Aurizon Mines: Expanding Reserves, Targeting Enhanced Production

Companies like Aurizon Mines Ltd. (AZK) have provided some of the best investment performance in the first half of 2009 where gains are tough to come by in any sector, and uncertainty persists. Aurizon’s disciplined approach to resource development at its Quebec-based Casa Berardi project has resulted in steady production above 150,000 ounces annually, and exploration success that will add years to the mine’s life once incorporated into 43-101 compliant reserve estimates.

Aurizon itself has seen its share price improve steadily since the turmoil in late 2008 brought its share price down as low as $1.50. Since touching a high of $6.28 in April, the price continues to hold in a range above $4.00.

CEO David Hall attributes the strong performance to the company’s successful expansion of known mineralization at Casa Berardi.

“We’ve got a two-fold approach”, he said in a telephone interview this week. “We’re upgrading the present resources where we’ve got 900,000 ounces in measured and indicated and another 900,000 ounces of inferred in addition to our reserves of 956,000 ounces. Specifically, we’re looking at upgrading the inferred resources that have only been drilled from the surface at this point in time – particularly in an area we call Project 810 which is in the deeper regions of the west mine, where we’ll now be able to drill two zones in particular, 118 and 123, from underground. We’re nearing completion of a new exploration drift that goes out about 1 km east of our infrastructure at 810 metres below surface. That will enable us to upgrade some of the ounces we have classified as inferred.

With some step-out drilling we’re going to be doing in the west and east mine areas, we’re looking to test new targets and hopefully increase our inferred resources. So we’re upgrading inferred resources to measured and indicated while continuously adding to the inferred resources.

Our objective is to find ways to increase production from underground, but that will really depend on the success of the drill. What I can say is that we will undoubtedly extend our mine life out beyond 2013, which is the end of the present reserves at the current rate of production.”

Based upon first quarter results and the 2009 mine plan, Casa Berardi remains on target to produce between 150,000 -- 155,000 ounces of gold at a total cash cost of approximately US$390 per ounce, using a Cad$/US$ exchange rate of 1.20.

The Casa Berardi gold deposits are located along a five kilometre east-west mineralized corridor. They include the East and West mines, and the Principal Zone. The mine has produced over 1 million recovered gold ounces since commencing production in 1986, including 375,000 recovered ounces since Aurizon re-commissioned production in December 2006.

According to the company’s mine plan, output from Casa Berardi will increase to 196,000 annually by 2013, as underground production is supplemented by material from the East Mine open pit.

But Aurizon has two other projects that represent future upside for shareholders in the company.

Joanna Project

The Joanna Gold Project is located along the Cadillac Break, in Joannes Township, two kilometres northeast of the Rouyn-Noranda airport and 20 kilometers east of Rouyn-Noranda. The property extends east-west for more than eight kilometres and reaches three kilometres in width.

“Joanna has a resource of over 2 million ounces”, said David Hall. “We completed a major in-fill drilling program over the last year to upgrade our inferred resources into measured and indicated, and we’ve got a good understanding on the geology and continuity of the zone, so now it’s a question of incorporating that information together with the metallurgical test work currently in progress, and completing a pre-feasibility study on the Hosco deposit by the end of this year. Conceptually what we have in mind is a project that could produce roughly 100,000 ounces annually over about a ten year mine life.”

Aurizon is also exploring a large gold-uranium-rare earths property 100 kilometres south of Rouyn-Noranda, halfway between the Elliot Lake uranium camp and the Abitibi gold belt camp.

Kipawa Gold-Uranium- Rare Earths

The first drilling program recently completed at Kipawa by Aurizon, totalled 681 metres in four (4) drill holes with the objective of testing the Snake rare earth elements target, located in the western part of the Kipawa southern claim block.

According to Hall:

That’s a very large project, and very early stage. We’ve assembled a large land position over the last three or four years, and now it’s a question of honing in on some more specific targets going forward. In terms of the gold, we’ve found very high gold values in the glacial till running as high as 6, 7 and 8 grams per tonne with one value of about 100 grams per tonne, so we know the gold is there. Now the trick is finding out where the gold has come from and how far it has moved through glaciation, so we’re doing some more work analyzing the gold grains in the till. We’ll go back in with a drill program later this year or early next year once we’ve properly identified the targets.

On the rare earth side, we know we’ve got a fairly large zone there. It’s a question of perhaps doing some mineralogical work to determine the exact composition of that rare earth deposit and get a feel for the potential metallurgical recovery, but rare earths are not really our core business so at some point in the future we may enter into a joint venture or farm-out arrangement to accommodate the advancement of that rare earth project.

Learn more by visiting the company online at www.Aurizon.com.

Disclosure: No Positions.