Left Andrew M. Alper Senior Editor Metals News, center Donald Robinson President Eastmain Resources, and Allen M. Alper Editor-in-Chief Metals News
We caught up with Donald J. Robinson, Ph.D., P.Geo., President of Eastmain Resources, to see what’s been happening in the last six months. It’s been a convergence of fine fortune, resulting from good decisions and seizing opportunities, both financially and in the gold fields.
Robinson told us about a financing in July 2008, that brought in 22 new institutional shareholders. “It’s the Who’s Who of the institutional shareholders, which is excellent,” he said.
Equally important, Eastmain’s major shareholder, Goldcorp, took the opportunity to maintain their ownership, even when there was significant demand for placement.
“They were called by the underwriter, who said, ‘Do you want to maintain your ownership?’ They said, ‘Absolutely.’ And so having the tremendous demand for the placement created another opportunity.”
Robinson explained that 500,000 warrants were held by a junior company that was in financial distress, at 10 cents higher than the placement price. “One of the institutional investors asked if this junior company would sell the warrants, so they could increase their holdings, which they did. This added another $750,000 to our treasury at no commission to the company.”
“This not only fortified our treasury, but essentially contributed towards the acquisition of the second gold deposit. It was almost like paying for itself in the first place,” he said.
Gold Deposits in Quebec
Eastmain Resources is a Canadian exploration company concentrating on gold and base metal exploration in the northern James Bay, Québec. It has 100% ownership of two gold deposits (1.24M oz), the Eau Claire deposit and the Eastmain Mine with total gold resources of 565,000 ounces (M&I) and 680,000 ounces inferred. They have 11 projects in Québec, four in Ontario and three in New Brunswick.
Eastmain’s flagship project is the Eau Claire gold deposit at Clearwater in the James Bay region of Québec. There are indicated and inferred gold resources in excess of 4 million tons, approximately one million ounces of gold. “Our Eau Claire gold deposit is a strategic asset,” said Robinson, “All of that really does tie into a nice situation for the company.”
Dr. Robinson has been President, CEO and director of Eastmain since 1994. Previously, he had his own consulting firm, exploring base and precious metals in Canada and Australia. He never lost his love for the hands-on part of the metals industry, and also managed the exploration of a gold-rich VMS discovery at Lewis Ponds, Australia. It was his work supervising an integrated base and precious metal program, on behalf of Westmin Resources Ltd., that led to the discovery of the Eau Claire gold deposit at Clearwater. Dr. Robinson’s Ph.D. degree is from the University of Western Ontario.
Core Diameter Increase Pays Off
The Eau Claire gold deposit consists of multiple, parallel veins of quartz and tourmaline. Previous wide-spaced drilling has confirmed a very large "footprint" — over 1.5 kilometers long and to a depth of 900 meters. The deposit is open laterally to the east, north and at depth.
“Recently, we made a technical decision to go with a larger core diameter and increase the number of holes to evaluate what mineable grade might be in the future. It’s paid off in spades,” Robinson said.
In 2007, Eastmain’s drilling at Eau Claire found 55 veins with visible gold, assayed at 70 grams per ton; seven times the indicated grade of the deposit.
“We maintained the program in 2008, and now there’s over 100 vein intercepts with visible gold in them,” he said, adding that daily updates from the project geologist continue to be positive, with good to very good indications from the drilling.
In September 2008, the company announced that current drilling intersected visible gold within another 50 quartz-tourmaline veins in 23 of 29 drill holes. These holes have intersected the main group of veins below the 2007 drilling. A new vein set, also containing visible gold, was discovered north of the main deposit.
The current program is designed to increase the size and grade of the Eau Claire gold deposit at a sufficient drill spacing to calculate a “measured” gold resource. The program will also focus on delineating near-surface ounces.
Projects Offer Strategic Advantage
For Eastmain, the volatile financial environment is an opportunity. “Companies like ours who have a good treasury, and an excellent project in a good location, can take advantage of opportunities,” he said. When these properties are sought after by others, they bring additional strategic leverage to the circumstances, as is the case with Eastmain.
In addition to these exploration projects, Eastmain Resources has owned Eastmain Mine since May 2006, when it acquired it from Campbell Resources Inc. for $2.5 million cash, and stock shares, a rate of $16 an ounce for 255,750 ounces of gold measured and indicated.
With the purchase of Eastmain Mine in 2006, Eastmain owns two of the three known gold deposits located within the Eastmain/Opinaca area of James Bay, Québec. Goldcorp’s Roberto, (the largest gold deposit discovered to date in the district) is being developed close by.
This proximity to Roberto, and the fact that Eastmain’s projects have established infrastructure, power lines and telecommunications, puts them ahead of the pack. Québec provides substantial financial incentives to companies actively exploring the region. Courtesy of Hydro Québec, Eastmain has also been a beneficiary of newly developed infrastructure and road networks which extend to within 2 kilometers of the Eau Claire deposit.
Junior Explore, Seniors Produce
Robinson is a veteran in this industry and understands the business of gold exploration and production. “If you have to raise significant amounts of money to put your project in production, you’ve put a halt on any chance of the share price appreciating. If you decide to be a producer, you can suffer financially in the near term, while perhaps gaining in the long term with a fully developed company.”
He explained that because junior companies are the explorers, and senior companies are producers, the best model is one in which a company attains an asset that can be moved into production, and finds a senior company interested in buying it.
“It doesn’t matter what price gold is, you will make money on the deposits that are high grade. That’s why Goldcorp is in such an enviable position. Because their Red Lake Project is the highest grade gold in an underground deposit that’s being mined,” he said. “So when we present them a project where we’re starting to see 100 veins with an average grade of an ounce gold per ton, obviously it gets their attention.”
Goldcorp and other investors are impressed by Eastmain’s long term position, established over the last decade. “We just didn’t get there last night. We acquired control of this asset (Eau Claire) in 2001, when gold was trading at $250 an ounce,” said Robinson.
The technical decision to increase core diameter brought the grade much higher than what was previously estimated. These grade estimates are affected by fluctuating (rising) metal prices, which have a huge impact on Eastmain and the whole industry.
No Shortcuts
Staying the course has worked for Eastmain, so Robinson turns away from shortcuts and detours, sticking to his business plan and big picture view. “When you start jumping all over the place in terms of your strategy, it just adds the variable of disaster. All of a sudden, you’ve spent all your money, and you’ve destroyed your project — even though it may be a viable project — by trying to jump the gun,” he said.
For the moment, Robinson is in the enviable position of having a couple of deposits and the financial wherewithal to decide Eastmain’s destiny for the next five years.
“We’re working for our shareholders, not the other way around,” Robinson said, adding that as stockholders, his management team also intends to be the beneficiary of their success. “But we know not to let it go to our head. We just keep our eye on the ball and keep working.”
Robinson and his team are regularly on site, focused on the technical aspects of the business. As he said, “We look at every drill hole. We are a hands-on type management. Once you’re into an ore deposit, there’s a lot of fun there.”
CORPORATE ADDRESS
36 Toronto Street,
Suite 1000
Toronto, Ontario
Canada
M5C 2C5
EXPLORATION OFFICE
834572 4th Line EHS,
Mono Twp,
RR#1
Orangeville, Ontario
Canada
L9W 2Y8
Web: www.eastmain.com
Tel: 519-940-4870
Fax: 519-940-4871
Email:info@eastmain.com