Coxheath has proposal to save Tangier mine

A payment proposal offered to creditors of the cash-strapped Coxheath Gold Holdings (TSE) may allow the company to recommence production at its Tangier gold mine in Nova Scotia. The terms of the proposal include the creation of a trust fund into which Coxheath will deposit all revenues, including sale of gold, until all creditors have been paid in full. Participants in the fund will also have the right to convert their debt into common shares of Coxheath.

President Michael Riddell believes the creditors will approve the proposal at a meeting March 20. If the proposal is accepted, Coxheath will be able to complete a financing agreement of $2.5 million for the Tangier mine.

The funds will be used to modify the Tangier plant, continue development of the mine, add high grade reserves and commence production operations.

Since Coxheath acquired the mine in April, 1986, more than $20 million has been spent on development. In March, 1989, low mill recoveries forced the company to lay off more than half of its employees and significantly reduce its mining operations.

In May, 1989, when production at the mine was suspended because of a lack of working capital, mining operations had opened a high- grade zone (the “B” zone) in one of the three veins being mined. A 2,000-ton bulk sample taken from this zone graded 0.58 oz. per ton across an average width of 4.4 ft, with a mill recovery of 92%.

A closer examination of the geological structures controlling the B zone indicates similar zones may occur in other parallel veins on the property. Drilling has identified close to 50 of these potentially auriferous veins across a 1,000-ft. width. If the payment proposal is accepted, initial development will focus on the B zone and its projected extensions.

From results of the three veins tested to date, Coxheath has calculated proven and probable reserves of 143,000 tons grading 0.30 oz. gold. Substantial inferred reserves have also been calculated to depth, along strike and in the additional parallel veins discovered on the property.

Coxheath projects an overall production cost of US$292 per oz., based on the present grade. In the higher grade “B” zone these costs may be reduced to as low as US$155 per oz.