Granges to spend $6 million on exploration during 1991

Exploration efforts by Granges (TSE) in the coming year will be focused on the Flin Flon area of northern Manitoba, President Colin Kaiser told shareholders at the company’s recent annual meeting.

The company expects to spend about $6 million on exploration in 1991, concentrating primarily on the Flin Flon camp. Granges’ land position in the area covers over 90,000 hectares, and Kaiser noted the company has an extensive exploration data base and a good understanding of the area’s geology and exploration potential.

Production in 1990 at the nearby Trout Lake mine, 29% owned by Granges, was slightly below 1989 levels due to problems associated with commissioning new equipment. The operation mined and milled 786,000 tons of ore during 1990, compared with 809,000 tons in 1989.

Granges’ share of output from the mine totalled 6.9 million lb. copper and 22.1 million lb. zinc for an operating profit of $4.6 million. The company expects throughput to increase during 1991 as a result of the addition of a shaft and better ore-handling facilities.

Drilling below the Trout Lake deposits last year encountered two new mineralized zones. The best intersection returned 18 ft. grading 22.8% zinc, 8.07% copper, 0.18 oz. gold and 1.72 oz. silver per ton.

Granges along with owners Hudson Bay Mining & Smelting (44%) and Manitoba Mineral Resources (27%) plan to complete an additional 72,000 ft. of underground exploration drilling this year to further explore the zones.

Hycroft Resources & Development (TSE), 67% owned by Granges, produced 92,600 oz. gold at the Crowfoot-Lewis mine in Nevada. Operating profit from the mine on a consolidated basis to Granges amounted to $3.7 million.

For the year ended Dec. 31, 1990, Granges reported earning of $1.9 million on revenues of $63.1 million. Cash flow for the period was $18.9 million compared with $13.4 million in the year-earlier period.

During the year, the company settled a lawsuit with Abermin Resources over the now-closed Tartan Lake mine near Flin Flon. Granges paid out $5.5 million to Abermin, freeing up more than $20 million which had been subject to a garnishment order.

As at year-end working capital was $39 million, or based on the 33.9 million shares outstanding, about $1.15 per share.

A second litigation still hangs over the company, however.

Granges is named as a defendant in a lawsuit which alleges that Oxford Acquisitions, a Toronto-based investment firm, had a prior right to purchase a 9.167% interest in the Trout Lake mine. Granges acquired the interest from Outokumpu Mines in March, 1989.

The plaintiff (Oxford) is seeking damages, including future profits, conveyance of the interest and other relief from Granges and Outokumpu.