CoCa acquisition precursor to higher gold production

Geodome’s mining claims in Custer Cty., Idaho, contain approximately 594,000 oz of gold equivalent; coupled with CoCa’s reserves at its 100%-owned Hog Heaven project in Montana, these reserves are sufficient to support an annual production rate of 100,000 oz beginning in 1992, said Hugh Matheson, president.

“We intend to develop these properties over the next three years. Finalizing environmental permits, completing engineering, arranging development financing and construction, are the major short-term goals of CoCa Mines,” he said.

Commercial production started at CoCa’s Shumake mine in December and yearly output is expected to be 38,000-42,000 oz gold equivalent. Production from the nearby Middle Buttes mine should be 17,000 oz this year but reserves there will be depleted in early 1990. The average direct operating cost for the two mines is expected to be $240 to $280 per oz this year.

CoCa is the operator and co- owner of Cactus Gold Mines which leases 1,600 acres in the Mojave mining district, 85 miles northeast of Los Angeles. The area is comprised of two mines and processing sites — Shumake and Middle Buttes. CoCa has the right to receive 74% of the cash flow from Cactus until it has recouped its capital contribution plus interest. At that point, its cash flow will be reduced to 63.75%.

Matheson said an independent evaluation of the Hog Heaven project recommended that mine construction begin in 1989 and full production in mid-1990. “However, because the economics of the project improve dramatically at silver prices higher than those prevailing today, the company may delay development of Hog Heaven in favor of first developing Geodome’s gold properties,” he cautioned. Reserves at Hog Heaven are estimated to be 2.8 million tons grading 0.021 oz gold and 4.8 oz silver per ton.

CoCa will have a 97.7% interest in Geodome’s Sunbeam and Grouse Creek properties if its offer to buy out the limited partner interests for $1.8 million is successful. Development drilling is planned this year and construction could begin in 1990, he said.

“Annual production is expected to approximate 50,000 oz of gold and its equivalent in silver,” he added.

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