Queenston’s Northfield deal overshadows 6-month results

While a new-look Queenston Gold Mines has reported increased income from custom milling and gold royalties at its Kirkland Lake, Ont., properties, revenues dropped considerably during the first half of 1987.

Revenues of $884,000 were down from $1,904,000 recorded during the first half of 1986 as a result of the November, 1986, planned shutdown of the McBean open pit mine.

However, net income for the 6- month period ended June 30, was $325,000 or 4 cents per share compared to $159,000 or 2 cents per share during the same period last year.

Although Queenston is now being piloted by a new board of directors, a recent agreement with Northfield Capital Corp. of Toronto and Canadian Ore Mining has focused attention on the company.

Under the terms of the agreement, Northfield and Canadian Ore Mining will likely spend $50 million by 1994 to earn a 50% interest in Queenston’s wholly-owned Kirkland Lake West property.

Thought by many to contain the projected western extension of the Kirkland Lake “Main Break,” the property is located 300 ft west of Lac Minerals’ Macassa mine site in Kirkland Lake. The so-called Kirkland Lake “Main Break” has produced over 23 million oz of gold so far.

As a result of this agreement Queenston can bring the Kirkland Lake West property to a positive feasibility stage without incurring any costs.

In other events during the first six months of 1987, Queenston earned $118,390 from royalty interests in jointly owned lands adjacent to the Macassa mine. That was up considerably from $20,347 in the first six months of 1986.

Average production from custom milling operations at the McBean Mill was 48,791 tons. However, a milling contract with Golden Shield Resources expired in September when the mill was shut down for maintenance.

Queenston has budgeted $8.5 million for exploration on a number of gold properties in Ontario and Quebec. According to the company, Queenston’s $3 million ($1.7 million is scheduled to be raised from a flow-through share issue) share of that will be spent on a 60,000-ft drill program to be spread across six projects. They include:

* An underground and surface program joint venture with Inco Gold at the Anoki gold zone one mile west of the McBean open pit. The agreement calls for a 3,500-ft ramp to be driven to the 735-ft level, 30,000 ft of underground and 10,000 ft of surface drilling.

Previous exploration on the Queenston (35%), Inco (65%), outlined some 600,000 tons of 0.145 oz gold per ton to a depth of 800 ft.

* Queenston’s jointly-owned Pandora mine property in Cadillac Twp. in northwestern Que., where American Barrick Resources has hinted at a possible open pit operation. If current drill indicated reserves of one million tons of 0.08 oz can be expanded, Barrick says the property is mineable at current gold prices.

* The Detour Lake joint venture 25 miles north of the Casa Berardi area in Quebec. The 680- claim property where a major gold- bearing structure called the Turgeon zone has been identified, is split three ways between Queenston, Falconbridge Ltd. and Bruneau Mining Corp.