Profits nosedive for Black Hawk

Despite improved operating results at the Keystone gold mine near Lynn Lake, Man., the writedown of an exploration property left Black Hawk Mining (BHK-T) with a loss of $4.1 million (or 2 cents per share) for 1996. By comparison, the company posted a loss of $1.1 million for the previous year.

In the fourth quarter, Black Hawk decided not to renew its lease on the Knox Nickel property in Maine. The writedown wiped out the year’s modest earnings of $29,042, all of which are creditable to Keystone, where higher grades, improved recovery and increased production resulted in an operating profit of $2.1 million.

Keystone produced 33,279 oz. gold in 1996, providing all of Black Hawk’s revenue, estimated at $17.5 million. Cash production costs averaged US$358 per oz.

Reserves at Keystone increased to 1.5 million tonnes grading 4.4 grams gold per tonne, up from 1.4 million tonnes grading 3.9 grams at the end of 1995.

The increase is related to the planned East Pit Extension, which was drilled off in early 1996.

At Black Hawk’s Vogel property in Hoyle Twp., east of Timmins, Ont., deep drilling by partner Kinross Gold (K-T) has intersected mineralization on known structures at depths of 200-520 metres. Black Hawk’s earlier drilling had outlined a resource of 700,000 tonnes grading 11.3 grams gold at depths above 200 metres, on three vein structures. This earlier drilling encountered several other mineralized structures, none of which were included in the resource calculation.

Kinross’s deep drilling confirmed that the structures continue at depth; the program intersected mineralization grading 1.7-52.2 grams gold over core lengths of 0.7-4.8 metres.

Kinross is earning a 32.5% interest, and Thunderwood Resources (THS-T) a 17.5% interest, in the property. Kinross, the operating partner, expects to have a development plan ready by late 1997, with production anticipated for mid-1999.

A short distance west of the project, in Tisdale Twp., Kinross affiliate Pentland Firth Ventures (PFO-T) has concluded an agreement with Moneta Porcupine Mines (ME-T) whereby the companies’ properties will be pooled together.

Moneta holds 9 sq. km in the area, Pentland 2.5 sq. km. The agreement calls for the latter to fund all expenditures for the first year, amounting to $250,000. Moneta will receive 100,000 shares in Pentland and 100,000 purchase warrants exercisable for one year at $1.60. At the beginning of the second year, Pentland can exercise an option to acquire 50% of the land package for another 100,000 shares and 100,000 warrants exercisable at $1.80.

The properties cover possible extensions to the camp’s New Mine trend, which links the Hoyle Pond, Bell Creek and Marlhill mines north of the camp’s main break. The trend is believed to extend west, across the Burrow-Benedict fault, on to ground held by Moneta and Pentland.