INVESTMENT COMMENTARY — Sleeping Giant results cause analysts to wake up to Aurizon Mines’ potential

Gold producer Aurizon Mines (TSE) has cropped up on the buy lists of several mining analysts who follow junior resource stocks.

The company’s share price has improved from earlier this year, when it was trading at 80 cents, to the current price (at presstime) of around $1.05, yet the issue continues to be recommended by Dorothy Atkinson, among others.

The Pacific International Securities analyst projects 1995 earnings at 19 cents per share, up from the 17 cents reported in 1994. She points out that Aurizon has a low multiple, relative to its peers, which is the result of what is perceived as a limited ore reserve.

“We believe the success of the 1994 exploration program, at both the Sleeping Giant mine and the Beaufor project, has not been recognized,” she states.

Situated in northwestern Quebec, the Sleeping Giant is jointly owned with Cambior (TSE). In 1994, the underground operation yielded 135,000 tons grading 0.33 oz. gold per ton, from which were extracted 43,003 oz. at a cash cost of US$198 per oz.

Proven and probable minable reserves at the end of the year totalled 650,000 tons grading 0.3 oz. gold, up from the Dec. 31, 1993, estimate of 394,000 tons grading 0.24 oz.

Reserves are sufficient for a further four years, but the joint venture expects its current shaft-sinking effort will add to the total.

This year, the Giant is expected to produce 40,000 oz. at a cash cost of US$210 per oz. The estimate is based on an ore production figure of 165,000 tons grading 0.25 oz. gold.

Aurizon’s other major project, the Beaufor, which is held jointly with Louvem Mines (TSE), is in an advanced stage of development. Situated near Val d’Or, Que., the project has geologic reserves (in all categories) estimated at 977,000 tons grading 0.23 oz. gold.

Operations last year included preproduction development and test mining. Custom milling was carried out at Richmont Mines’ nearby Camflo operation, which produced 9,650 oz. gold from 34,600 tons of Beaufor ore grading 0.28 oz.

The joint venture expects to spend about $9 million on further development work this year, including a feasibility study. Plans call for the development and feasibility work to be self-funded through the production of an estimated 18,000 oz. gold, and a production decision could potentially be made in the fourth quarter.

Among Aurizon’s other assets is La Reyna, which lies east of Mazatlan, Mexico. Cambior is earning a half interest in the project by providing US$15 million in exploration and development funding over a 5-year period.

A minimum of US$1 million will be spent this year to drill-test the Cerro Pelon and Cerro Tunel targets, outlined by Asarco in the 1970s. The drill-indicated resource in the two adjacent zones is estimated at 36 million tons grading 0.48% copper and 0.038 oz. gold.

As of Dec. 31, 1995, Aurizon had 35.2 million shares outstanding, $7 million in working capital and no long-term debt.