Cannon Mine Boosts Breakwater’s Earnings

Forward sales and higher grades of ore processed at the Cannon mine contributed to a substantial increase in net earnings for Breakwater Resources (TSE) for the nine months ended Sept 30. The company has a 49% interest in the gold-silver mine in Washington State.

Net earnings of $5,556,000 or 20 a share were reported for the period, compared to $2,842,000 or 13 a share in the same period of 1987. Shareholders of record Dec 15, 1988, will be paid a dividend of 5 per share at year-end; a nice bonus particularly for Corona Corp. (TSE), which now has a 12.9% equity interest in the company.

During the first nine months of the year, the Cannon mine processed 378,489 tons of ore at an average grade of 0.329 oz, with gold recovery averaging 92.16% to produce 118,195 oz. For the same period in 1987, 348,862 tons at an average grade of 0.311 oz were processed with gold recovery averaging 91.26% to produce 107,167 oz. August was a record month as 19,140 oz of gold were produced from ore with an average grade of 0.469 oz gold per ton at a recovery of 93.63%.

Breakwater is also continuing exploration programs on a number of properties acquired through last year’s takeover of Novamin Resources. Among those is the East Amphi property west of Malartic, Que., which will be the focus of an underground exploration program. The existing underground workings are now being dewatered and rehabilitated in preparation for geological mapping, bulk sampling and diamond drilling.

The company is also continuing surface exploration at the Norman Lake, Cadieux and O’Brien-Kewagama properties in Quebec and Ontario to confirm and extend the mineral inventory outlined from surface drill programs.

Breakwater also has a 19.9% stake in Noramco Mining Corp. (TSE) and more recently purchased 9.6% of Golden Group Explorations (VSE) and 9.3% of the shares of Golden Hope Resources (VSE). Breakwater President Brian Pewsey said the shares were acquired for investment purposes and additional shares might be purchased from time to time.

The Golden Group/Golden Hope joint venture owns the Estrades project in the Casa Berardi camp of Quebec, a polymetallic project which has geological reserves of 2.9 million tons averaging 0.11 oz gold, 3.73 oz silver, 0.93% copper and 9.16% zinc. Mineable reserves are reported as 1,362,745 tons averaging 0.15 oz gold, 4.15 oz silver, 0.76% copper and 9.58% zinc. The majority of the reserves are reported to be above the 300-m level in three zones.

According to Pewsey, Breakwater intends to enter into negotiations with Teck Corporation (which now has a back-in agreement to finance the project to production) and Golden Hope and Golden Group in order to acquire an additional interest in the property by financing ongoing exploration and development programs.

“We will be negotiating to take the Estrades project to a feasibility study,” Pewsey said.

A number of management changes have taken place in recent months. Peter Brown, a director of Breakwater and president of Canarim Investments, was appointed chairman after Robert Hunter stepped down to devote more time to other commitments. Hunter remains a director of the company. Bruce McDonald has resigned from the board while Ned Goodman, chairman of Corona Corp., was appointed a director.