Cheni Gold Plans Mill Start-up By Fall

With development and construction programs on schedule, Cheni Gold Mines (TSE) appear to be on track to begin commercial production from its wholly-owned Lawyers gold-silver mine during the fourth quarter of 1988.

The project is located in the Toodoggone district of north- central British Columbia. A 64-mi access road, funded in part by the B.C. government, has been driven to property. The road will also be used by a number of other companies active in the region.

Cheni Gold, a company indirectly owned by the French government, anticipates the mill will be commissioned in late October. And assuming a smooth commissioning and no unforeseen problems during the start-up phase, it hopes to achieve full mining throughput at 550 tons per day by early January, 1989.

Exploration of the property has been suspended until the completion of the construction program and total reserves in all categories remain at 1,938,000 tons grading 0.198 oz of gold and 7.09 oz of silver per ton.

The company reports detailed engineering and procurement are substantially completed; the concentrator and services buildings have been erected and internal structural steel and mill equipment are now being installed. Construction of the crushing plant is well under way, the company says, despite unexpected severe ground conditions encountered during the excavation for the foundations. The tailings dam is more than 60% completed.

Cheni Gold has continued with development and stope preparation on the AGB zone. To date 19,047 tons of ore averaging 0.378 oz of gold and 10.05 oz of silver per ton have been stockpiled on surface. This total will increase to about 32,000 tons prior to the beginning of commercial production.

A change in mining method from shrinkage to blast-hole stoping has resulted in increased pre-production development costs, but the company notes the net result of this will be lower mine operating costs.

A sales contract for metal production and a $6 million(US) gold loan have been arranged with a major institution to replace the previously arranged $2 million(C) bank line of credit. The company says this will provide sufficient funds for on-going capital and to offset the pre-production program and capital cost increase due to tailings dam, foundations and various items in mill equipment.