Cassiar faces decision in asbestos deposit

The decision by Cassiar Mining to either develop its McDame asbestos deposit or terminate operations completely by mid-1991 will have to be made this year. James C. O’Rourke, president, also told the annual meeting that if a “positive decision is not made on McDame the company will direct its resources toward other mining opportunities.”

But he noted a preliminary feasibility report has shown that development of the 32.5-million tonne underground deposit is “technically feasible and that a full feasibility study is warranted.” The report emphasized the need to begin development by year-end to avoid any interruption in production when the present open pit is exhausted. Such a delay could result in a considerable cost overrun, he said.

Further underground exploration is planned for the McDame deposit this year, all of which will be funded by a $2.5-million flow- through offering. The program will include a decline to the 1,385-m elevation and a crosscut into the mineralized zone for bulk sampling purposes.

The work will provide geological data on the footwall of the deposit and material for metallurgical test purposes. The sample, which will be milled and concentrated on site, will provide information for the design of a pre-concentrator. This pre- concentrator will be required because of waste dilution resulting from the block caving mining method used for the McDame orebody.

Pointing out that 1986 was a good year for Cassiar, Mr O’Rourke noted that cash flow from operations was sufficient to reduce the company’s bank debt by $11 million to $34.6 million. Revenues were $12.4 million lower at $48.7 million because of the “downward pressure on both sales volume and price,” he said. Operating expenses were 17% lower at $40.2 million because of improved efficiencies, a 3-month summer closure, lower fuel prices and decreased waste stripping. This year’s closure will be reduced by over half to approximately five weeks, he added.

The company had an accounting loss of $283,000 in 1986 but things have improved considerably in the first quarter. Earnings totalled some $648,000 compared to a restated loss of $314,000 for the same period a year earlier. Higher sales revenue was attributed to improved demand for certain grades of asbestos fibre and steady prices.

Inco Ltd. has identified some 1.46 million tonnes of reserves grading 0.23 oz gold below the 26th level of the San Antonio mine in Manitoba. The company completed 20,088 ft of diamond drilling in 1986 which “confirmed the continuation of the mineralization at depth,” he noted. An independent consulting report has “indicated that reactivation of the mine at current gold prices would be economically viable,” he added. Test work has shown that the recovery rate achieved in previous milling operations could be improved with the addition of a concentrate leach circuit.

Mr O’Rourke said Inco has requested an extension to its commitment period for exploring the mine. Negotiations are under way to find a mutually acceptable way of doing so, he said. San Antonio Resources, which is owned by Inco and private investors, can earn up to a 50% interest in the property for an expenditure of $7.5 million by June, 1988. The property is fully equipped with a modern 450- tonne-per-day mill and associated surface and underground facilities.

Cassiar’s exploration properties were sold last year and are now being managed and developed by Western Canadian Mining. Cassiar has a 40% interest in the company so its exposure to the exploration scene is on an equity basis.