Declining gold prices affect Breakwater earnings

The company’s earnings declined to $890,000 or 3 cents per share for the quarter ended March 31, from $1.97 million or 7 cents per share for the same period in 1988.

Breakwater’s key asset is a 49% stake in the Cannon gold-silver mine in Washington State where 128,721 tons of ore were milled at an average grade of 0.309 oz gold per ton to produce 36,414 oz of gold and 83,817 oz of silver.

In the 1988 first quarter, the mine produced 37,285 oz of gold and 56,972 oz of silver from 125,120 tons of ore at an average grade of 0.325 oz gold.

Gold recoveries averaged 91.47% this year compared to 92.16% in 1988, while the total operating cash cost per oz of gold shipped (including royalties and smelting costs) was $266(US) compared to $264 in the 1988 first quarter.

Although a forward selling program did provide protection against low spot prices, the average price received per ounce of gold shipped in the first quarter declined to $405 per oz from $465 in the same period of 1988.

Breakwater and partner Asamera Minerals Inc. (TSE) are continuing a regional exploration effort to find new reserves near the Cannon mine this year.

On its own, Breakwater acquired an option to earn up to a 70% interest in the Estrades polymetallic project in northwestern Quebec. To date, 24 h oles (14,200 ft) of a delineation drilling program and a 2,067-ft shaft pilot drill hole have been completed.

Engineering studies scheduled for completion in June will form the data base for the final feasibility study that’s to be finished in October. An access road to the property has already been constructed.

As operator, Breakwater also plans to carry out 33,000 ft of exploration drilling along trend and to depth at Estrades to try to increase reserves. Mineable reserves at Estrades were previously estimated at 1.25 million tons grading 0.15 oz gold per ton, 4.15 oz silver, 0.92% copper and 8.93% zinc.

In other news, the company recently discovered a new gold zone on its 100%-owned O’Brien property near Cadillac, Que. The new 36E zone is estimated to have a mineral inventory of 275,290 tons grading 0.24 oz gold.

The O’Brien property is a former producer that also has reserves within the area of the old mine workings. A 300-ton-per-day mill built in the 1970s still remains on the property.

Breakwater is currently compiling a mineral inventory for its 51%-owned East Amphi property in Malartic, Que. An underground sampling, mapping and drilling program was completed recently on the property which is conveniently located within trucking distance of the O’Brien mill.

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