Feasibility study for McDonald project

A final feasibility study will examine the McDonald gold deposit near Lincoln, Mont.

Canyon Resources (NASDAQ) has a 27.75% interest in the joint venture, which is operated by senior partner and majority owner Phelps Dodge (NYSE). The low-grade deposit contains an estimated 8.2 million oz. gold within 414 million tons averaging 0.02 oz. gold per ton, using a cutoff of 0.008 oz. gold per ton.

An earlier study determined that 5.2 million oz. gold, contained in 208 million tons averaging 0.025 oz. gold per ton (using a 0.016 oz. cutoff), could be mined economically.

The partners are proposing an open-pit/heap-leaching operation involving two pads. Annual production is estimated at 300,000 oz. gold per year. Canyon currently produces gold from its Kendall mine, also in Montana, which turned out 15,557 oz. in the second quarter, a slight increase over the 15,353 oz. produced in the 1992 second quarter. Operating costs increased to US$221 per oz., compared with US$192 per oz. in the same quarter of 1992. Earnings of US$428,700 were reported, a 45% increase over the US$295,500 reported for the same period of 1992.