Great Lakes still eyeing Geomaque

Management of Great Lakes Minerals (TSE) is reviewing its options in the wake of the recent decision by Geomaque Explorations (TSE) to terminate merger talks between the two companies.

Great Lakes Chairman John McBride told the Northern Miner, “We have two choices: to do something friendly with the management and the board of directors of Geomaque, or to launch a hostile takeover bid. It’s our current position that we would like to do things in a friendly manner.” McBride said Great Lakes remains willing to deal with the current Geomaque management, or with a new group should one emerge from that company’s June 30 annual meeting. Great Lakes owns 6% of Geomaque, he added, “so we will certainly have a vote on who is there and not there.”

Geomaque’s interests include 100% of the San Francisco heap-leach gold project in Sonora, Mexico, along with several properties in Ontario and Quebec.

Great Lakes’ assets include a 20% interest in the Grouse Creek mine in Idaho. The company has an option to purchase another 10% from mine operator Hecla Mining (NYSE).

In the first quarter of 1995, production at Grouse Creek was 307,000 tons grading 0.07 oz. gold per ton and 0.767 oz. silver, resulting in the production of 22,321 oz. gold and 131,321 oz. silver.

Over the past year, exploratory work by Hecla boosted gold and silver reserves by 8.5% and 25% respectively, bringing the total to 22 million tons at 0.041 oz. per ton gold and 0.092 oz. per ton silver.

Though commissioning of the plant began in November, 1994, reclaim system design problems and adverse weather resulted in commissioning delays. Capital costs totalled $92.1 million, 5.9% above projected costs.

Ore mined from the underground high-grade deposit at Grouse Creek was 118,000 tons grading 0.39 oz. gold and 1.56 oz. silver per ton – well below the 1993 reserve estimate of 183,000 tons grading 0.55 oz. gold and 2.5 oz. silver. McBride said, however, that the unexpectedly high grades in the Grouse open pit made up for the disappointing underground numbers.

Mine construction at Great Lakes’ Lluvia de Oro project in Sonora, Mexico, is expected to get under way soon, for a total capital cost of $3.3 million.

Mining and processing will utilize conventional open-pit, heap-leach methods, with an anticipated gold recovery of 81%. The stripping ratio is expected to be 0.92:1 waste-to-ore, and the operating cost is estimated at $220 per oz. gold.

Reserves at Lluvia de Oro are 5.5 million tons grading 0.029 oz. gold per ton, and Great Lakes expects to produce 25,000 oz. annually. McBride said the various construction projects that will make up the mine have been put to tender.