Cheni sets October date for start-up at Lawyers

A production start-up in late October has been announced by Cheni Gold Mines (TSE) for its Lawyers gold-silver property in the mountainous Toodoggone area of north-central British Columbia.

President Paul Girard said at the annual meeting (the company’s first since changing its name from Serem Inc.) in Toronto that the mine will be in production about four months earlier than forecast. The capital cost, an estimated $43.2 million, is above the original estimate, he said.

Final approval was recently given to a feasibility study prepared by Wright Engineers which calls for a production rate of 550 tons per day. Current reserves (all classes) on the property — three zones have been uncovered — stand at 1.9 million tons grading 0.19 oz gold per ton and 7.09 oz silver.

Planned production is about 40,000 oz gold and one million oz silver per year.

Current production plans would give the mine a lifespan of more than eight years; the company says the zones remain open in nearly all directions.

Girard said the estimated operating cost is $275(C) per oz gold.

A 95% recovery rate for gold is anticipated, and 75% (a conservative estimate, Girard said) for the silver. Funding available

Cheni Gold is a subsidiary of Cheni Canada, whose major shareholder, with a 61% interest, is Cheni S.A. of France. The parent French company boosted Cheni’s coffers by $15 million last year through a private placement. A public offering in 1987 also raised $23.1 million for the Canadian company.

The British Columbia government made ground access to the Lawyers site possible through a loan ($4.5 million or 50% of the construction cost, whichever is the lesser) which helped build a 62- mile-long supply road, which now links the property with Prince George, located about 375 miles to the southeast.

A fly-in operation is planned by the company; a 150-man permanent camp has been built at the mine site.

Not all of the Lawyers property has been drilled. In addition, the company reports preliminary drilling on claims in the vicinity of the Lawyers property has encountered intersections warranting further exploration.