Lac looks beyond Canada’s boundaries for gold

LAC, which produced more than 300,000 oz gold in 1988 and is aiming for output of 500,000 oz by 1991, has high hopes for its Apolinario project in the mountains of Chile, where it is spending about $300,000(US) per month (until May) trying to verify continuity and grade of a multiple-vein system uncovered by preliminary exploration.

“We hope that by the end of May to have some good answers there,” President Peter Allen said in an interview.

Allen, 48, son of an investment dealer, saw his company’s earnings skyrocket in 1988, despite a volatile market price for gold which dropped for a few months to the $400(US) per oz range.

In northwestern Quebec, where LAC is active in two producing mines, the Doyon (with Cambior) and Bousquet #1, the company is excited about its Bousquet #2 exploration project, a deposit uncovered on the eastern side of the Bousquet property.

The company expects by the end of 1989 to have a shaft sunk to 4,200 ft and to have made a start on underground development. Commencement of production is scheduled for early 1989. Large concentrator considered

Construction of a concentrator with a production capacity of 3,400-4,000 tons per day is being considered, Allen said. “It would be a fairly major step. We would anticipate handling up to 2,100 tons from Bousquet #2 and 1,200 tons from Bousquet #1,” he said, adding that extra capacity might be added. (Ore from Bousquet #1 is being custom milled.)

Allen noted the impact Bousquet #2 will have on the over-all operations, the mine adding a forecast 140,000 oz per year to the company’s already prodigious output.

(Above production figures do not include data from the operations of the Page-Williams mine at Hemlo in northern Ontario; Lac no longer includes that data or any financial information for the mine in its quarterly and annual reports. The company is awaiting a decision by the Supreme Court of Canada on its appeal of a 1986 Ontario court ruling which awarded the mine to Corona Corp.)

At Doyon, east of Rouyn-Noranda, mining operations are going underground and an increase in the production cost is expected. Allen said the partners are hoping to average about $300(C) per oz. As an open pit gold mine, Doyon was the largest in the country.

Underground development at Doyon continues to show continuity of ore and grade, and is open in three directions, Allen said. “It’s been much more encouraging than we thought,” he said. New mineralized area

The Main zone, Allen explained, is essentially two zones, a second area of mineralization having been uncovered about one mile east of the main sh aft. For a while dilution became a possible problem but Allen said it has not turned out to be as severe as anticipated.

On the other side of the shaft, the West zone is showing great promise. “We expect half the ounces for one-third the tonnage for some time to come, maybe even better than that,” Allen said. The strike there is open in two directions, he said, below the fourth level to the north and at depth. An extensive underground drilling program is planned this year for the West zone.

Also, a similar type of drilling program is planned this year for the Bousquet #1 mine, located half- way between Rouyn-Noranda and Val d’Or.

At Kirkland Lake, in northeastern Ontario, drilling at the Macassa property has indicated the possibility of new areas of mineralization, to the north. Results confirming the strike are expected in the near future.

Pleased with the operational benefits flowing from the completion 2 1/2 years ago of the new No 3 shaft at Macassa, the company officially opened a new $20-million mill at the mine site last autumn. “You couldn’t get a better time to increase your reserves and production,” Allen said. Bulge indicated

Underground exploration continues at the deep mine which has been in operation for 56 years. Allen said a large bulge has been detected in the mining width below 6,100 ft and is being investigated.

By the end of 1989, LAC should be well advanced on the Bousquet #2 project and, along with its three other major producing projects, the company should be firmly placed among North America’s top gold producers. “We could see a major impact on our reserves for long- term production and on holding down our costs,” Allen said.

Two relatively small mining operations LAC is involved in are the Lake Shore tailings project at Kirkland Lake and the joint venture Francoeur project (with Rouyn Mining Resources) near Rouyn- Noranda. Both went into production during the latter part of 1988; the tailings recovery project (the new Macassa mill is being used to process the tailings) is expected to be a low cost operation, while Francoeur could be turning out 65,000 oz in 1991.

While LAC has an 85% interest in the producing Toqui zinc mine in Chile, Allen said the company’s main emphasis will remain on gold. (A 331/3% interest in the Stillwater platinum-palladium mine in Montana was sold by LAC in November last year for $48 million.)

The company remains a player at the grassroots level; it budgeted $30 million for exploration in 1988 in the search for gold, silver, diamonds and base metals in Canada, the United States, Australia and Chile. Among its promising gold plays is the Ortiz project in New Mexico in the United States, for which a feasibility study is being considered.

LAC shares are widely held, with no one individual or group claiming more than 5% of the outstanding shares. Last year (as in previous years) the company became the subject of takeover rumors, and while Allen admits to having heard the street talk, he said that in 1988 “nobody submitted an offer to me.”

No longer part of the LAC operation are oil and gas assets located in western Canada; the company sold those assets last year.

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