Queenstake’s future production will include hard rock mines

Discussing Queenstake’s future prospects at the annual meeting, Gordon Gutrath, president, noted that 1988 gold output from four placer operations was a record 14,000 oz and he predicted 1989 production would reach 23,000 oz, increasing to 50,000 oz by 1991.

In early December, the company’s first hard rock mine, Dos Cabezas in Arizona, shipped 500 tons of silica flux grading 0.34 oz gold to the Phelps Dodge smelter in New Mexico on a test basis. Plans call for shipments of 1,000 tons per month when sufficient working stopes are developed this June. Dos Cabezas is expected to yield about 3,000 oz of gold this year and cash flow from the mine will be utilized to explore and develop additional reserves.

The Argus project in California is another advanced stage gold project with reserves of 1.2 million tons grading 0.054 oz. Childs International, the project operator, has proposed a $1.2 million(US) work program this year and it has already agreed to fund half. This would give Childs a 60% interest with Queenstake holding the balance. The expenditure will be largely directed at completing a feasibility study for the project.

A dispute with a former joint venture partner prevented any work being done at the Buckskin National Mine in Nevada; but Queenstake has now recovered its property interest. The company will make the required expenditures this year to earn a 60% interest. Reserves in the Bell vein now stand at 138,000 tons grading 0.36 oz gold and 3.4 oz silver.

While there is still potential to expand these reserves, the upcoming program will test a major epithermal precious metal system that was previously identified by Asarco, a possible joint venture partner. Gutrath emphasized that Queenstake is “continuing the search for new acquisitions with emphasis on gold deposits with reserves in excess of 100,000 oz.”

Placer operations began on schedule this year after the company successfully negotiated a $1-million operating line of credit with a major chartered bank. This loan will be repaid during the placer mining season, said Queenstake. A $2-million standby acquisition line of credit was also negotiated of which $1.3 million was drawn down by May 18. In an effort to increase its placer gold reserves, Queenstake also plans to complete a small flow- through share issue.

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