Breakwater earnings increase

Increased production, an improved gold grade and lower operating costs at the Cannon Mine in Washington State all joined forces to make a better bottom line for Breakwater Resources (TSE) during the first half of 1988. The company reported earnings of $3,839,000 or 14 cents per share for the 6-month period, compared to $1,645,000 or 8 cents per share in the same period of 1987. And it also paid its second semi-annual dividend of 5 cents per share.

Obviously keeping a close eye on Breakwater’s performance of late is Corona Corporation (TSE), which last week announced it had acquired a 9.2% equity interest in the company in the open market for “investment purposes.” Corona believes the purchase represents the largest single holding in the company and said its chairman, Ned Goodman, would be nominated to Breakwater’s board to join two other Corona directors already on side.

Breakwater hasn’t just been counting up its share of revenue from the Cannon mine operated by partner and 51%-owner, Asamera Inc. Earlier this year the company amalgamated with Novamin Inc. which it had acquired control of the previous year. That acquisition gave it a portfolio of projects in Eastern Canada and a stronger operating team. In June of this year the company continued on the acquisition trail, this time picking up 19.9% of Noramco Mining Corporation (TSE) for $6,025,780 in cash and $14,774,220 by way of just over 2.6 million Breakwater shares. That company’s leading projects are also located in Eastern Canada.

Now poised to make some real noise back east, the Vancouver- based company is busy prioritizing projects and planning work programs; part of an over-all effort to give gold production a boost well over the 100,000 oz range by 1989.

According to Brian Pewsey, president of Breakwater and now president and CEO of Noramco Mining, the most prospective project in the former Novamin portfolio at the moment is the East Amphi project found within the Darius Joint Venture located near Malartic, Que. Breakwater has a 51% interest in the project and is operator under Novamin’s deal with St. Joe Canada (now Bond Gold). Exploration on the Darius Joint Venture has been separated into two special projects; the East Amphi and the Tonawanda.

Significant gold intersections were recently found in the East Amphi project which the company said “greatly expanded” the potential of the property. Although reserve figures are not yet available, gold values ranged from 0.155 to 2.08 oz gold per ton over core lengths of at least 5 ft. Drilling to further delineate the zones of gold mineralization is continuing. Pewsey said once the current program is complete, the possibility of dewatering the existing shaft and carrying out an underground exploration program will be considered. A budget for this has already been presented to the joint venture partner, and Breakwater hopes to start preparing the surface facilities before the snow falls.

An in-house engineering study was recently completed on the Tonawanda property and Breakwater has decided to begin a surface diamond drilling program later this year. The program will evaluate the open pit potential of the Highway zone area of mineralization which Pewsey said has been assigned tentative tonnage of 500,000 tons at a grade averaging 0.15 oz.

“We are trying to verify stripping ratios now which will be the telling factor at that grade,” he told The Northern Miner.

Now at the helm of Noramco Mining, Pewsey said the operating team has prioritized the large number of projects into one producer — the Golden Rose mine — and three development projects; the Estrades, the Pickle Crow and the Zahavy. Three “top rate” exploration projects have been selected; the Central Patricia, the Crow Bay and the Bonanza. These are followed up by three “secondary exploration projects” which are the Lac Storm, Opikeigen and the Keezhik.

“We hope the work programs on these properties, which should be completed by the end of next March, will be able to advance the projects into the next stage,” Pewsey said.

The company is also working to resolve the situation at the Golden Rose Mine which has been having difficulty in establishing sufficient working faces to be able to allow it to run at 450 tons per day.

“We are now actively resolving that scenario by developing a decline to a higher grade zone within the ore deposit to increase the number of working faces to 10. This will allow us to produce at 450 tons per day,” Pewsey said, noting the work should be completed in December. Breakwater has not yet made a decision to acquire any further shares of Noramco, but Pewsey did indicate he is “very encouraged” by the company’s assessment of the deal so far.

Meanwhile, exploration work over the past year has continued to add new reserves to the Cannon Mine operation. Operating since 1986, the mine produced 136,913 oz gold and 184,660 oz silver during 1987. During the first half of 1988, the mine processed 262,999 tons of ore to produce 75,544 oz of gold at an average grade of 0.313 oz.