A BREAKNECK PACE Hope Brook

In what is easily one of the mining success stories of 1987, Hope Brook Gold brought into production its Newfoundland mine — the only operating gold mine in the province. What’s more, the operation is believed to be the sixth largest gold producer in Canada and the 14th largest in North America. However, bringing this open pit/underground operation on stream hasn’t exactly been a piece of cake. Situated about 490 ft above sea level on the remote southwestern coast, the mine site is accessible only by air or water. Strong Atlantic gales are a frequent problem, mainly because there are no trees to offer protection, only tundra. Because of a particularly severe winter last year — the worst in Newfoundland in 65 years, piling up huge snowdrifts and causing delays — capital costs of the project are now estimated to be $162 million. That’s $11 million higher than the company expected. Operating costs, too, are greater than the prospectus projected — about 12% higher. And the estimated cost of producing gold from the underground portion of the mine has been bumped up to $222 per oz.

The lesson to be learned from all this might be: don’t give too much detail in your prospectus because you’ll have to answer for it later. On the other hand, Hope Brook has a great deal to be proud of. The first cyanide hit the heap leach pad at the open-pit mine on schedule in August of this year (the underground operation is not expected to enter full production until the fall of 1988). Also, engineering work on the underground portion and the 3,000-ton milling complex is nearly complete and construction of the surface facilities is more than halfway done. As of late last year, the company had poured 5,500 oz and had sold 4,400 oz for revenues of $2.7 million. That works out to an average selling price of $464(us) per oz.

President Patrick MacCulloch says the mine will have produced 18,600 oz in 1987 — 9,700 oz short of what was projected in the prospectus. But he adds that the shortfall will be made up in 1988. Hope Brook Notebook Location: ……. southwestern Newfoundland, 50 miles east of Port-Aux-Basques Major owners: ……. Hope Brook Gold (BP Canada, 75.7%; public shareholders, 24.3%) Commodity: ……. gold Discovery date: ……. August, 1984 Production decision: ……. August, 1984 Start-up: ……. heap leaching, August, 1987; mill, October, 1988 Capital costs: ……. $162 million Operting costs: ……. not available Reserves: ……. 11.6 million tons at 0.117 oz gold per ton Means of access: ……. ramp, 21 ft wide and 15 ft high Extent of vertical workings: ……. 1,550 ft Mining method: ……. open pit and sub-level open-stoping with post filling Mining equipment: ……. trackless Production rate: ……. open pit, 1,760 tons per day; underground mine, 3,300 tons per day Milling plans: ……. on-site Major contractors: ……. Bechtel Canada Engineers and numerous subcontractors Status: ……. principally pre-production