Located near Hemlo, Ont., the mine produced 336,700 oz last year at a cost of $115 (US) per oz — one of the lowest operating costs in Canada. (The Page-Williams mine, also at Hemlo, produced 379,000 oz in 1988.)
A big plus of the operation is that the grade of ore produced continues to exceed ore reserve estimates by 10%, the company says. As a result, year-end ore reserves of 19.9 million tons were recalulated to average 0.32 oz gold per ton.
The low costs at the operation can be attributed to more than just the high grade and excellent mining widths. The Golden Giant also boasts a highly computerized system which controls conveying, skipping and pumping operations. Also, the main tramming and crushing levels will be completed by the second quarter of this year.
For the year, the company earned $44 million or 50 cents per share, compared to 60 cents in 1987. The company’s balance sheet includes working capital of $1 9.5 million after the payment of a $17.5-million dividend, $76.4 million in capital expenditures and $28.3 million in gold loan repayments.
With such a strong cash generator as the Golden Giant, Hemlo plans to use its cash flow to build value via acquisition and exploration. As a result, the company’s exploration bill in 1988 came to $18.7 million; money which was spent on 97 projects in the U.S. and Canada. This year, the company plans to spend $30 million.
Another $31.1 million was spent on acquiring major share positions in junior emerging gold producers. These investments included $10 million in Viceroy Resource Corp. (TSE) and $6.5 million in Windarra Minerals (TSE). Another $9 million was spent on the shares of Central Crude (VSE).
The company’s two main exploration projects are the Eagle River project in Ontario and the Tundra project in the Northwest Territories. At Tundra, the company spent $2.8 million as its share of expenditures on an underground program. The Tundra deposit represents Canada’s largest undeveloped gold resource, hosting geological reserves of 32.6 million tons grading 0.18 oz to a depth of 3,200 ft. Hemlo has a 25.5% interest. Other partners include Noranda Inc. (25.5%) and TOTAL Energold (49%).
In the Mishibishu area of Ontario, Hemlo has a 60% interest in the Eagle River property which hosts reserves of 1.77 million tons grading 0.24 oz.
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