[Editor’s note: A previous article, also entitled “Breakwater moves into the black,” was published in our Nov. 1-7/99 issue. It contained numerous errors, including the reporting of silver grades as gold grades in recent drilling. The following article is intended as a replacement to the previous version. We regret the errors and offer our apologies to Breakwater Resources.]
Increased zinc and lead production and lower costs allowed
The Toronto-based miner earned $19.4 million (or 25 cents per share) on gross revenue of $194.3 million during the first nine months of 1999. This compares with a net loss of $14.1 million (20 cents per share) on revenue of $133.8 million for the corresponding period of 1998. Earnings in the quarter ended Sept. 30 were $10.4 million, a dramatic improvement over the US$10.9-million loss reported a year earlier.
The improved performance reflects the inclusion of the Bougrine zinc-lead mine in Tunisia for a full nine months (it was in production for only five of the nine months in 1998) and overall lower costs, particularly at the El Toqui mine in Chile.
The company’s zinc production for the first nine months of the year totalled 131,671 tonnes (of metal in concentrate) — a 30% increase over the year-ago period. Lead production was up 52% to 8,213 tonnes (metal in concentrate), while silver production rose 5% to 1.6 million oz.
Moreover, the 3,537 oz. of gold produced in the first nine months represent a 52% increase over the corresponding period of 1998.
The Nanisivik zinc-silver mine on Baffin Island was the best performer during the 9-month period, having milled 603,045 tonnes of ore grading 7.5% zinc and 28 grams silver per tonne, from which were produced 43,787 tonnes zinc-in-concentrate and 399,572 oz. silver-in-concentrate. Zinc and silver production was up 8% and 5%, respectively, from the first nine months of 1998. Operating costs per tonne of ore milled dropped to US$24.45 — US$1.78 lower than a year ago. For the 9-month period, the mine posted an operating profit of $14.8 million on gross revenue of $64.7 million, compared with the $1.7 million earned on $51.7 million in revenue a year ago.
Meanwhile, Breakwater’s attributable zinc and lead production from the Bougrine mine more than doubled since last year. During the first nine months of 1999, the operation milled 319,387 tonnes grading 12.8% zinc and 1.9% lead, from which were produced 34,111 tonnes zinc-in-concentrate and 4,621 tonnes lead-in-concentrate.
Operating costs during the recent 9-month period fell to US$29.19 per tonne milled from US$36.69 per tonne a year ago, a decline attributed to increased productivity, improved inventory control, lower material costs and a decrease in the Tunisian dinar compared with the U.S. dollar.
With the bonus of improved head grades, mine site cash costs during the 9-month period fell 7 cents to US34 cents per lb. of payable zinc.
With operating earnings of $8.4 million, the Bougrine mine was Breakwater’s second-largest contributor to earnings after Nanisivik.
Recent infill drilling at the southern end of the F-2 zone between levels 400 and 300 has demonstrated higher grades and greater widths than shown in the orebody model.
For example, hole 27 intersected 20 metres grading 17.2% zinc, compared with the reserve-model prediction of 8.3 metres of 11.4% zinc, while hole 28 cut 10.3 metres averaging 16.1% zinc in an area where the model predicted nil reserves due to expected faulting.
The mineral rights to another 80 sq. km of ground near the Bougrine mine site was recently acquired so that the company can continue to drill-test a possible extension of the deposit to the west.
The El Mochito zinc-lead-silver mine in Honduras milled 459,428 tonnes of 7.3% zinc, 1.1% lead and 84 grams silver during the 9-month period, which translates into the production (in concentrate) of 30,550 tonnes zinc, 3,592 tonnes lead, and 1.1 million oz. silver.
Compared with last year, zinc and lead production at El Mochito rose slightly during the recent 9-month period, while operating costs fell US$1.76 to US$30.99 per tonne milled and cash costs declined US3 cents to US41 cents per lb. of payable zinc.
Exploration work at El Mochito has focused on delineating a high-grade zinc-lead-silver pipe with a vertical height exceeding 150 metres and an irregular cross-section of roughly 18 by 30 metres and has an open vertical extent.
Highlights from the recent 37-hole, 3,048-metre drilling campaign include:
- 22.6 metres (not true width) grading 16.6% zinc, 18.5% lead and 476 grams silver per tonne in hole 6255;
- 54.4 metres of 14.8% zinc, 10.3% lead and 236 grams silver in hole 6241;
- 11.1 metres of 10% zinc, 13% lead and 367 grams silver in hole 6264;
- 12 metres of 14.3% zinc, 13.3% lead and 247 grams silver in hole 6222; and
- 11.3 metres of 17.6% zinc, 3.1% lead and 138 grams silver in hole 5972.
During the recent 9-month period, the El Toqui zinc mine in southern Chile milled 284,218 tonnes grading 9.1% zinc and 0.8 gram gold per tonne, up from last year’s figures of 257,600 tonnes of 7.5% zinc and 0.8 gram gold.
Over the recent 9-month period, the mine produced, in concentrate form, 23,223 tonnes zinc, 3,537 oz. gold and 99,155 oz. silver, up from the 16,386 tonnes zinc, 2,325 oz. gold and 37,576 oz. silver produced during the corresponding period last year.
A capital improvement program launched last year at El Toqui resulted in operating costs falling US$7.15 to US$27.82 per tonne milled during the recent 9-month period. The dramatic improvement was also seen in the figures for minesite cash costs per lb. of payable zinc, which fell US13 cents to US43 cents during the recent 9-month period.
El Toqui contributed operating earnings of $1.3 million during the first nine months of 1999, compared with an operating loss of $6.2 million during the corresponding period last year.
West of the Dona Rosa deposit, a stepout hole drilled 80 metres from the previously reported hole DRW-01 intersected 4 metres averaging 8.8% zinc, 7.8% lead, 0.37 gram gold and 115 grams silver.
East of the deposit and south of the formerly producing Mallin-Monica mine, five holes were drilled over an area measuring 300 by 120 metres into what was previously believed to be a barren rhyolite. All five holes intersected ore-grade mineralization, the best result being 5.1 metres of 9.7% zinc, 0.03% lead, 0.08 gram gold and 3 grams silver in hole DTQ-345.
One hole, SAE-2, drilled east of the formerly producing San Antonio mine, cut 8.4 metres of fossiliferous limestone averaging 16.5% zinc, 0.06% lead, 0.02 gram gold and 11 grams silver. Breakwater says the ongoing drilling program in the area will likely result in a “significant increase” in reserves and resources.
On Sept. 30, 1999, Breakwater had $7.9 million in cash and equivalents.
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