MacLellan mine has successful turnaround

The turnaround of the MacLellan gold mine appears to have been successfully completed, mine owner and operator LynnGold Resources (TSE) says. Results from the third quarter show the mine producing 14,241 oz of gold from 101,931 tons of ore. For the 9- month period, gold output totalled 40,548 oz — more than was produced during all of 1987. Also, operating costs were reduced to $53 per ton of rock. During the quarter, the cost per ounce of gold increased to $335(US) due to the mining of lower grading ore, the company says.

Located near Lynn Lake, Man., the mine was placed in production in 1986 by SherrGold, an affiliate of Sherritt Gordon Mines. A money loser from day one, the mine and company were sold by Sherritt to Hayes Resources (TSE) in early 1988. Hayes purchased a 58% controlling interest in SherrGold and then changed its name to LynnGold later in the year.

Earnings for the quarter were $269,000 or 2 per share compared to a loss of $2.56 million or 25 per share. For the 9-month period, LynnGold lost $188,000 or 4 per share. Last year, the company lost $7.4 million or 72 per share during the corresponding period.

Third quarter revenues declined to $7.5 million from $8.8 million realized in the second quarter. This was due to lower gold prices, a small decrease in gold output and a weaker Canadian dollar. Fourth quarter results are not expected to be greatly affected by lower gold prices, the company says. This being the result of forward sales completed at $487(US) per oz.

Underground developments completed during the period include the installation of a jaw crusher which replaced a rockbreaker and the extension of a decline ramp to the 370-ft level. The ramp enables more shaft hoisting time to be devoted to ore handling as opposed to mine servicing.

Exploration in the area is focusing on the Burnt Timber discovery near Wasekwan Lake. Located within trucking distance of the MacLellan mill, the Burnt Timber deposit hosts reserves of 1.1 million tons grading 0.11 oz gold per ton. A prefeasibility study has been started. Another discovery adjacent to the deposit has yielded strong results in three holes. These included 1 oz gold in a 5.3-ft section of core and 0.23 oz gold across 21.4 ft.