Bonanza grades at Red Lake

The momentum is growing as Goldcorp (G-T) hits more high-grade gold in underground exploratory drilling at its Red Lake mine in Red Lake, Ont.

The list of ore-grade intersections is phenomenal. Approximately 500 ft below the lowest working level at the mine, in the High Grade Zone (HGZ) extension hanging wall area, a 19.2-ft-intercept grading 7.76 oz gold per ton was intersected. Another 200 ft below this a hole intersected 6 ft grading 5.26 oz per ton. At 6,750 ft below surface (some 1,250 ft below the mine workings) this same zone was intersected grading 2.18 oz over 70 feet.

The HGZ extension footwall zone was intersected in 19 holes; the two highest intercepts were 4.31 oz per ton over 2 ft and 2.96 oz over 1 foot. Nine intersections graded 1.1-1.84 oz gold per ton over widths of 2.7-15.2 ft.

The HGZ hanging wall zone has been consistently intersected to a depth of at least 7,700 feet (2,200 ft below the current mine workings). Resources are also being outlined in sulphide zones dubbed the Deep Extensions and Far East.

Sulphide mineralization in the Far East zone resulted in intersections of 4.5 ft grading 6.55 oz per ton, as well as 5 ft grading 2.18 oz gold. Other intercepts assayed 0.1-0.49 oz over widths ranging from 2.4-12 ft.

The Far East zone currently has a resource of 240,000 ounces gold at a grade of 0.47 oz. gold per ton.

The sulphide mineralisation in easily-accessible, nearby extensions of previously mined ore has been intersected in some 60 holes with four holes grading from 1.61 to 2.87 oz. per ton over widths from 1-16 ft; the rest of the holes intersected .12-0.97 oz per ton over widths of 1-45.9 ft.

A new shaft is currently over 1,000 ft deep and plans are for it to reach its maximum depth of 7,150 ft by late 2006. Mine expansion is slated to increase production from the current 510,000 ounces a year, to 700,000 ounces. It is estimated that the new shaft will have a 1.2-year payback with an internal rate of return of 48% and at a gold price of US$400 per oz.

The mine poured its 5 millionth ounce of gold on May 6, 2004. Reserves and resources currently total over 6 million oz. The Red Lake mine produced 532,028 oz gold in 2003.

Goldcorp shares are down 25% from the end of 2003, even though its first quarter report announced a 19% increase in production and a 22% increase in earnings compared with the first quarter of a year earlier. The company began paying a dividend in 2001. It estimates that the 2004 dividend will be 18 per share.

At the end of 2003, Goldcorp had 183.5 million shares outstanding, 188 million on a diluted basis.