Bousquet 2 set to exceed `91 target output by 20,000 oz.

A summer visit to the Bousquet No. 2 gold-copper mine of LAC Minerals (TSE) 25 miles west of Malartic, Que., helped securities firm Midland Walwyn in deciding to issue a “buy” recommendation for the large gold producer.

LAC, Midland Walwyn pointed out, has consolidated Bousquet No. 2 and sister mine Bousquet No. 1 (located one mile to the west) into the Bousquet complex. Commercial startup for Bousquet No. 2 was Oct. 1, 1990, four years after the initial discovery. Midland Walwyn made the following comments about the new mine in an August research report:

At year-end 1990, the book value of Bousquet No. 2 was $77.9 million. Access to the deposit is through a 4-compartment shaft to a depth of 4,084 ft. The deposit is currently being mined on the 5th and 6th levels. Mining between the 7th and 8th levels is scheduled to start during the last quarter of 1991. Originally forecast at 140,000 oz. of gold per year (as stated in LAC’s 1989 annual report), gold production has consistently exceeded budgets. This is due to the presence of north-south-trending sulphide-enriched shear zones containing above-average-grade gold ores. These shear zones went undetected in the exploration stage, as they were parallel to the surface drilling. For the first half of 1991, the average gold grade recovered (0.476 oz. per ton) has been nearly 25% higher than originally forecast (0.384 oz.). While the mining rate was 8,000 tons below budget at mid-year, gold output was nearly 20% higher than expected (at 99,000 oz.).

The Bousquet No. 2 mine should easily exceed its 1991 production target of 170,000 oz. of gold by as much as 20,000 oz. Cash costs for the first half of 1991 are currently running at $185 per oz. (net of copper byproduct credits). The mine is forecast to produce around 10 million lb. copper annually. The ore from Bousquet No. 2 is being processed at a rate of 1,500 tons per day at LAC’s East Malartic mill, located a few miles to the east. LAC is considering expanding the mill to 2,500 tons per day.

The mill expansion, which could be completed by late 1992, would lead to further production increases at Bousquet No. 2, to 186,000 oz. and 246,000 oz. in 1992 and 1993, respectively. If gold grades continue to exceed forecasts, the Bousquet No. 2 mine could be producing 300,000 oz. of gold in 1993.

Bousquet No. 2’s importance to LAC will grow as the mine reaches full operating capacity. By 1993, we estimate the mine will account for nearly 25% of LAC’s total output and will rank with the 83%-owned El Indio mine in Chile as LAC’s lowest-cost producer.

LAC is one the few gold companies with a rising production profile over the next two years. We estimate LAC’s output could attain the 1.2 million-oz. mark by 1992, a potential 20% increase over the 1991 production target of one million oz.