Healthy Hemlo Gold output hindered by lower head grade

The company, 50.1% owned by Noranda Inc. (TSE), produced 369,305 oz in 1987, the largest output by any single gold mining operation in Canada that year.

The company milled a greater tonnage last year than in 1987 but experienced a lower head grade. Hemlo Gold processed more than one million tons of ore averaging 0.35 oz gold per ton in 1988 compared with about 975,250 tons averaging 0.39 oz the previous year.

Operating costs rose to $115(US) per oz in 1988 from $95 the previous year. Recovery rates were similar, 95.5% last year compared with 96% in 1987.

Net earnings in 1988 for Hemlo Gold, which became a public company in February, 1987, totalled $43.9 million (50 cents per share). Net earnings for the 11-month operating period in 1987 amounted to $52.7 million (60 cents per share).

More working places in the lower section of the Golden Giant mine were opened during the last quarter of 1988, allowing production to reach design levels, the company says. Production during the quarter averaged 3,340 tons per day. Grades also increased during the quarter, to 0.33 oz. Output during the fourth quarter totalled 89,935 oz. Reserves re-calculated

Because head grades have been consistently higher than initially estimated, ore reserves were re-calculated at year-end to be 19.8 million tons grading 0.32 oz, about a 10% increase.

However, the company cautions that because of the limited number of drill holes available for the re-calculation of reserves, ore grade assumptions for certain sections of the deposit will be difficult to estimate in advance.

Recent detail underground drilling in the lower mine levels, the company says, has indicated reserves scheduled for mining during the next 3-4 years will possibly boost the previously forecast bullion production to average about 430,000 oz per year during this period.

During the last quarter of 1988, Hemlo Gold spent $8.8 million to fund 65 precious metal exploration projects throughout North America, including the Central Crude (VSE) Eagle River play in northern Ontario and the Tundra property in the Northwest Territories. The company’s exploration expenses for all of 1988 totalled $22.7 million.

The Central Crude project is currently undergoing a feasibility study, the work there including the driving of a ramp. Reserves currently stand at 1.77 million tons grading 0.51 oz (uncut), or 0.25 oz (cut). At the Tundra property, where Hemlo Gold’s junior partner is Total Energold (TSE), the underground exploration shaft by year-end had reached 1,115 ft.

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