Radisson plans production in August at Duquesne bet

And, if it can raise the necessary funds ($8 million), the company hopes to have the mine in production during the summer of this year. President Guy Bou rassa says the total cost of the shares of Duquesne Gold Mines, a private company which owns the remaining 75% interest in the property, is $4.2 million.

“Management of the company believes this is a reasonable price, given the underground works that were already in place when the company acquired the property,” writes Bourassa in Radisson’s annual report. “At today’s prices, such installations would cost $10 million and would take 18 months to put in place.”

The company says it spent $6.2 million on surface and underground exploration work at the Duquesne project during the fiscal year ending Aug 31, 1988, the money raised through the sale of treasury and flow-through shares.

Last year’s program included installation of surface infrastructure and underground work involving dewatering, shaft rehabilitation to about 1,250 ft and drifting. Surface and underground drilling was also undertaken. Feasibility study

An independent feasibility study anticipates a 6-year life for the mine, based on probable reserves of 565,330 tons grading 0.26 oz gold per ton. (Possible reserves of about 183,000 oz grading 0.21 oz have also been identified.) Output of 24,000 oz per year is forecast.

A pre-production phase will cost $3.9 million, the company estimates. The company is negotiating for the custom milling of its ore during pre-production. Production could be under way in August.

Warrants exercised during the last fiscal year realized almost $1.3 million for the company, which issued about 1.5 million shares in return.

Bourassa says the company intends to raise the $8 million needed to place the property into production by means other than issuing common shares.

Radisson has interests in 11 other properties, for the most part located in the Casa Berardi and Rouyn- Noranda areas and all at the exploration stage.

John Larche, president of the Prospectors and Developers Association of Canada (PDAC), voices similar reservations about the coming year.

“It’ll still be a good year for exploration, but it will be the major (companies) that will carry a lot of the exploration load,” says Larche. “The majors are working from profits. The junior companies are not going to be participating as well as they should.”

Larche says prospectors and junior companies face three negative factors:

— investors’ attitudes have not “come back” since the market crash of October, 1987

— regulations governing the new government incentive program for mineral exploration, CEIP, have not yet come into effect

— the price of gold, the commodity on which most junior exploration activity is focussed, has declined markedly from a year earlier.

The year ahead is not all gloomy, however, Larche says. All three of those factors could change during the course of the year and, even at current levels, the price of gold still makes it an attractive exploration target.

Larche also says the federal government is well aware of the positive influence junior mining companies have on creating jobs throughout the regions of the country. The new mines minister, Jake Epp, will be a guest speaker at the PDAC’s convention and Larche plans to make the most of that opportunity.

“We’ll be meeting with the minister right after the convention and explore ways the government can help.” He says the incentive for exploration might be improved by, for example, adjusting upwards the cost base of flow-through shares. Currently the cost base is considered to be zero, so flow-through shares that are later sold incur considerable capital gains tax.

He says when the previous changes that established CEIP were announced, the minister of finance and the minister of energy mines and resources both “left the door open” that the program could be adjusted should conditions change.

Larche, who steps down as president of the PDAC at this year’s annual meeting of the PDAC March 5-9, says he plans to go prospecting himself as soon as his term as president ends.

The mixed feelings about prospects for 1989 are evident in other businesses related to mineral exploration, too.

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