the key to Matagami infrastructure. The existing mill and operations there require additional feed.”
Bracemac-McLeod is a joint venture between Xstrata and Donner and is about six kilometers from Xstrata’s Matagami Mill production complex in Quebec, which is expected to run out of ore in three or four years. Capital costs for Bracemac-McLeod are expected to be minimal because of the proximity to Xstrata’s operations. And there is little doubt among analysts and observers that Bracemac-McLeod will advance to production. “Absolutely, this takes our discovery at Bracemac-McLeod and moves it up the chain to the next robust stage of study, if you will,” Adair said. “It does have to pass hurdles going forward but preliminary indications are favorable. Meanwhile that puts all of that effort into Xstrata’s boat so they’re covering the cost and we’re continuing our exploration elsewhere.”
Vancouver-based Donner was founded in 1995 as a mining exploration company prospecting in South Voisey's Bay in Newfoundland and Labrador. That project has since become dormant, but in the meantime Donner developed a relationship with Canada’s Falconbrige, which was bought by Xstrata in 2006. In 2006, Donner signed a deal with Falconbridge under which it is required to spend C$20 million by 31st May 2011, plus another C$5 million if a new discovery is made. Effectively, the deal made Donner a vehicle for exploration in the Matagami base metal camp. Xstrata can earn back a 15 per cent interest on the project by spending up to C$20 million on the feasibility study.
Analysts have been watching Donner, calling it a green shoot, or rising star, in the junior base-metal space. Donner completed a non-brokered private placement of C$1.6 in the spring to fund exploration up at Matagami. A drill program that started in 2006 wrapped up in 2008, and in February Donner released a National Instrument 43-101 compliant resource estimate of 3.6 million tonnes at 11.52% zinc, 1.60%, 31.55 grammes per tonne silver and 0.49 grammes per tonne gold.
For that work, even as it was ongoing, Donner received the prospector of the year award in November 2007 from the Quebec Mineral Exploration Association and The Mining Journal’s outstanding exploration achievement award in 2008.
According to Adair, Donner’s next step is a bigger push for recognition of the Donner name in connection with Matagami and Xstrata. The decision to move to the feasibility study so rapidly will be key to boosting the company’s credibility, he says.
For Donner, the partnership with Falconbrige and some fortuitous timing played important roles in the company’s evolution, he adds. “By and large we had an opportunity for an option and joint venture with Falconbridge before the Xstrata changeover occurred on a package of property that was kept in Falconbridge/ Xstrata’s hip pocket and a window of opportunity opened for Donner. The recognition that this was a key property with a large exploration outlay really led us into the first discovery within a few months of starting activity on the project, and following that the continued exploration success of Bracemac-McLeod brought us to the announcement of the feasibility study.”
It will be interesting to see what happens next, because Adair says Donner’s three Magatami properties that have yet to be explored are just as significant as Bracemac-McLeod. Chairman Dave Patterson is due to present at our Minesite Forum early in the autumn, so there’ll be an opportunity for a London audience to find out exactly where the future focus lies.
