Bachelor Lake wrestles with operating problems

Unit costs of $390(US) per oz mean the 7-year-old gold producer is uneconomic at current prices and could be shut down if mining staff can’t find ways to cut production costs, Bachelor Lake spokesman Gerald Harron told the Northern Miner.

“The mine’s 123 employees should be able to get costs way down to the $350(US)-per-oz level,” said Harron who blamed equipment breakdowns and frequent power failures for contributing to high costs.

In 1988, the 49.6%-owned Quebec Sturgeon River Mines (TSE) affiliate took some significant steps toward solving the dilution problems that also have plagued the mine almost from the day it went into production. Quebec Sturgeon is a member of the Toronto-based Coniagas Mines (TSE) group.

Bachelor Lake’s annual gold output increased to 19,516 oz from 4,391 oz in 1987 and after tallying $10.4 million in revenues the mine generated an operating profit of $1.1 million.

The company also succeeded in reducing its losses to $1.1 million or 13 cents per share last year from $12.9 million or $1.76 per share in 1987.

Hopes for a turnaround at Desmaraisville depend on higher grade ore in the A vein structure that the company is still attempting to access through underground development. The A vein has already been delineated via 18,791 ft of drilling from the 3rd to 12th levels over a 1,000-ft strike length. Containing 446,100 tons of grade 0.15 oz gold per ton, the A vein appears to traverse the entire width of the property and contains three economic ore shoots where it is exposed in the underground workings.

According to Bachelor Lake, the A vein offers the potential to extend the life of the mine, which hosts total reserves in all categories of 927,900 tons of grade 0.16 oz.

The company gained access to the A vein by extending the shaft 112 ft down to the 12th level and completing about 1,000 ft of lateral development work. “As a result, we can adjust our production schedule to compensate for changes in the price of gold,” said Harron.

The Main vein system, which has sustained the mine since it went into production, is known to extend below the 12th level and is estimated to contain 202,000 tons of grade 0.20 oz in proven reserves.

A third system, the B vein, which was initially recognized in 1987 between the 10th and 11th levels and explored in 1988, is thought to persist down and to the east below the 11th level. While still poorly known, it hosts proven reserves of 21,100 tons grading 0.12 oz.

In other news, related to the Bachelor Lake mine, Toronto-based gold producer Aur Resources (TSE) is using the 6th and 8th level to access the Hewfran East zone which extends west from the Bachelor Lake deposit.

As reported (N.M., Feb 6/89) an East zone bulk sample recently yielded 637 oz gold and confirmed the compatibility of the ore with Bachelor Lake’s mill.

Having outlined 144,000 tons of grade 0.18 oz between the 900-ft and 1,500-ft levels, Aur could start a custom milling operation this year, but much depends on progress of talks involving the two companies now in the preliminary stage.

Underground exploration is also in progress at the Flordin gold property, 40 miles away, which was a joint venture involving Bachelor Lake and Cambior Inc. (TSE) until last September.

After securing Cambior’s 51% interest, Bachelor Lake dealt the property to 80%-owned subsidiary Western Premium Resources (VSE). Cambior retains a $3-per-tonne royalty while Flordin Mines retains a 20% net profits royalty.

Western Premium spent $1.2 million to define economic ore reserves, but poor road conditions have prevented the company from processing a 5,000-ton bulk sample, Harron said.

Under an agreement with Westmine Canada Ltd., Bachelor Lake can earn a 51% interest in the 53-claim Lesueur Twp. property which is situated about six miles east of Desmaraisville.

To earn its interest, Bachelor Lake must spend $150,000 by Oct 15, before a joint venture is formed. Exploration work in 1988 consisted of drill target definition and $68,000 is expected to be spent on diamond drilling this year.

Bachelor Lake’s total deficit increased slightly at year’s end to $21.4 million from $20.3 million on Dec 31, 1987.

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