Newcoast to receive revenue from Gibraltar copper mine

The phase-III expansion of the East pit at the Gibraltar mine near McLeese Lake, B.C., will begin to generate revenue later this year for Newcoast Silver Mines (VSE).

Newcoast owns a 30% net profits interest in the Jan/Summit claim group which extends over a portion of the pit expansion.

Gibraltar Mines (TSE), which owns and operates the mine, purchased Jan/Summit claim group from Newcoast in 1971 for about $60,000 with the intention of using the ground as a waste dump site.

As Marianne Kyme, a director of Newcoast, explains, the company did not realize it still had an underlying interest in the property until Placer Dome (TSE), Gibraltar’s major shareholder, contacted Newcoast in late 1990 to inform it that mining would take place on the Jan/Summit ground. Gibraltar expects to mine 540,000 tons grading an average of 0.36% copper and 0.007% molybdenum at a strip ratio of 1.9-to-1 over a 6-month period starting in October.

The 30% interest is on gross profits after the deduction of direct operating costs, applicable mining taxes and reasonable general and administrative expenses.

Gibraltar does not release detailed operating cost figures for the mine although Hugh Leggatt, a spokesman for Placer, did say the average cash cost of production including smelting charges at the mine in 1990 was 85 US cents per lb. Concentrate copper costs would be somewhat higher, however, since the figure includes about 8.2 million lb. of cheaper cathode copper production. In addition to the tonnage in the expansion pit, Gibraltar has identified a second mineralized zone on the claim group.

Gibraltar recently completed a 19,000-ft. drilling program on the central part of the Jan/Summit claim identifying a northwest trending deposit measuring about 1,600×400 ft. The deposit remains open to the south and east. Although the grade of the material appears to be higher than the current average being mined, the mineralization is deeper.

During 1990 Gibraltar mined 13.5 million tons of ore grading an average of 0.30% copper at a strip ratio of about 1.33-to-1.

Gibraltar is evaluating the drilling data to determine if the deposit can be mined economically.

Selected drilling results from the program are as follows:

Hole Interval Width Copper

(ft.) (ft.) (%)

9112 340-750 410 0.52

9113 280-700 420 0.51

9115 620-700 80 1.29

9117 530-670 140 0.78

9119 210-270 60 0.45

550-740 190 0.62

9120 180-230 50 0.25

290-640 350 0.36

9121 370-680 310 0.39

9129 230-720 490 0.38

9130 320-620 300 0.44

9131 270-610 340 0.39

9133 270-710 440 0.75