MacDonald mine could produce zinc by fall

Negotiations involving MacDonald Mines Exploration (COATS), Deak Resources Corp. (TSE) and Noranda Inc. (TSE) are nearing completion and should be finalized this month, says MacDonald President Milton Snow.

The companies have exchanged various letters of intent which eventually will lead to a dewatering of the open pit and resumption of production.

The mine is currently owned by a private company, Les Mines Gallen, which is held 51% by Noranda and 49% by MacDonald.

Deak has been negotiating to acquire Noranda’s 51% interest in Gallen, and is currently working to satisfy all necessary environmental requirements for the planned mining operation.

A joint venture agreement between Deak and MacDonald calls for Deak to become operator of the mine with both companies obtaining a 50% interest in the property. The joint venture will be subject to a 15% net profits interest payable to Noranda.

The MacDonald property is one of a number being prepared for production in the Noranda camp by Deak, all under the guidance of Malcolm Slack, a well know mine developer.

Deak estimates open pit reserves at 765,000 tons grading 6.67% zinc, 0.024 oz gold and 0.79 oz silver per ton together with 385,000 tons undergrou nd grading 7.19% zinc, 0.025 oz gold and 1.03 oz silver. Another deeper orebody on the property is reported to contain a further 261,000 tons of 6.55% zinc.

According to Snow, annual revenue from the open pit mining operation could be about $22 million in 1990, based on a zinc price of 81 cents per lb and production of 1,500-2,000 tons per day.

The base metal project has a troubled history with two previous mine closures by Noranda, and controversy surrounding the abrupt resignation of most of MacDonald Mines’ former board of directors in 1987.

Shares of MacDonald Mines Exploration have traded at around 25-35 cents recently, down from a high of 70 cents reached in March when the company first announced it had signed a letter of intent with Deak to re-open the mine.

]]>