Grades still consistent at Red Lake

Delineation drilling at the Red Lake mine in northwestern Ontario continues to confirm the grades and widths measured in earlier drilling.

Goldcorp (G-T) has been delineating mineralization below the mine’s 30 Level (about 1,340 metres depth) since 1995. The work has defined a body of high-grade mineralization in a series of vein structures called the FW (footwall), Main, HW (hangingwall), and EW (east-west) zones.

Most of the latest drilling was intended to provide information on the shape of the known mineralized zones. The program has not substantially increased the high-grade reserve below the 30 Level, which, at the end of 1998, was estimated at 1.3 million tonnes with an average grade of 47 grams gold per tonne.

(At the end of 1998, a further 138,000 tonnes grading 12.7 grams had been blocked out in the Sulphide zone below the 30 Level, and 1.1 million tonnes grading 12.3 grams were in reserves above the 30 Level.)

The new holes show gold grades similar to those encountered in earlier drilling, including bonanza holes with visible gold and grades in the hundreds of grams per tonne. Most of the holes in the high-grade mineralization have at least one multiple-ounce intersection.

Goldcorp plans to have a new reserve audit completed by the end of 1999 and is pushing ahead with development plans for the new zones. Dynatec has been hired to do about 6,000 metres of underground development, and Hatch Associates is designing a mill. About US$7 million has been spent so far, with US$22 million scheduled for work before the end of the year and a further US$27 million in 2000.

About a quarter of the recently reported holes were devoted to exploration.

One hole west of the currently delineated FW zone encountered a quartz-carbonate vein that carried an average of 132.7 grams per tonne over a length of 2.3 metres. The intersection indicates that the FW vein could extend a further 30 metres west between the 30 and 34 levels.

Deep drilling intersected some gold mineralization over mainly modest widths downdip from the High Grade zones. The two best intersections were a 1-metre length grading 25.9 grams per tonne, identified with the FW4 zone, and a 3.7-metre length grading 13.8 grams, thought to correlate with the Sulphide zone.

The second quarter of 1999 was kind to Goldcorp, yielding earnings of US$845,000 on revenues of US$13.1 million, which included US$6 million from its industrial minerals units: Havelock Lime and Saskatchewan Minerals. In the corresponding period of 1998, the company showed a US$12,000 loss on revenues of US$16.3 million.

For the six months ended June 30, Goldcorp earned US$933,000, or 1 cents per share, on total revenue of US$24.7 million. In the first six months of 1999, the company was poorer by US$908,000 on revenue of US$29.8 million.

Goldcorp’s Wharf mine in South Dakota produced just over 50,000 oz. of gold in the first six months of the year, at an average cash cost of US$201 per oz. Total costs were US$237 per oz.

There has been no progress on negotiations between Goldcorp and the United Steelworkers, which went on strike in June 1996. The dispute centres around contracting-out and scheduling arrangements.

Goldcorp’s balance sheet shows current assets of US$71 million, including US$45.6 million cash. Current liabilities are US$12.2 million, leaving US$58.8 million for working capital.