Problems at Nickel Plate continue for Corona Corp.

Corona, one of North America’s major gold producers with interests in 10 mines, turned out about 300,100 oz gold in 1988 (or about 490,600 oz if production from the Williams mine, ownership of which is in dispute, is added to the total). For 1989, the company is projecting output of 372,000 oz (617,000 oz including Williams production), at a direct operating cost of about $215(US).

President Peter Steen told shareholders at the recent annual meeting a lower grade and higher strip ratio have contributed to a relatively high operating cost at Nickel Plate, in the $370(US)-per-oz range.

“The geologists have made a concerted effort to find new and richer ore in the area around Nickel Plate. They have found some ore in the Canty property but not enough so far,” Steen said.

“We have been searching for an underground source of high grade ore to sweeten the mill feed but again so far we have not found sufficient to justify a sustained underground mine effort. But the search continues.” David Bell mine

One of Corona’s major assets is a 50% interest in the David Bell gold mine at Hemlo, where reserves currently stand at 8.15 million tons grading 0.37 oz. Steen said 1989 first-quarter production there totalled more than 61,000 oz at a cost of $110 per oz.

Exploration expenditures during 1988 totalled $29 million. This year, Steen said, Corona has budgeted $20 million. Among the projects Corona has an interest in (recently increased to 25%) is the Musselwhite gold project in northern Ontario, for which a production decision is expected by the end of the year.

Positions held by Corona in companies such as Prime Resources, Breakwater Resources (TSE), Golden North Resource (TSE), Newhawk Gold Mines (TSE) and Dolphin Explorations (TSE) provide future growth potential, Steen said. Dolphin, in which Corona has a 45% interest, is nearing the feasibility stage at its Cape Ray project in Newfoundland, he said.

Corona’s long-term debt stands at $280 million, $173 million of which “is gold related and can be repaid out of production from the company’s mines at an interest rate which averages about 2.5%,” Steen said.

An unsuccessful attempt by Corona earlier this year to take over related companies Dickenson Mines (TSE) and Kam-Kotia Mines (TSE) cost the company about $1 million, he added.

Corona, created last year through the amalgamation of five companies, recently announced a plan to restructure its oil and gas, and industrial minerals assets. (See N.M., May 8/89.)

The plan calls for Corona to acquire the majority shareholding in oil and gas producer Avalon Corp. (NYSE). Corona would then sell its interests in oil and gas producer Poco Petroleums, the Suzorite mica operation in Quebec and the Fort Cady boric acid project in California, to Avalon.

Regarding its ownership dispute with LAC Minerals (TSE) over the Williams mine at Hemlo, Corona and LAC are awaiting a ruling by the Supreme Court of Canada, which heard the case last October. Corona was awarded the mine in 1986 by the Supreme Court of Ontario, a decision LAC appealed.

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