LynnGold to raise $4 m through equity issue

The cash is required to increase gold production, lower costs and improve profitability, Goodwin said. All three goals could be met by bringing the Burnt Timber deposit into production. Situated within trucking distance of LynnGold’s MacLellan mine and mill near Lynn Lake, Man., the Burnt Timber deposit hosts reserves of one million tons grading 0.1 oz gold per ton. Mining would be from an open pit.

Owned 51% by LynnGold and 49% by Trans America Industries (VSE), the Burnt Timber deposit would require a 500-ton-per-day expansion of the MacLellan mill. The mill’s current capacity is 1,200 tons per day. The project would be capable of producing 16,000 oz of gold per year.

Despite the improvements in operations made at the MacLellan mine since LynnGold was purchased by Hayes Resources (TSE) in early 1988, Goodwin said that costs still remain too high. “These costs must be further reduced,” he said. In 1988 costs were $420(C) per oz of gold, down considerably from $586 per oz in the previous year. In 1989, Goodwin expects the company will earn $3.9 million and generate cash flow of $8.6 million.

A highlight last year was the expansion of reserves at the MacLellan mine to 2.9 million tons — sufficient for seven years of operating life. “In 1985, the mine had a five year life,” Goodwin noted. “The potential for finding more ore is excellent.” Last year the mine produced 55,188 oz of gold.

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