PDAC-INTERVIEW-Red-hot Trelawney bets on Cote gold find-CEO

* Cote Lake deposit seen as multimillion-ounce find* Chester Mine in pre-production, but ramp-up could slow

* Stock up ninefold since early 2010, up 70 pct in 2011

By Cameron French

TORONTO, March 4 (Reuters) - Trelawney Mining (TRR.V: Quote) is already looking beyond bringing its first gold mine into production, a milestone the Canadian explorer expects to reach soon.

Trelawney's chief executive has his sights set firmly down the road at a much larger deposit called Cote Lake that could transform the company into a significant gold producer in four or five years.

"Cote Lake is the project our stock is hung on. It's a very large gold discovery," CEO Greg Gibson said of the deposit, which is sits south of the historic gold mining hotbed of Timmins in northern Ontario.

The potential of Cote Lake has prompted Trelawney to consider reducing its planned production ramp-up at its adjacent Chester mine, in favor of focusing on exploration and development that will pay off down the road.

Judging by the stock's surge since the discovery of Cote in early 2010, additional focus on the property could pay off.

Trelawney shares are up ninefold since it announced the discovery, and up 70 percent so far in 2011, boosted by a steady diet of promising drilling results from Cote Lake.

Also driving the shares are gold prices that have climbed more than 31 percent since early 2010, driven by a combination of inflation concerns, political turmoil, an uneven U.S. economic recovery and European sovereign debt issues.

RBC Capital Markets analyst Richard Bishop called Cote "the next multimillion-ounce Canadian gold deposit" in a recent note, predicting a potential resource of more than 4.5 million ounces.

"Cote Lake could propel Trelawney from junior mining exploration company to significant gold producer in 2016," he wrote.

Bishop said the catalyst for the shares going forward is likely to be the release of a 43-101 resource estimate on Cote Lake, which will solidify estimates of the size of the deposit, and give both analysts and potential investors and lenders a benchmark with which to value it.

Gibson, in Toronto for the PDAC prospectors and developers convention, a massive annual meeting of junior mining companies, said he expects the resource estimate to be out very soon.

"I think you look at it that if we have a target of 3.5-6 (million ounces), and if we come out with our initial 43-101 resource in the next little while, and it's anywhere within that exploration target, then nobody cares about (Chester)," he said.

CHESTER PRODUCTION SOON

Even so, with production at Cote unlikely until 2015 at the earliest, Gibson is banking on production from the Chester underground mine to pay the bills.

And with gold having hit a record high of $1,440.10 an ounce on Wednesday, he has plenty of incentive to want to begin production as quickly as possible.

Originally constructed in the late 1980s but never put into production because of weak gold prices, Trelawney acquired the project in 2009 and began overhauling it.

The company has begun pre-production at the mine and plans to produce at a steady pace of 30,000 ounces a year by the end of 2011. It had been aiming for annual output in the range of 75,000-90,000 ounces by the end of 2012.

Gibson said recent exploration successes at Cote, and at Chester, have convinced the company it should focus less on rushing to production and instead direct its efforts at firming up a the deposits.

"Let's stick with the 30,000 ounces of gold and put our focus on underground exploration, at the same time as we are increasing our bulk tonnage open pittable resource on Cote Lake," he said.

In addition to expected revenue from Chester, Trelawney recently closed a C$57.1 million ($58.9 million) private placement that it will use to fund exploration.