Gold production is boosted at Keystone mine McWatters plans merger with Maude

Record gold production of 9,702 oz. during the second quarter enabled Black Hawk Mining (BHK-T) to report a production improvement at the Keystone gold mine at Lynn Lake, Man.

The mine produced 17,188 oz. during the first six months of this year, representing a 13% improvement over the 15,272 oz. produced in the first half of 1995.

The company expects to boost production higher and, at the same time, lower costs, now that mining operations have begun at the higher-grade Farley Lake pit.

The reserve grade at Farley Lake averages 3.9 grams gold per tonne, compared with 2.7 grams at the BT deposit. As well, the waste-to-ore ratio at Farley Lake is lower than at BT. Black Hawk reports that mining of Farley Lake ore started in June, ahead of schedule and at about the same time that the mill finished processing BT pit ore.

Despite the improved operating performance, Black Hawk reported a net loss of $971,049 on revenue of $4.5 million for the first six months of this year, compared with a loss of $459,389 on $3.9 million a year earlier.

In early July of this year, Black Hawk completed an amalgamation with Granduc Mining.

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Two junior companies with Canadian projects plan to merge, subject to a due diligence review and regulatory and shareholder approvals.

The transaction between McWatters Mining (MCW.A-M) and Maude Lake Gold Mines (MAUD-C) provides for a share exchange on the basis of one common share of the former for five shares of the latter. The deal also includes an 18-month stock purchase warrant at an exercise price of $1.30 per McWatters share for every 10 common shares of Maude Lake.

Maude Lake’s key asset is a property near Matheson, Ont., which hosts reserves, in all categories, of 813,400 tons grading 0.24 oz. gold per ton.

McWatters plans to invest $3 million in an attempt to develop the property and bring it to production.

The transaction is expected to lead to the creation of a new company, Maude Lake Exploration, into which the various exploration projects will be transfered. Ownership of the shares of this new company will be split 60-40 between McWatters and current shareholders of Maude Lake Gold Mines, respectively.