Claude tries to hold down costs at Seabee

The Seabee gold mine in Saskatchewan’s La Ronge district has produced modest profits for most of its 10-year operating history. Not so in the first quarter of 2001, when operator Claude Resources (CRJ-T) posted a net loss of $400,000, compared with break-even net earnings a year earlier.

Production at Seabee fell 23% to 11,100 oz. in the latest quarter from 14,500 oz. a year earlier, reflecting a delay in completion of a high-grade stope — a delay attributable to its larger-than-expected size. The company expects this stope to be available during the latter half of the second quarter, which should allow production to reach the budgeted level of 54,800 oz. for the full year.

Cash operating costs increased to US$217 oz. during the first quarter, compared with US$208 a year earlier. However, Claude believes it can sustain cash costs at below US$200 per oz. for the forseeable future.

The shear-hosted, underground Seabee mine has produced more than 500,000 oz. gold to date yet still has reserves totalling 579,000 tonnes grading 7.54 grams gold per tonne, plus an additional 1.6 million tonnes (at similar grades) as extensions to depth of current mine workings.

Underground exploration is continuing at the mine site, with work focused on the 2C and 2D structures between the 340 and 400 levels. Both structures remain open along strike and at depth. Deep drilling is planned for later this year.

Claude is exploring other claims in the region, within a 4-km envelope of the Seabee mine. Work to date has extended several moderate-to-strong shear structures, generally cutting narrow widths with low gold values. However, the company remains confident of the potential for additional reserves to be found within trucking distance of the Seabee mill.

In Ontario’s Red Lake district, Claude’s Madsen gold project is being explored by Placer Dome (PD-T), which is carrying all costs associated with the work program. The first-phase program, involving four stratigraphic exploration holes, is complete, and Placer has started a second phase, which will include drilling the area that hosts the high-grade No. 8 zone.

Placer Dome can earn a 55% interest in the project by spending $8.2 million on exploration over three years, and by producing a bankable feasibility study. This can be increased to 60% by funding all development costs.

Claude also has oil and gas assets, which generated revenue of $3.5 million in the latest quarter. Total revenue, including gold sales, was $7.9 million for the period, about the same as a year ago.