First year proves golden for River Gold Mines

The first 12 months of production at the Eagle River gold mine, near Wawa, Ont., translated into a strong year for owner River Gold Mines (RIV-T).

Earnings for 1996 amounted to $5.9 million (or 19 cents per share), compared with $200,000 (1 cents per share) in the previous year. Revenues rose to $34.3 million from $600,000.

Production at Eagle River, the company’s only mine, began Jan. 1. The company produced 64,523 oz. by milling 162,075 tonnes grading 12.76 grams gold per tonne. Gold recovery at the mill was rated at 97%.

The mine’s average cash cost was US$223 per oz., whereas cash operating costs (including administration) amounted to US$247 per oz.

Production was initially forecast at 45,000 oz., but that level was surpassed as a result of improvements in grade and mill efficiency. The cash flow generated at Eagle River was used to continue development of the mine, upgrade the mill and tailings facilities, begin work on a new shaft and commence development of the Edwards project, a mine owned by VenCan Gold (VCG-M). The company was also able to repay half of a gold loan and dole out an initial dividend of 5 cents per share.

The Magnacon mill, 18 km from the Eagle River mine, was purchased in late 1996 for $3.3 million.

In 1996, $3.7 million was spent on the Edwards project, and development is continuing. Milling of Edwards’ ore is expected to begin in mid-1997, with tonnage for the year projected at 40,000 tonnes.

River paid VenCan $500,000 for the right to develop the Edwards mine and will receive half its profits (after recouping development expenses).

Work began on a 700-metre shaft at Eagle River in late 1996. The shaft is to be completed by mid-1998 at a cost of $10 million, including underground mine development.

Reserves were increased by 15%, more than replacing the mine production.

Total reserves at year-end were 430,000 oz. In addition, reserves at year-end were estimated at 70,000 oz.

Exploration in 1997 will be carried out in the Eagle River mine area and on other targets, primarily to the east. The Eagle River property covers a 14-km strike length of the structure that hosts the mineralization. Several promising quartz veins will be explored in 1997.

River Gold expects to crank out more than 70,000 oz. gold in 1997 from 200,000 tonnes milled.