New Britannia mine overachieving

Gold production is up and cash costs are down at the New Britannia mine in Manitoba.

The mine, which is owned equally by TVX Gold (TVX-T) and High River Gold Mines (HRG-T), produced 91,415 oz. gold in 1997, topping the partners’ target of 85,000 oz. Production was up 34% over the previous year. The production goal for 1998 is 92,500 oz.

Cash operating costs per ounce continued to decline throughout the year; the average for 1997 was US$274 per oz. gold (total cash cost: US$279 per oz.), which was on budget. Cash operating costs for 1998 are expected to average US$255 per oz. (projected total cash cost: US$260 per oz.).

During the third quarter, New Britannia achieved its objective of having ore developed a full year ahead of mining, with six months of ore drilled out.

The results of an aggressive $3-million underground drilling program exceeded the partners’ expectations. The program on the 3,000-ft. level consisted of 1,641 ft. of drifting and 49,563 ft. of diamond drilling in 88 holes. The exploration program confirmed continuity of both the Dick and Ruttan zones from the 2,300-ft. level down to the limit of drilling on the 3,150-ft.

level.

Both structures are open at depth and show good continuity of the economic gold mineralization with either consistent or increasing grade, strike and thickness. The Ruttan zone also remains open to the east along strike. The ore reserve as of Dec. 31, 1997, is being calculated and will be available by late January.

The drilling on the Dick zone confirms the ore continuity to the 3,150-ft.

level, where the strike length has been extended for another 140 ft. for a total length of 1,040 ft. The drilling results also indicate an increase in zone width and grade at depth.

The best of the 12 key holes that defined the Dick zone were: * hole 43, with 0.4 oz. gold over 24 feet;

* hole 24, with 0.21 oz. over 33 feet;

* hole 81, with 0.23 oz. over 15 feet;

* hole 25, with 0.31 oz. over 18 feet;

* hole 93, with 0.24 oz. over 17 feet; and

* hole 20, with 0.24 oz. over 20 ft.

All of the above intervals are true widths.

The remaining 50 drill holes that filled in the zone have an average grade of 0.2 oz. gold per ton and a true width of 16 ft. The 3,150-ft. level drilling has left the structure open at depth. One hole drilled from surface in 1993 intersected the Dick zone at a vertical depth of 3,230 ft. and returned a gold grade of 0.3 oz. over a true width of 23 ft. The results of this deep hole can now be taken into account in calculating the total gold resource.

Drilling on the Ruttan zone has confirmed continuity in the grade and width of the zone from the 2,300-ft. level down to the 3,100-ft. level, with the structure remaining open at depth. The strike length of the Ruttan zone is 700 ft., and it remains open to the east.

Five key holes that intersected the Ruttan zone contained the following intercepts:

* 0.18 oz. of gold over 23 feet in hole 71;

* 0.23 oz. over 12 ft. in hole 202;

* 0.24 oz. over 30 ft. in hole 42;

* 0.15 oz. over 40 ft. in hole 201; as well as

* 0.11 oz. over 33 ft. in hole 39.

The assay results of the remaining 15 holes (six of which were drilled outside of the zone) have an average grade of 0.19 oz. over a true width of 21.4 ft. The strike length of the Dick and Ruttan zones on the 3,000-ft.

level now exceeds 1,740 ft., with the Ruttan zone still open to the east.

Based on last year’s exploration work, TVX and High River conclude that New Britannia is a relatively thick deposit with good vertical and horizontal continuity, and with grade and width increasing at depth. The mineralized structures remain open at depth and show every indication of continuing to considerable depths below the 3,000-ft. level.

High River reports that the mine will continue to benefit from forward sales of 81,000 oz. gold at an average price of US$465 per oz. in 1998, and 13,000 oz. at US$481 per oz. in the first quarter of 1999.