Costs too high for Giant Yellowknife

Giant, with mining operations in the Timmins area of northern Ontario and at Yellowknife, N.W.T., recorded a net loss of $30.4 million (including a $29.6 million write- down) compared to a net profit of $12.3 million the year before. Gold output in 1988 tumbled to 187,354 oz, compared with 214,779 oz in 1987.

The company reports a unit cost per oz in 1988, for its conventional mining operations, of $595(C), compared with $465 for 1987. A reduced grade and lower gold production are blamed for the increase in cost. The unit cost for the Yellowknife tailings project last year averaged $318 per oz.

During the first quarter of 1989, the company recorded a net loss of $183,000 compared with a loss of $2.3 million for the same period in 1988. Production totalled 47,996 oz during the quarter, compared with 41,270 oz last year. New operating strategy

Fleming said the company’s disappointing performance last year necessitated a re-assessment of the ore reserve potential and development of a new operating strategy to ensure the company’s future.

“The new operating plan includes manpower reductions, curtailed mining activities in certain areas and a variety of other cost- cutting measures,” he said, adding that the company’s commitment to exploration will continue.

Mining activities are to be significantly curtailed in certain locations around Timmins; activities at the Schumacher mine have ceased entirely.

The company has implemented stringent grade control procedures for its Timmins operations. At the end of March, 146 employees were laid off. Also, the Schumacher mill has been reduced to a crushing and grinding facility.

At Yellowknife, the company says an improved grade is the result of a higher-than-anticipated grade in ore from the B-1 open pit and the discontinuation of mining of lower grade blocks underground at the Giant mine.

The Yellowknife tailings recovery project produced 6,780 oz gold during its first season (six months) of operation in 1988, which was less than planned. Certain changes have been made to the operation, Fleming said, to improve production. First-quarter output from the project totalled 3,667 oz. Exploration programs

The company continues to explore its extensive land holdings in the Timmins area, and has a major underground and surface- drilling program under way at the Giant mine.

A forward selling program has the company covered for the next two years, said Fleming, who earlier this year replaced D. J. Emery as president. Almost 100% of the company’s output is sold forward for a year, and about 75% for two years, he said. Gold revenue per oz for the first-quarter amounted to $573.

Elected to the board of directors of Giant Yellowknife, which will be changing its year-end to June 30 beginning this year, were Fleming, C. H. Frame, L. C. Kilburn, J. D. Krane, J. C. Lavigne, E. F. Merringer, Robert Needham (chairman) and T. T. O’Neil.

Giant Yellowknife is 41.8% owned by Pamour Inc. (TSE) and 16.7% by Giant Resources of Australia. Giant Resources in turn owns about 67.5% of Pamour, which has become a holding company.

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