PRECIOUS METALS — High River moving into black

Record production of gold from the New Britannia mine in Snow Lake, Man., has ensured a third profitable quarter for 50%-owner High River Gold (HRG-T).

The mine, operated by High River’s joint-venture partner, TVX Gold (TVX-T), produced 97,603 oz. in 1998 — about 5% ahead of planned production and 7% greater than in 1997. At the same time, TVX brought costs down to US$238 from US$279 per oz.

The results did not bring High River into the black for the year, but they did mean that the last six months of 1998 were profitable. The company posted a loss of $2.4 million (or 9 cents per share) on revenue of $32.4 million for 1998, but earned $837,000 in the third quarter on revenue of $8.3 million. In 1997, High River lost $7.9 million on revenue of $26.9 million.

The trend has continued into this year’s first quarter, with High River earning $678,000 on revenue of $7.2 million. Cash costs at New Britannia have fallen to US$215 per oz. and production, at 23,779 oz., is slightly ahead of last year’s pace. The lower cost figure stems from reductions in maintenance costs and marginal increases in recovery, as well as better productivity, which has been helped by a faster development timetable.

Since exploration drilling over the past two years has replaced resources at a faster rate than gold was being produced, resources at New Britannia are also up. High River quotes New Britannia’s year-end reserves at 3.6 million tonnes grading 5 grams gold per tonne, plus resources of 2 million tonnes grading 5.2 grams. At the end of 1997, the mine had 4 million tonnes grading 4.7 grams in reserves, and an additional resource of 1.7 million tonnes grading 5.1 grams.

The two principal mineralized zones in the resource, Dick and Ruttan, are both open to depth below the 3,000-ft. level (914 metres deep), and deeper exploration holes indicate that the zones persist.

New Britannia recently won the 1998 John T. Ryan award for safety in western Canadian metal mining. The mine had won the national trophy in 1997.

Production at the Russian gold mines operated by Buryatzoloto (BYZJY-Q), in which High River owns a 23% interest, also hit records in 1998. The Zun-Holba mine east of Lake Baikal produced 63,047 oz. at a cash cost of US$174 per oz. in 1998, up from 57,142 oz. at US$241 in 1997. The Irokinda mine, southwest of the lake, saw its production rise to 32,190 oz. from 28,669 the year before, while costs fell to US$166 from US$215. Small placer operations on the Irokinda property produced less in 1998, but costs also declined.

At the Taparko property in eastern Burkina Faso, where High River holds a 61.5% interest, a feasibility study is under way. A new resource and minable reserve estimate, based on additional results from infill drilling in 1998, is being calculated. The infill drilling produced no surprises and the final resource figure is expected to mirror previous estimates.

High River’s partners on the project are the government of Burkina Faso, with 20%, and the privately owned Canadian company Incanore Resources, with 18.5%.

Exploration drilling is indicating more mineralization on target zones away from the main resource. Ten reverse-circulation drill holes on a showing named Zemce 4/5 all intersected gold mineralization, with gold grades ranging from 1.1 to 9 grams per tonne. The longest intersections (7 metres) showed average grades of 6.2 and 5.1 grams per tonne.

In Taparko’s Area 3, operators have identified 15 showings over a 24-km strike length of the main shear structure. Four of the showings have been drilled, yielding encouraging preliminary results; others have been trenched. The 8-km corridor known as Area 4 has been trenched, and other areas have been subjected to preliminary surface work.