Costs up by $14 million, but Lawyers producing

Paul Girard, president, said commercial production levels for profitable operations were achieved in March, with the 550-ton-per-day mill running at an average of more than 85% of its nominal capacity during the month.

“For the last 10 days the mine has reached 500 tons per day,” he told The Northern Miner at press time, adding that the mine should soon be up to its full rated capacity.

Since the beginning of mill operations, some 25,140 tons of ore averaging 0.30 oz gold and 5.28 oz silver per ton have been treated to produce more than 7,000 oz of gold and 91,000 oz of silver.

Girard noted that mill recoveries are currently estimated at 88% for gold and 71% for silver, although “there is still room for improvement”.

A year ago, Cheni estimated that its total outlay for mine development would amount to $43.2 million. However total expenditures, including administrative costs and working capital requirements, came in at $57.4 million to the end of 1988.

The principal items making up the over-run were $7.8 million from the 2-month delay in the scheduled start-up and acceleration of the pre-production development program in the AGB zone, and $2.4 million from increased costs in the construction of the tailing dam and access road.

The balance of $4 million was attributed to unexpected severe ground conditions in preparing building foundations, unforeseen environmental requirements, shortages of skilled labor, lack of good used equipment and some delivery delays for material.

In order to complete the project, the company took out a $6-million(US) gold loan and a $5.3-million loan from the company’s principal shareholder, Cheni Canada.

Girard said the liquidity problems that existed at the beginning of 1989 were remedied by deferring repayment installments of its gold-silver loan. But having now achieved commercial production, he noted the company’s cash flow “should be more than sufficient” to meet ongoing operating requirements.

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