Hope Brook needs better gold price to show a profit

As a result of lower gold prices which averaged $479(C) during the first half of 1989, the 75%-owned BP Canada Inc. (TSE) subsidiary is looking at ways to reduce a huge debt load which now stands at around $40 million.

The cost of operating the mine and servicing the debt means that Hope Brook is spending over $400(US) for every oz of gold produced, according to John Fleming, vice-president finance. At press time, the yellow metal was trading at $365.50(US) per oz. However, even though Hope Brook reported a first-half loss of $4.6 million or 15 cents per share, the mine will be kept open and layoffs are not among the options under consideration, said Fleming.

The mine is still in a start up phase and until it is operating at design capacity for a number of months, it is difficult to estimate what actual operating costs are going to be,” he told The Northern Miner.

Contributing to the company’s recent financial results was a 5-week mill shutdown at the Chetwynd mine which dropped production expectations to around 100,000 oz gold this year instead of a planned 140,000 oz.

As reported (N.M., March 20/89) the 3,000-ton-per-day mill was shut down while Hope Brook’s effluent treatment facility was modified to meet government regulatory standards.

Construction crews are attempting to expand the size of a retaining pond to allow more of the effluent and other toxic chemicals from the mine to be neutralized through natural exposure to sun and air.

The company is also encouraged by the fact that it is now drawing ore (grading 0.131 oz gold per ton) from the mine’s underground workings.

“We think that the problems we have had are pretty well resolved, and the only thing working against us now is the price of gold,” said Fleming.

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