Donner & Xstrata Ready For Winter Drilling

Contact Peter Grandich at peter@grandich.com

http://www.theprospectornews.com/weekly_1109_02.php

The brisk November air has us pulling on warmer coats and hats, while exploration teams are rubbing their hands together in anticipation of the winter drilling season in Quebec.

Joint venture partners Donner Metals Ltd. (tsxv: DON) and Xstrata Zinc Canada are continuing year-round exploration drilling on their 4,750 square kilometre Matagami Project in Matagami, Quebec. The Matagami Mining Camp is a world-class mining camp with 11 former producers and 18 known deposits. Since signing the agreement in late 2006, Donner and Xstrata have made a number of new discoveries; two of which are part of the new Bracemac-McLeod mine currently under construction, and three more elsewhere in the camp awaiting follow-up.

The winter drilling season is the best time to access certain areas of the camp, like the Daniel-1 discovery area. New exploration could be a catalyst for Donner and with 2-3 drills turning; I am expecting a steady stream of news over the next few months.

Another area of focus is the PD1 deposit in the West Camp area. October 4th news announced a definition drill program on the near-surface portion of the PD1 deposit as the first step towards defining and measuring a potential open pit resource. The decision will then be made to conduct a feasibility study and assess the upper part of the PD1 deposit as another source of mill feed for Xstrata’s Matagami mill. There are 11 shallow diamond drill holes underway to in-fill historic drilling between surface and 150 metres vertical depth, all funded by Xstrata Zinc. Results from these 11 holes are expected in the near term.

In a recent conversation with Donner’s Chairman, David Patterson emphasized that moving the Bracemac-McLeod deposit from a brand new discovery and into construction of a new mine has largely dominated the Matagami Project thus far. But Patterson is quick to remind us that Bracemac-McLeod is just one small area of a huge property:

“The Donner/Xstrata team made the Bracemac-McLeod discovery using innovative technology and a new understanding of the Matagami Camp,” says Patterson. “We are now applying what we’ve learned to other areas of the camp, not only to our new discoveries, but also to known deposits and other high-potential targets.” Exploration in the camp is fundamental for Xstrata because they own the onsite mill. One of the driving forces behind the accelerated feasibility study and early construction at Bracemac-McLeod comes from Xstrata’s need for more mill feed to replace the Perseverance Mine. I expect we’ll see a very active and robust exploration program in 2011.

The new Bracemac-McLeod zinc-copper mine is under development on the property, with production scheduled for January 2013. The recently released Positive Feasibility Study gives an estimated 4 years of mine life, but I see the potential for significant expansion on this from a nearby Inferred Resource, where mineralization still has more room to stretch out beyond what is already known.

The positive feasibility study is based on proven and probable reserves of 3.73 million tonnes grading 9.60% zinc, 1.26% copper, 28.25 grams silver per tonne and 0.43 grams gold per tonne, based on the measured and indicated resource of 3.39 million tonnes grading 11.31% zinc, 1.47% copper, 34.27 grams silver, and 0.50 gram gold. The accelerated feasibility study was sped along so quickly that construction began on the new mine in July, months before the study was released. The time pressure at the Matagami camp comes from Xstrata’s Perseverance Mine, which will likely be mined out completely by late 2012 - the very time that Xstrata and Donner intend to begin production from the new Bracemac-McLeod Mine.

Consider as well that the positive feasibility study does not assess the extension of the mineralization at Bracemac-McLeod - notably the 2.07 Million tonnes at McLeod Deep, grading 10.66% zinc, 1.33% copper, 41.72g/t silver and 1.21g/t gold. The decision to go into production was made on a positive base case with considerable up side. Based on known inferred resources and mineralization that requires more drilling, we know that there is more potential expansion for the Bracemac-McLeod deposit as well as the McLeod Deep area. It’s possible that they may connect. That’s just one possibility in one area of this world-class mining camp.

In a few weeks Donner is attending the Quebec Exploration conference from November 22-25th at the Chateau Frontenac in Quebec City. It was at that very same show that the Donner/Xstrata team won the Prospector of the Year Award in 2007. With mine development underway and ongoing exploration at the camp, it looks like Donner has come a long way in a short time, and has big plans for the Matagami Project moving forward.

Peter Grandich is the founder of Grandich.com and Grandich Publications, LLC, and is editor of The Grandich Letter which was first published in 1984. On his internationally followed blog he comments daily about the world’s economies and financial markets and posts his views on social and political topics. The result is an insightful and intuitive look at business, finances and the world, set in a vernacular that just about anyone can understand.

He is a member of the National Association of Christian Financial Consultants, and a long-standing member of The New York Society of Security Analysts and The Society of Quantitative Analysts