FALCO GOLD: A GLOBAL PLAYER

Falconbridge Gold Corp., a subsidiary of Falconbridge Ltd., produced 82,018 oz. of gold in 1990. Hoyle Pond, a high-grade producer near Timmins, contributed about 64,500 oz. to the total. The rest came from stockpiled ore from the Owl Creek mine, now defunct.

Hoyle Pond does not have huge reserves. At the end of 1990, the reserve was 291,000 tonnes grading 16.9 grams gold per ton. At a mining rate of 110,000 tonnes per year, that works out to a mine life of fewer than three years. Fortunately, the year-over-year reserve has declined on average by only 55,000 tonnes, leading Falco President Brian Ferguson to conclude that “the mine life is something more than three years.” The subsidiary also earns royalties on the Hoyle mine property (not to be mistaken with the Hoyle Pond mine), where Giant Yellowknife mines this producer with access from the neighboring Pamour No. 1 mine.

In a deal with the parent, the gold subsidiary is in the midst of taking over all of Falconbridge’s gold interests in Canada and overseas. This includes the acquisition by the subsidiary of the parent’s Zimbabwean gold mines, two in total, producing 29,000 oz. per year. And already, Ferguson is actively discussing expansion of the Zimbabwean facilities. “We are contemplating doubling production in Zimbabwe,” he says. An improved investment climate allows for the more aggressive stance.

Also in the package is the Signal Hill exploration project in Botswana, along with an option to acquire all of the gold exploration properties in Canada. This involves as many as 40 properties, the bulk of which are near Val d’Or. Six properties alone cover 2,151 ha within 15 km of the northern mining centre.

In total, the asset-equity swap is worth about $11 million (in stock and debentures). If the debenture is converted into shares of the gold subsidiary, Falconbridge would increase its ownership to 60%. On the exploration front, Ferguson says one of the most important Canadian properties is the joint venture with Thunderwood Resources on the Pelletier Lake project, south of Rouyn-Noranda, Que.

An underground exploration/ development program is under way. Undiluted, “drill-indicated” reserves stand at 907,000 tonnes grading 6.9 grams per tonne.