Eagle River lifts River Gold off ground

With higher-grade development ore coming from the no. 6 zone at the Eagle River mine, 50 km west of Wawa, Ont., River Gold Mines (RIV-T) managed to climb back into the black during the second quarter.

For the three months ended June 30, the company posted net earnings of $739,000 (or 2 per share) on revenue of $10.6 million, compared with a year-ago loss of $1.6 million (5 per share) on $8 million. Cash flow from operations increased to $2.6 million from $398,000. For the first half of 2001, the net loss amounted to $1.2 million (4 per share) on $18.4 million, compared with a year-earlier loss of $2.2 million (7 per share) on revenue of $17 million.

Second-quarter gold production totalled 25,400 oz. at a cash cost of US$185 per oz. During the first half of 2001, the company churned out 44,900 oz. at US$215 per oz. River realized an average gold price of US$268 per oz. during the recent quarter and US$266 in the 6-month period.

Eagle River’s new production shaft has advanced to the 450-metre level and should reach the targeted depth of 505 metres by year-end. Slated for completion in February 2002, the shaft is expected to generate significant savings over the current ramp system.

Meanwhile, development and in-fill drilling are proving up two parallel structures at the high-grade no. 6 zone. Drilling at 12.5-metre centres, at a depth of 400 metres, is indicating a strike length of 240 metres, with an average width of 2.35 metres, and an average cut grade of 21.67 grams in the southernmost of the two structures.

On the financial front, River Gold is attempting to raise $5.4 million by issuing just over 31 million rights to its shareholders. Proceeds are earmarked for debt reduction, working capital and ongoing shaft-sinking.

At last report, reserves at the Eagle River mine stood at 1.2 million tonnes grading 10.14 grams gold per tonne. These reserves extend to 400 metres below surface, except in the shaft area, where they deepen to 460 metres. The deposit remains open at depth.

Eagle River had 117,000 tonnes of ore in stockpile at the end of June. Production forecasts for 2001 remain at 87,000 oz.; preliminary estimates for 2002 production is 75,000 oz.

In early July, River closed the Edwards mine because of low gold prices and dwindling reserves, though plans call for deep exploration at the property when gold prices improve.

Meanwhile, permitting continues apace at the wholly owned Mishi project, 2 km west of the River Gold mill. The deposit has a resource of about 1.4 million tonnes grading 4.2 grams gold per tonne, including an open-pit resource of 772,000 tonnes grading 3.3 grams to a depth of 56 metres. The company’s in-house evaluation has outlined an open-pit resource of 450,000 tonnes grading 3.1 grams gold to a depth of 35 metres, with a stripping ratio of 3-to-1.