Canamax gold discovery boon for Kremzar mill

When Canamax Resources (TSE) decided to build a brand new 500- ton-per-day mill to process ore from the soon-to-be-producing Kremzar property near Wawa, Ont., the facility was designed to handle an additional 300 tons daily.

About 12 months further on, the latest results from two properties about 1 1/2 miles south of Kremzar have made that decision look like a sensible piece of long-term planning.

As indicated by an initial reserve estimate at the wholly-owned Lochalsh project and early drill results at the adjacent Goudreau claims, Canamax will eventually use all of the Kremzar mill’s excess capacity.

After completing 68,000 ft of drilling in 72 holes at Lochalsh, drill-indicated geological reserves in the Lochalsh and Island zones stand at 460,998 oz gold per ton grading 0.266 oz (uncut) and 904,744 tons grading 0.239 oz (uncut) respectively.

While Canamax has yet to test the Lochalsh reserves estimate with a major underground drill program, Fred Johnston, vice-president exploration says the property could be a major contributor to the company’s Wawa operation.

Based on a 500-ton-per-day operation, the Kremzar mine is expected to produce 32,000 oz annually. But additional tonnage from the Lochalsh claims could increase Canamax’s Goudreau production rate to 50,000 oz by 1991.

“The results could see us go underground at Lochalsh sooner rather than later,” said Johnston who will oversee a 15,000-ft drill program at the adjacent Goudreau project where Canamax (51%) is joint venturing with Algoma Steel Corp. (TSE) (49%).

As reported (N.M., Sept 7/87), Canamax recently pulled four 1-m intersections grading 0.23 oz, 4.61 oz, 0.77 oz and 0.19 oz at the Goudreau claims which is part of the same regional shear which houses the Lochalsh deposits.

Meanwhile, Canamax is on a fast track to achieving an ambitious plan which calls for five new gold mines to be in operation by 1992.

With its Bell Creek project in full production, the 46%-owned Amax Gold subsidiary is scheduled to bring three more mines on stream this year before doubling its 1988 gold output from 45,000 oz to 90,000 oz annually by 1989.

“By the end of this year, we will be a mine ahead of our schedule,” said President John Hansuld at the company’s recent annual meeting in Toronto.

First up on Canamax’s roster of soon-to-be-producing mines, will be the Ketza River project, 45 miles from Ross River, Yukon. The 50-50 joint venture project involving Canamax and partner Pacific Trans- Ocean Resources (TSE) is in the tune-up stage.

As reported (N.M., May 9/88), the first gold was poured recently at Ketza River. The operation’s 350- ton-per-day mill is running at 75% capacity and with 500,000 tons grading 0.45 oz of oxide reserves in place, it should be in a full production mode (50,000 oz annually) by July. Spiral ramp

Next in line, is Canamax’s Kremzar project where reserves of 874,300 tons grading 0.189 oz is being accessed via a spiral ramp. Mill construction is on schedule despite a shortage of fabricated materials in the area.

Precommissioning is expected to begin by early summer with an October production target, Hansuld said.

Work is also progressing at Canamax’s “no-frills” Matheson project near Timmins, Ont. In a bid to extract 8,000 oz this year from a small custom milling operation, Canamax is currently drifting on the 50, 90 and 110-m levels in the Upper Shoot where reserves stand at 245,911 tons grading 0.177 oz.

The company is also driving an exploration drift on the 130-m level to allow underground drill testing of the high grade Lower Shoot where 247,124 oz grading 0.255 oz is contained. Matheson project

Ore is currently being stockpiled at Matheson in preparation for a 275-tons-per-day operation, Hansuld said.

If everything goes according to plan, Canamax’s four producing mines should be generating $25 million in revenues and $10 million in cash flow by year-end.

A $35-million gold loan from the National Westminster Bank of Canada puts the company in a financial position to develop its three new mines and conduct exploration at a number of other projects.

They include a joint venture involving Canamax and Bruneau Mining (ME) which could be mine No 5 in Canamax’s stable of gold producers. Located near Timmins, Ont., the Clavos property has been brought to a prefeasibility stage. After drilling 247 holes during the past four years the partners have outlined five distinct gold zones within a 4.5-km strike length.

According to Canamax, uncut and undiluted drill-indicated reserves on three zones — Clavos, Discovery and Extension — add up to 1.16 million tons grading 0.15 oz gold.

Preliminary metallurgical testing on drill core samples is under way to determine the best way to develop the deposit. Gold loan

Since Canamax has drawn down only $22 million of the $35-million loan, the company still has $13 million in its treasury.

During the first three months of 1988, Canamax’s earnings from operations were $400,000 compared to a loss of $20,000 in the same period last year. The company reported a first quarter net loss of $1 million or 7 cents per share, compared to a loss of $2.4 million or 20 cents per share in the first three months of 1987.