Inco exposure to gold increased with new firm

In an effort to increase its exposure to gold, Inco Ltd. is spinning off its gold assets into a new vehicle known as Inco Gold. The company, which will initially remain 100%- controlled by Inco, forecasts gold production of 115,000 oz by 1991. That figure will swell to more than 400,000 oz of gold per year by the late 1990s, Inco estimates.

Although management says there are no plans to take the new company public, most industry experts feel a public issue and exchange listing will come in the near future. Such a move would follow on the heels of other well- known mining firms which have placed their gold assets into new companies, thereby enjoying the historically higher price earnings multiples generated by listed gold issues.

“We want to establish a track record first,” Dr Walter Curlook, president of Inco Gold, told The Northern Miner during an interview. Dr Curlook is also executive vice-president of Inco. However, “the possibility is open to going public,” he added.

Inco Gold holds interests in several projects in the advanced stages of development. Crixas, a gold project shared equally with Anglo American in Brazil, hosts reserves in excess of seven million tons grading 0.34 oz gold per ton. The mine is expected to produce 115,000 oz per year by 1990 from a 1,100-ton-per-day operation. A first-phase $65-million(US) capital expenditure program has been approved which will lead to production, Dr Curlook explained. Underground, the partners have “encountered good surprises,” Terrence Podolsky, vice-president of exploration with the new company said. Mr Podolsky is also vice- president of Inco.

Inco Gold’s first gold production will come in 1988 from its 60%- owned Golden Pond mine development. Located in the Casa Berardi area of northwestern Quebec, the property hosts reserves of 10 million tons grading 0.22 oz. Although production will start next August at a rate of 60,000 oz per year, Dr Curlook noted that the mill and plant thickeners are being built to handle up to 1,980 tons per day.

Initial production will come from the East zone at 880 tons per day. “We expect to get enough feed to meet the 1,980-ton rate. That will double output,” Dr Curlook explained. At such a rate, the Golden Pond project could be expected to produce in excess of 135,000 oz per year, The Northern Miner estimates. Golden Knight Resources holds the remaining 40% stake in the project.

A production decision is also expected shortly for the Jardine project in Montana. Held equally by Inco and Homestake Mining, the property hosts more than one million tons grading 0.33 oz gold.

The company’s philosophy will focus on developing and operating gold mines. With interests in more than 50 gold projects ranging coast to coast in Canada and throughout the U.S. and Brazil, Inco Gold plans to continue increasing its exposure to the metal. In Alaska, Inco Gold has just completed a deal with a native group which gives the company the right to explore a large 785,000-acre concession. The effort will attempt to find the hardrock source areas of known placer gold deposits in the area.