Toronto-based Bachelor Lake Gold Mines (TSE) has agreed to sell a 60% stake in its Desmaraisville, Que., gold mine and mill to Hecla Mining Co. of Canada. While the deal is subject to due diligence and approval by the boards of both companies, Hecla can earn the interest by spending $11 million on underground exploration and development of the mothballed mine. Bachelor Lake is a member of the Coniagas Mines (TSE) group.
The 500-ton-per-day mine, which has produced 121,160 oz. gold since 1982, was placed on care and maintenance last August when metal prices fell below the operation’s US$390 per oz. break-even point.
Excessive dilution, almost since the mine went into production, has prevented Bachelor Lake from getting unit costs down below a targeted US$350 per oz.
However, Hecla is proposing to undertake a major underground exploration program to expand ore reserves below the lowest active mining level. Reserves in all categories still stand at 927,900 tons of grade 0.16 oz. gold per ton.
If the exploration program is successful, Hecla may deepen the shaft and do some lateral development work while acting as operator in any future joint venture mining operation.
The proposed agreement will be welcomed by Aur Resources (TSE), which was using Bachelor Lake’s underground workings to explore its Hewfran gold project.
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