Decline in investor confidence

Of about a dozen underground exploration programs in operation in 1987, all but two have been shut down. The two still in progress are both being funded by major mining companies Placer Dome (TSE) and Falconbridge Ltd. (TSE). Not one junior-funded program has survived into 1989, Lorne Luhta, resident geologist with the Ministry of Northern Development and Mines in Timmins, told The Northern Miner.

“There’s no question that a number of underground projects have been closed,” and these closures have had a negative impact on the community, Luhta explained. “Those projects all required a lot of manpower.” Luhta noted that of the remaining projects, both are being funded by hard dollars, not flow-through funds raised by juniors.

Surface exploration is also off. A sure-fire indicator is drill rig activity. Two years ago, Bradley Brothers, for example, had about 35 machines at their Timmins office. Today just one rig is available, Luhta says. The decline in gold prices to $363(US) today has also taken its toll on several high-cost mines that have been forced to curtail operations or shut down.

Probably the most affected company is Pamour Inc. (TSE) affiliate Giant Yellowknife Mines (TSE), which operates the Pamour No 1 — the last operating underground mine in Pamour’s Timmins operations. With grades of 0.069 oz gold per ton, the mine is especially sensitive to low gold prices. The company has an aggressive exploration program with five drills operating underground. In 1988, the company shut down the money-losing Schumacher mine.

ERG Resources (TSE), another Pamour affiliate, is also suffering. The company is not reaching the operating objectives initially set out at its ambitious tailings recovery operation.

Since beginning production in September, 1988, the operation has only attained 85% of anticipated mill recoveries. As of June 30, the operation had produced 18,260 oz of gold from the treatment of 2.8 million tonnes grading 0.553 g gold per tonne (0.016 oz gold per ton). Payments on a $40.8-million gold loan provided by Westpac Bank of Australia have been rescheduled.

Pamourex Resources (TSE), Pamour’s exploration arm, completed 15,000 ft of diamond drilling on its Cody Twp., project just east of town. Another 5,000 ft is planned by freeze-up. An old shaft on the project has been allowed to flood.

Production from two local gold mines will also either stop or be temporarily curtailed. At Falconbridge Gold’s (TSE) Owl Creek mine, production from an open pit stopped in June. More than 200,000 tons of ore, grading 5 g gold per tonne (0.145 oz gold per ton), have been stockpiled on surface. The material is being used as smelter flux or is blended with higher grading rock from the nearby Hoyle Pond mine, also owned by Falconbridge.

A deep drill program began in August at Owl Creek which is testing for reserves below the open pit. According to Mike Bradshaw, a geologist with the Ministry of Northern Development and Mines, the project is scheduled for completion by year-end.

Hoyle Pond continues to operate efficiently with forecast 1989 gold production at 60,000 oz. The mine yielded 96,000 tons of high grade ore averaging 18 g gold per tonne (0.52 oz gold per ton).

At Canamax’s Bell Creek mine, operations will be temporarily suspended to allow for the deepening of the shaft from the 240-m level to 488 m. Although Bell Creek will stop feeding the mill, gold production will continue from the nearby Marlhill deposit where mining began this year. Five small shrinkage stopes at Marlhill are feeding the mill. The Bell Creek shaft sinking project is expected to begin by year-end and will include the development of three additional levels.

Other than Falconbridge’s Owl Creek operation, the only other underground exploration program in progress in Timmins is Placer Dome’s Paymaster project. The No 5 shaft at the former gold producer is almost dewatered. An internal winze to a depth of 6,025 ft will be dewatered by December, when a hoist will be installed. The $10- million project is expected to be completed by February, 1990. A possible mining advantage will be to haul rock from Plac er Dome’s 29 level on the Dome mine property, only 300 ft from the Paymaster boundary, and then up to surface via a Dome shaft.

]]>