Corona purchase of Piedmont shares expected to increase Haile

A number of majors were in the running, but Corona Corp. (TSE) came out the winner in its effort to strike a deal with North Carolina- based Piedmont Mining (NASDAQ). Corona recently agreed to purchase 625,000 Piedmont shares at $1 each and make a similar investment in an upcoming rights offering.

Corona chairman, Ned Goodman and two other Corona nominees will join Piedmont’s board which will now comprise nine members. Besides taking an equity position in Piedmont, Corona will also have right of first refusal should Piedmont elect to joint venture any future exploration and development of its properties. What this amounts to is that Corona will be able to match any offer presented to Piedmont. The money will be used by Piedmont for exploration work at its Haile mine property (N.M., Feb 20/89) and for working capital. Located just over the State line near Kershaw, S.C., the small heap leach operation produced 11,738 oz gold last year and Piedmont is optimistic production will be close to 15,000 oz in 1989.

Piedmont has been chronically under-financed and has not been able to develop the Haile property to its full potential. Last year the company reported a $456,082(US) loss (4 cents per share) using a conservative accounting method where all costs are expensed as incurred. According to Robert Shields, chairman and chief executive officer, exploration expenses increased significantly in 1988 as did charges for depreciation and amortization due to the increased investment in facilities and equipment and increased gold production.

“Reclamation costs and costs of complying with regulatory requirements have also increased significantly over the past two years,” he emphasized. Some of these costs should be offset by economies of scale which the company hopes to realize with additional exploration and reserve development.

Recent drilling has indicated high grade values in at least two areas which were missed by miners in the past. Mining has tended to focus on low grade areas surrounding old mine workings which were basically high-graded by old time miners. Development drilling on 50 ft centres has outlined a mineralized zone grading better than 0.08 oz gold, over twice their current production grade, he noted.

“We are developing our East Snake orebody now and are taking the top off a mineralized system. We also plan to do a lot of deep underground drilling and testing a lot of geophysical targets that we haven’t tested,” Earl Jones, president, told The Northern Miner.

“Our East Snake orebody will only last us through September but it will have some ounces in it and that’s going to shore us up. With our exploration money we plan to really put a thrust on drilling through the summer, fall, and into next spring,” he said.

Several of the shallow intersections have been impressive including 208 ft of 0.09 oz gold, 98 ft of 0.15 oz, 93 ft averaging 0.16 oz, 70 ft grading 0.17 oz, and 50 ft of 0.19 oz. Although metallurgical test work is not yet complete, Jones was confident the material will be heap leachable. “Down the road, assuming we find bigger and better deposits that require a mill, we’ll just simply go back and run it through the mill again,” he pointed out. The East Snake zone is comprised of sulphide material which he said was leachable. Ore at the Haile mine leaches readily and they get rapid oxidation on pads which reduces the impact of the sulphide content.