Hemlo’s gold production down, but earnings up

Despite a 5% drop in production at its two gold mines, Hemlo Gold Mines (TSE) managed to increase earnings in the first quarter, compared with the same period a year ago.

Combined production from the wholly owned Golden Giant mine near Marathon, Ont., and the 55%-owned Silidor mine near Rouyn-Noranda, Que., slipped to 126,600 oz. for the first quarter.

Fortunately, however, the production cost also fell, to below the US$100-per-oz. level experienced in the 1993 first quarter. And earnings for the period increased to $16.8 million (17 cents a share), compared with $12.7 million (13 cents a share) in 1993.

Proven and probable reserves at Silador stand at 2.2 million tons averaging 0.15 oz. per ton, while Golden Giant contains 13 million tons averaging 0.33 oz.

Meanwhile, two projects are under development: Holloway, 75 miles east of Timmins, Ont., and New World, near Cooke City, Mont.

Having received a positive feasibility study, Hemlo and its partners have decided to put Holloway into production. At 1,450-1,650 tons per day, the mine is expected to yield 60,000 oz. gold per year at US$200 per oz. Hemlo holds 60% of the deposit, both directly and indirectly.

New World, which is also 60%-owned by Hemlo, has a geological resource of 8 million tons averaging 0.21 oz. gold.

A U.S. environmental group recently described the project as a potential ecological disaster. Yet, at the Hemlo annual meeting, corporate officials flatly denied the allegation.

Studies by the company suggest the development will not drain into the rivers that flow into Yellowstone River. Moreover, stated Chairman Ian Bayer, by refurbishing old mine workings that date from the late 1800s, Hemlo is actually improving water quality in the area.

As for exploration, Hemlo is involved in projects stretching from Alaska to Chile. It plans to spend $15 million on exploration in 1994, projects of note being in Mexico, Quebec, British Columbia, Chile and Alaska.