With the first full year of production from its 24.01% owned Denton Rawhide mine behind it, Plexus Resources (TSE) reported positive earnings and cash flow in 1991.
Plexus also holds a 2.45% royalty interest in the west-central Nevada gold mine. The balance of the mine is owned 51% by Kennecott and 25% by Kiewit Mining.
The company netted 19,940 oz. of gold and 134,300 oz. of silver out of its interests at a direct operating cost of about US$221 per oz. The Denton-Rawhide mine crushes and stacks about 3.5 million tons of ore per year with heap leach recoveries averaging about 79% for gold and 29% for silver in 1991.
Plexus anticipates its share of production will increase to about 25,000 oz. of gold and 184,000 oz. of silver in 1992, with cash costs falling to the US$195-205-per-oz. level.
The company noted that development and exploration drilling adjacent to current mining operations expanded reserves by about 18%, with current proven and probable ore standing at about 54 million tons grading at 0.026 oz. gold and 0.41 oz. silver per ton.
Plexus reported earnings of US$300,000 for 1991, up from a loss of US$864,000 in the previous year. Cash flow for the year increased to US$2.24 million compared to a negative cash flow of US$950,000 in 1990.
A gold price hedging program allowed the company to realize an average price of US$387 per oz. compared with the average London spot price of US$362 in 1991.
Work on Plexus’ Bornite property 50 miles east of Salem, Oreg., advanced the project to the development stage. Recently revised ore reserve calculations, based on a 0.3% copper cutoff, put reserves at about 3.1 million tons grading 2.2% copper.
The deposit is contained in a roughly cylindrical breccia pipe about 450 ft. in diameter and extending from surface down to about 1,000 ft. Conceptual designs for the mine, flotation mill, tailings system and site reclamation have been completed and the company is proceeding with an “environmental impact statement.”
Plexus hopes to have permits for a 1,000-ton-per-day operation by early 1993. Permitting efforts at the Western World are continuing. The company holds a 75% interest in a joint venture with United Gunn Resources (VSE) in a project about 18 miles east of Marysville, Calif.
The joint venture owns title to the 1,400-acre property and plans to develop it as a residential community following mine reclamation.
Plans call for a open pit mine and mill on 160 acres of the land to process reserves totaling 1.4 million tons and grading 2.62% copper. The mine-life based on a 750-ton-per-day milling operation is expected to be about seven years from the start of construction.
On completion, the mine and mill site will be re-contoured and flooded to form a lake to compliment the real estate development.
The company hopes to receive permits for the project before year end and will review financing plans at that time.
As of Dec. 31, Plexus had a working capital deficit of about US$1.2 million, a gold loan totaling US$8.2 million and US$1.2 million in convertible debentures. The working capital deficit is misleading, since it includes the company’s 233,334-share investment in Crown Butte Resources (TSE) at its cost of US$114,603. Subsequent to year-end, the company sold 203,700 shares of Crown Butte at $7.50 and it expects to sell the remainder before year-end. Through hedging and its gold loans, Plexus expects to receive an average of US$377 per oz. for 15,000 oz. of 1992’s gold production.
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