Quebec STurgeon group follows St. Andrew lead

A concerted drive toward production at the Stock Twp. property near Timmins, Ont., has made St Andrew Goldfields (TSE) the star in Quebec Sturgeon River Mines’ (TSE) group of four mining companies.

The 55%-owned Quebec Sturgeon subsidiary is expected to churn out about 35,000 oz of gold annually when production begins at Stock Twp. next September.

But as St Andrew prepares to spend $15 million to construct a 500-ton-per-day milling facility, the affiliate companies in the Quebec Sturgeon group were reporting some encouraging developments at their own projects.

Mining and milling operations were suspended for most of the year at Bachelor Lake Gold Mines’ Desmaraisville, Que., mine while the company attempts to solve a severe dilution problem. Bachelor Lake is a 51%-owned Quebec Sturgeon subsidiary.

In operation for only 76.5 working days, the Bachelor Lake mine produced 4,391 oz gold in 1987 and revenues added up to only $2.84 million.

But salvation appears to lie in the discovery of a new vein structure and higher grades below the 7th level where Bachelor Lake recently conducted a major underground program. Main vein

As reported (N.M., Nov 9/87), hopes of a turnaround have been fueled by a steepening dip of the Main vein system which has allowed the company to drift in the vein at levels 8, 9, and 10.

An updated reserve estimate, calculated to the 15th level horizon and confined to the Main vein system, adds up to 296,780 tons of proven and probable reserves at an average cut and diluted grade of 0.183 oz gold per ton, the company said recently.

With a possible reserve inventory of 492,331 tons grading 0.175 oz, Bachelor Lake has also directed its exploration efforts toward the new A Vein structure which has been traced vertically from levels 7 to 11. The A Vein appears to traverse the entire property and could prove to be more important to the operation than the Main vein which has been the sole source of mill feed since production began in 1982, Bachelor Lake said recently.

Due to an $8-million write-down in the carrying value of the Desmaraisville gold property, Bachelor Lake reported a year-end loss of $13.6 million or $1.84 per share. That compares with a loss of $894,576 or 13 cents per share before an extraordinary item at the same time last year. Bateman Twp.

In contrast Phoenix Gold Mines (TSE), a 77%-owned subsidiary in the Quebec Sturgeon group increased its cash position to $4.9 million in 1987 from $1.34 million at the same time in 1986.

However, the sale of a 43% interest in the Bateman Twp. project near Red Lake, Ont. to McFinley Red Lake Mines (TSE), couldn’t prevent Phoenix from reporting a 1987 net loss of $1.6 million or 39 cents per share.

Under the terms of a recent agreement, Placer Dome Inc. (TSE) is earning a 51% working interest by spending $2 million at Phoenix Gold’s Sturgeon River property near Beardmore, Ont.

The 1,623-acre property is located around the original Sturgeon River Gold Mine claims which produced 73,332 oz gold and 15,992 oz silver byproduct from 233,476 tons grading 0.31 oz between 1936 and 1942.

The Sturgeon River mine is developed by a 2,108-ft vertical shaft and 15 levels which descend from 125 ft to 2,080 ft. Exploration is expected to focus on the Marge vein. Located 2,000 ft north of the shaft, it has been mapped along strike for 980 ft.

Quebec Sturgeon reported a year- end net loss of $1.57 million or 17 cents per share in 1987 compared to a gain of $598,452 or 7 cents per share at the same time last year. Year-end revenues from gold production decreased to $2.7 million from $10.4 million in 1986. Quebec Sturgeon’s shares were trading recently on the Toronto Stock Exchange at $2.80 in a 52-week range of $8.25 and $2.25.