LAC to spend $34 million at El Indio gold mine in Chile

With a broader platform of gold projects and mines to build upon, LAC Minerals (TSE) is set to launch a major exploration effort this year designed to bolster its ore reserves for the future. Last year’s acquisition by LAC of a 65% stake in Bond International Gold (TSE) included control of five operating mines and several high profile exploration prospects, also. Most of those are set to receive big spending programs this year.

President Peter Allen told a big turnout of shareholders at the annual meeting that his company is “looking forward to testing several high priority exploration targets this year.”

The crown jewel in the BIG acquisition is its El Indio gold mining complex in Chile, where about $23 million in exploration and development projects are planned for 1990, including $10 million for deep drilling programs. Total gold production for El Indio is projected at 206,000 oz. this year.

LAC plans major exploration spending programs to outline new reserves and add to existing ones at most of the BIG mining properties it acquired in Canada, the U.S. and South America.

At the 65% owned Bullfrog open pit mine in Nevada, LAC is planning a $2-million exploration drilling program around the open pit to expand ore reserves. Allen said the Bullfrog deposit was not sufficiently drilled in the past by BIG because the latter company was short of capital. Another $2 million worth of expenditures is slated for a regional exploration and drilling program in the Bullfrog area, also.

Allen hinted that lower earnings could be in store for LAC as the impact of major exploration spending programs are felt over the next two years. The company appears willing to sacrifice short-term earnings for long-term gain as it builds up reserves at its gold mines. “We have to put a priority on the gold reserves we’re going to mine in the next 10-20 years,” he said.

In South Dakota, the 65% owned Richmond Hill open pit mining property will see a $2-million exploration program with a total of seven targets to be tested this year.

Meanwhile, in Canada, $800,000 has been budgeted for exploration spending on the Doyon mine property in Quebec. Production at a rate of 75,000 oz. gold per year is expected to commence in June at the Bousquet No. 2 mine where development expenditures will total $18.5 million.

The Macassa mine near Kirkland Lake, Ont., will see about $2.2 million spent on exploration to find new ore at the mine and on the adjoining claims to the west. Macassa is set to reach an important historical milestone this month when it tops three million ounces of gold production since startup in 1933.

At the 65% owned Golden Patricia mine near Pickle Lake, Ont., $1.7 million has been allocated to conduct underground exploration and another $1.7 million for surface exploration to test the 15-km long Golden Patricia horizon which hosts the main deposit.

At the large Red Mountain property near Stewart, B.C., a $2.5- million exploration program is planned this year to follow up high- grade gold intersections discovered last year by BIG.

When asked if LAC is planning to purchase the remaining 35% interest in BIG it does not already own, Allen said the company “does not have any intention to acquire the minority interest at this time.”

Since the acquisition of BIG, total gold production from mines owned by the two companies will be about 1.1 million oz. this year, of which LAC’s share will be about 770,000 oz.