Falco Copper moves on Winston Lake and Ansil

Full production at the rate of 1,000 tonnes per day is anticipated to start in the second quarter of 1988 at the rich zinc orebody at Winston Lake, near Schreiber, in northwestern Ontario, John Carrington, vice-president operations of Corporation Falconbridge Copper, tells The Northern Miner.

At this stage, the idle 1,200-1,400- ton mill complex has arrived to the Winston Lake site from its original location at Sturgeon Lake, 125 miles to the north. The concrete for mill foundations and crusher has been poured and the basic structural steel for the mill building has been erected. The concentrator should be commissioned during this year’s fourth quarter.

The water storage dam has also been completed and the upgrading on the 14-mile access road north from the Trans-Canada Highway has been done.

The Winston Lake deposit hosts probable and possible reserves of 3.4 million tons grading 1.0% copper, 16% zinc, 0.96 oz silver and 0.03 oz gold per ton. Estimated construction and development expenditures to complete the project are $45 million.

This deposit as well as the high grade Ansil copper project near Noranda, Que., were the two major assets that Kerr Addison Mines acquired last August when it purchased about 50% of Falconbridge Copper from Falconbridge Ltd. for a cash consideration of $120.2 million. Underground at Ansil

Drill-indicated reserves at Ansil stand at 2.3 million tons grading 7% copper, 0.50% zinc, 0.7 oz silver and 0.05 oz gold.

The production shaft has been completed to its initial depth of 1,400-m below surface. Sinking of the ventilation shaft started in October and it is now at a depth of 400 m, approximately one-third of its way to its ultimate depth of 1,380 m, says Mr Carrington.

The changeover to the underground exploration program was nearing completion at year-end. Drifting on the 1,220, the 1,280 and the 1,340 m levels and some 13,000 m of detailed diamond drilling to delineate the deposit should be completed by the end of this year. At that time a production decision is expected to be made.

The production shaft would then be completed, probably to a depth of 1,600 m, but as Mr Carrington explains, the bottom of the deposit has yet to be defined. Production would not be expected to start any earlier than 1989.

Planned expenditures for this year on the Ansil are $20 million. Last year $11.8 milllion was spent on the project. Balance sheet

At year-end the company found itself in a fine financial position to handle its upcoming capital expenditures. Cash and short-term securities increased over the year by $5.9 million to a very solid balance of $72.2 million.

Cash provided by operations increased to $20.1 million in 1986, up from $14.l5 million in 1985. Additional proceeds from flow- through share issues and investment transactions brought total cash flow to $33.7 million, up from $32.2 million in 1985.

Reduced underground exploration expenditures and lower concentrate treatment charges all had a hand in boosting the all-important earnings entry this year to $4.6 million or 35 cents per share, a marked difference from last year’s net income of $386,000 or 3 cents per share.

Net revenue from metal shipments was $70.4 million, down $4 million from 1985 due to lower production from the Opemiska Division and the depletion of the Corbet mine at Lac Dufault. This latter operation closed, as planned last September.

The production of the yellow metal was down by 2,000 oz in 1986 for a total of 107,000 oz. Parent Kerr

For parent company Kerr Addison Mines, the latest fiscal year was just as positive. Net income doubled over the past year to $5.1 million or 30 cents per share from a net income of $2.4 million or 14 cents per share in 1985. Proceeds of $47 million from the sale of investments was the principal reason for this tremendous income increase.

Operating profits, however, were adversely affected by the 5-month strike at the Canadian Electrolytic Zinc smelter which was settled in early November. This resulted in a loss for the year from this joint venture, the company says.

Gold production from the Kerr Addison mine near Virginiatown, Ont., was 43,400 oz, down about 10% from 1985 due to lower average grade of ore mill.

The oil and gas sector provided improved earnings due to reduced Federal PGRT taxes, which were eliminated last October, and lower provincial royalties. This occurred, says the company, despite lower production prices and declines in natural gas sales which was partly offset by increased volumes of natural gas liquids from Canadian Hunter’s new production facilities.

Kerr’s long term-debt increased to $50 million this year, reflecting its purchase of Corporation Falconbridge Copper. Cash balances in that company at the time of the acquisition amounted to $76.3 million and as a result, consolidated cash and short term investments increased to $74.3 million at the end of 1986, compared to $36.7 million at the end of the year-earlier period.