Northumberland confident N.B. mine will be approved

Geologist William Young is confident his company, Northumberland Mines will give New Brunswick its first, albeit small, full- fledged precious metals mine within a year.

The provincial government has given its approval in principle to the Toronto-based junior to build a 1,000-ton-per-day open pit mine near Bathurst, N.B. It could produce 10,000 oz of gold and 250,000 oz of silver per year for the next five years according to present reserves.

The deposit, called the Murray Brook deposit, contains 1.7 million tons grading 0.0371 oz gold and 1.49 oz silver per ton.

A $5-million mining project, evaluated by Kilborn Engineering, could pay for itself in about two years and generate a discounted cash flow rate of return for Northumberland of about 50%.

These predictions are based on an operating cost of just $9.37 per ton and precious metals prices of $414(US) per oz for gold and $5 per oz for silver.

The scale of the venture means it will be very sensitive to the price of gold and silver, Mr Young told brokers and mine analysts at a company presentation in Toronto last week.

“We are now in the final phases of a $5-million financing,” Mr Young says. Once the money is in place and once the detailed engineering design has been completed, the provincial government will be considering formal approval of the project.

Mr Young is confident his company can have the mine up and running within a year after the final approval is granted.

At the company’s other potential gold mine at Cochrane Hill, N.S., joint venture partner Inco Ltd. (60%) is currently evaluating results from a $2.2-million underground bulk sampling program completed last winter.

Mr. Young anticipates this property could add 30,000 oz of gold to the company’s annual gold output by 1990.

Northumberland has about 8,193,331 shares outstanding. This week they traded on the Toronto Stock Exchange at about $1.58.