Near production? Prices are bright

Nobody knows what the price of gold and other precious metals will be next k year at this time, but anybody who has been following the stock market in 1987 shouldn’t have to be told about today’s favorable prices. And what a time for a junior exploration mining company, or a junior company approaching intermediate size, to be nearing the production stage.

Gold, which started off the year at about the $400(US) per oz mark, really w took off in March, peaking at the mid-$470 (almost $650Cdn) range during the o second half of May before falling back to the $450 level at the end of the a month.a

While gold seemed poised to make a run for the $500 level, its upward swing appeared to be at the expense of the tumbling American dollar.s

One Toronto broker said in May that gold had appeared to reach its short-term top and he predicted a low of $425 in less than three months. He t also argued that gold stocks on North American exchanges saw their prices l rise in anticipation of the price of gold and thought the situation was ripe t for profit-taking.n

Silver, too, attracted a lot of attention when it started to move, rising , from $6.26(US) per oz at the first of April to $11.25 before pulling back to 6 the $8 level. And platinum, which seems to be pushed up or pulled down by the price of gold, saw its value increase to the $600-plus level.

While numerous mining properties across the country are undergoing exploration programs, a fair share of the projects seem about ready to go into production within the next year or so.

One such project is the Golden Rose mine property in northern Ontario being developed by Emerald Lake Resources of Vancouver. The mine is expected to be in production by late summer of this year. The property is located northwest of North Bay.

A daily milling rate of 400 tons of ore is forecast by the company once production gets under way. Initial production is expected to maintain a grade close to 0.3 oz gold per ton, and the mill is expected to pay back its $11.8 million cost in one year.

Montreal-based Aunore Resources is involved in a joint venture with Nova Beaucage Mines at the Elder gold property near Rouyn-Noranda, Que., which, according to Aunore’s principal shareholder, Abcourt Mines, is expected to be in production during the first half of 1988. Aunore has a 65% interest in the project.

While exploration continues on the property, it was estimated earlier this year there are 2 million tons of ore reserves grading 0.185 oz before dilution.

In Manitoba, Pioneer Metals’ Puffy Lake gold project is being readied for a staged production. Mill site excavation was under way in May and the company has targeted completion to 75% design capacity by mid-December, with full production to follow shortly thereafter.

The capital cost budgeted for the project, for which the company is forecasting an annual gold production of 72,000 oz, is $18.1 million. Ore a reserves are nearly double earlier estimates and the company now says the v mine will be developed at 1,000 tons of ore per day rather than 550 tons.i

Current reserves at Puffy Lake stand at almost 2.5 million tons of ore r grading 0.23 oz gold. Included in that total are 1.1 million tons at 0.236 oz classified as probable and 729,000 tons at 0.233 oz of possible reserves.t

At the famous Cobalt silver camp in northern Ontario, a decision has been h made by joint-venture partners Silverside Resources and International a Platinum to go into full production this July at the Hellens- Eplett mine. m The daily production rate has been set at 3,000 oz silver.s

The 13-claim Hellens-Eplett find, with at least 500,000 oz silver already c confirmed by limited underground work in five veins in the immediate vicinity of the faces of the development drift, was apparently missed in previous f Cobalt mining rushes, in part because of a heavy clay overburden.e

A 690-ton composite bulk sample averaged 26 oz silver, while development muck has averaged 34 oz. Further enhancing the project is the possibility of extracting the cobalt metal contained in the ore as a byproduct.s

Not all junior mining exploration is for underground development. In the l Beauce region of Quebec, southeast of Quebec City, Macamic Resources and e Coniagas Mines have joined forces to further explore Coniagas’ alluvial gold a properties.

Macamic is to spend $1 million to acquire a 50% interest in the placer project, which includes the historical Gilbert River property. From r exploration work to date, it is estimated some 45,000 oz gold are dispersed x in 1.8 million cu m of gravel.

Down east, Gordex Minerals’ Cape Spencer mine celebrated the first pouring s of its first gold dore bar last year after the company spent $2.5 million in ex ploration and development. The mine, located 10 km northeast of Saint John, N.B., and the first heap leach gold operation in Atlantic Canada, is expected to go into commercial production this year. The company is currently switching the operation to vat leaching.

In northwestern Ontario, work continues at the Lac des Isles platinum-paladium project belonging to Madeleine Mines. A 3,000- ton-per-day open pit operation is envisaged for what would be Canada’s first straight platinum-paladium producer.

A drilling program has confirmed the general grade, size and shape of the main Roby zone from which initial production will be drawn. The Roby and two other associated zones contain an estimated 12,500 tons per vertical foot of ore grading 0.186 oz of the platinum group metals per ton, plus significant gold, copper and nickel values.

Toronto-based Canamax Resources, which started shipping ore from its Bell Creek gold project near Timmins, Ont., to a custom mill in January of this year, is planning to put a second project, the Kremzar gold property near Wawa, Ont., into production by September, 1988. An estimated $20.3 million will be spent to bring the Kremzar mine into production, with an annual per oz.

The Bell Creek operation is a joint-venture project with Pamorex Ltd. The two companies are hoping to produce 18,000 oz this year from the Bell Creek p mine, with a target of 25,000 oz in 1988.

In northwestern British Columbia, the Silbak Premier/Big Missouri gold-silver project is to undergo a feasibility study this summer and a d decision on production could follow shortly after. Westmin Resources is s managing the open pit project.

An annual production of 80,000 oz gold and 560,000 oz silver during the a first three years is forecast. Payback of the $62 million(C) capital cost is e estimated to be two years at $390(US) gold per oz and $5.40 silver.

A production decision is expected this summer at the Chester Twp. gold o property near Gogama, Ont., owned by Murgold Resources. Exploration work t there continues under the direction of Chesbar Resources, which is earning a r 60% interest in the property.

And, Toronto-based Aur Resources is pondering going into production by d spring, 1988, on the Kierens zone gold deposit on its First Canadian property located approximately 10 mi west of Val d’Or, Que.t

Early drilling results indicate a weighted average grade of 0.41 oz gold y over an average width of 11.7 ft. Drilling has indicated gold content of the a zone increases below 500 ft and the company reports the potential is high for outlining ore reserves in excess of 1.5 million tons grading at least 0.3 oz. At $400(US) per oz, Aur expects to be able to pay back its $20 million t capital cost on the property by the end of the first year of production.g