Profit prospects bright for Blackdome Mining

Paying three dividends in the first year of production is quite an accomplishment for any gold mining company, including a medium-sized one like Blackdome Mining. But not all mines are as successful as the Blackdome project 140 miles north of Vancouver. Production began last May and Blackdome’s year-end balance sheet showed no debt and over $7.4 million in working capital.

In the first quarter, the company posted net earnings of $1.9 million or 23c per share — and with metal prices higher today than the average for the recent quarter, the prospect for increased profits looks even brighter.

At the company’s annual meeting, which incidentally was held back-to-back with its major shareholder MFC Mining Finance Corp. (50.3%), Blackdome President Carl Ashenhurst announced a further 15 cents dividend plus an extra 5 cents payable June 15 to shareholders of record May 15, 1987. That’s a total of 55 cents in three payments. He reiterated the company’s policy that 60%- 70% of cash flow would go into dividends but “not more than net earnings.”

Much of MFC Mining’s financial success can be attributed to Blackdome. It reported consolidated first-quarter earnings of $717,730 or 6 cents per share and a working capital of $12.9 million at the end of the period. Blackdome did not achieve commercial production until May 1986 and MFC’s Stibnite heap leach mine in Idaho produced its first dore bullion two months after. MFC President Douglas Nicholson, said that sprinkling of ore heaps at Stibnite will begin this May because of good weather conditions. Because of this, he expects a 10% increase in gold production over last year’s output which totalled some 30,075 oz. MFC has a 50% interest in the project.

During the latest quarter the Blackdome mine lived up to its reputation as being one of the highest, if not the highest, grade gold mines in the country. (In terms of gold equivalent, it probably is). Head grades averaged 0.86 oz gold and 2.4 oz silver and 13,286 oz gold was produced from 16,661 tons of feed. The mill rate averaged approximately 185 tons per day but it has achieved 200 metric tons on occasion. Recoveries averaged 92.7% for the quarter but they are now over 93%.

A second portal has been collared in ore on the No 1 vein north at the 2050 elevation. Sampling of the exposed vein on surface has indicated a grade of 0.327 oz gold per ton and 1.28 oz silver over a width of 6.5 ft and a length of 197 ft, noted Mr Ashenhurst. The lower grade surface ore will be mined by open pit which of course is cheaper than underground methods. But the grade won’t be as high.

The portal at the 1870 m elevation, which will be the lowest level in the mine, has been established. It will go in about 1,800 ft and take at least three months to complete, said William Price, general manager. A crosscut will begin in the second quarter to intersect the No 1 vein south of the present mine workings.

There are nine stopes in the mine at present, one a crown pillar that is being extracted from surface. Not all the stopes are working continuously, however. The majority of the feed has been coming from underground stopes on the No 1 and No 2 veins and from a small surface stockpile.

A 20,000 ft diamond drilling program is scheduled to begin next quarter, Mr Ashenhurst noted. Exploration has been expanded to include limited trenching and drilling on the Dawson and Giant veins and drifting and crosscutting has been increased by some 1,600 ft, he added.