LAC in solid shape despite loss of Williams mine

Toronto-based LAC, which produced more than 300,000 oz gold last year, is poised to increase output to 500,000 oz by the end of 1992.

LAC developed the Williams mine which will turn out a projected 490,000 oz this year. But the company lost the mine in a 1986 court decision to Corona Corp. (TSE). Appeals to the Ontario Court of Appeal and the Supreme Court of Canada proved unsuccessful (N.M., Aug 21/89).

The court softened the loss of the mine somewhat by ordering Corona to make a cash payment covering LAC’s development costs. The 1986 award of $154 million has grown, with interest, to about $210 million today.

That amount, added to LAC’s cash and short-term investments of about $255 million (as of June 30, 1989), leaves the company with current cash reserves of almost half- a-billion dollars.

LAC’s long-term debt, as of the same date, stood at slightly more than $1 million.

Senior vice-president R.C. Francisco said the court decision does not affect the on-going progress of the company. LAC, he said, intends to continue its strategy of increasing its reserves by finding and developing major hard-rock deposits.

Since the 1986 court ruling, after which LAC ceased to account for the Williams operation in its financial statements, the company reports increasing total gold output by 20-25%, revenues by 35% and earnings by almost seven fold.

During the first six months of 1989, LAC produced 164,595 oz. First-half earnings totalled $23.1 million on revenue of $91.9 million.

Besides its Canadian operations, which include interests in three of the country’s largest gold mines (Doyon, Bousquet No 1 and Macassa), LAC is active on the exploration scene in the United States, Chile and Australia. The company also operates a zinc mine in Chile.

News of the recent Supreme Court of Canada decision had little effect on share prices. By the end of the first trading session following the late Friday afternoon announcement, both LAC and Corona (the A stock) had traded more than three million shares, but LAC had slipped $1.38 to $11.88 while Corona A gained 25 cents to $9. By the end of the trading week, LAC remained at $11.88 and Corona A was up to $9.13.

A third company, Teck Corp. (TSE), which under an agreement with Corona becomes a 50/50 partner in the Williams mine, fared slightly better, gaining 38 cents to $23 by the end of the first trading day after the decision and closing the week at $23.75.

The Northern Miner recently visited two of LAC’s projects, the developing Bousquet No 2 property near Cadillac, Que., and a tailings retreatment operation at Kirkland Lake, Ont.

At Bousquet No 2, shaft-sinking crews of Dynatec Mining were excavating the shaft station on the 7th level at a depth of 3,600 ft. Gilles Brousseau, project director, said he expects the $85-million mine to enter pre-production by June, 1990. At full production, the mine should be turning out 150,000 oz per year. The mine is being designed to produce 2,750 tons of ore per day at an average grade of 0.186 oz gold per ton.

Underground diamond drilling on 130-ft spacings (which puts the ore in the proven category) will start soon on the third level. Contract drillers from Morissette Canada are currently operating two machines on the 5th level.

The first heading in the ore zone itself will be a ventilation crosscut on the 3rd level. It should be completed in September and will provide the first bulk sample from the zone.

“We’re being conservative on the milling side,” Brousseau said, “by investing in the expansion of the East mill in Malartic. Once we determine the metallurgical characteristics of the ore, then we might invest in a new mill at the Bousquet No 2 site. We should know by June, 1990.”

In Kirkland Lake, LAC is pouring about 2,000 oz of gold per week at its new mill. Mill Superintendent Len Robinson said the mill consistently treats 750 tons of tailings per day now that a grinding problem has been overcome.

The $20-million mill, which started up last September, could not process any tailings for about 45 days last winter because of freezing in the outdoor thickener. Also, recoveries were only 35-40% because of an insufficiently-fine grind.

The mill circuit has since been re-designed. By constructing a large insulated surge tank capable of holding one day’s production and moving the thickener farther downstream in the process (after the grinding stage) and by commissioning a new tower mill, the company is now getting a better grind of 96% minus 325 mesh, Metallurgist Carol Symes said.

Recoveries have subsequently increased to the 73-76% range since June. The tailings feed averages about 0.07 oz gold per ton.

The same mill also treats about 500 tons of ore per day grading about 0.5 oz gold per ton from the Macassa mine. This material is treated in a separate grinding and leaching circuit. The mill is capable of handling 600 tons of ore per day, but the mine is not capable of supplying it.

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