1991 probably peak year for Golden Giant gold mine

Gold production at the low-cost Golden Giant mine of Hemlo Gold Mines (TSE) in northern Ontario probably peaked in 1991 at 443,400 oz., according to the Noranda (TSE) controlled company.

Hemlo President Ian Bayer said at the annual meeting in Toronto that the average reserve grade (the mine has at least 14 years of life remaining) is forecast to begin a gradual decline this year.

Projected mine output for 1992 is 435,000 oz. and for 1993, 375,000 oz. Beginning in 1994, annual output is expected to level off at 360,000 oz. However, Bayer pointed out that in 1991, Golden Giant output was “6% higher than predicted at the beginning of the year.”

One of three mines operating in the Hemlo camp, Golden Giant had average operating costs in 1991 of US$126 per oz., up slightly from 1990. Less ore was processed through the mill in 1991 but the ore grade was higher and the recoveries slightly better at 96.7%, compared with 1990.

Hemlo Gold has a 55% interest in the Silidor gold mine at Rouyn-Noranda, Que., which contributed 25,900 oz. to the company’s total 1991 production of 469,300 oz. Hemlo’s share of gold from Silidor in 1992 is expected to rise to 37,500 oz.

Bayer said 1991 earnings, at $13.7 million (down from $23.6 million the previous year), were affected by the sale or writedown of certain long-term investments worth a combined $28.2 million.

During the first quarter of 1992, Hemlo recorded production of 121,200 oz., including 111,200 oz. from the Golden Giant mine.

According to Michael Proctor, vice-president of finance, Hemlo’s total hedging position as of April 22 stood at 182,600 oz. About two-thirds of that total is covered by prices close to US$460 per oz.

The company spent about $15 million on exploration work in 1991 and expects to spend the same amount this year. Its two advanced projects are Holloway in northeastern Ontario and New World in Montana.

Ian Atkinson, vice-president of exploration, said plans are in the works for a $12-million underground exploration and ore reserve validation program at the Holloway project. The work will include sinking an exploration shaft to 1,400 ft., 3,600 ft. of drifting and 82,000 ft. of underground drilling. At New World, an underground drilling program to validate ore reserves is planned for this year. Also, the permitting process (expected to take another two years) will continue.

Other active exploration areas this year include the Yukon at the Brewery Creek project and in Nevada, Atkinson said.

Retiring from Hemlo Gold’s board of directors were Vancouver-based promoters Richard Hughes and Frank Lang, who were involved in the early financing of the project which grew into the Golden Giant mine. Hughes and Lang were original members of the board of Hemlo Gold, which was incorporated in 1987.