Rayrock first quarter up, sees dip in gold output

Production this year from the three open pit gold mines in Nevada operated by Rayrock Yellowknife Resources could decline slightly from last year, President David Crombie said following the annual meeting.

Rayrock’s share of production from the three mines, the Pinson, Preble and Dee mines, was 37,981 oz gold in 1986, up by over 4,000 oz from the previous year.

At the meeting, Mr Crombie reported first quarter 1987 earnings for Rayrock, after taxes and exploration expense, of $963,000, or 9 cents a share, compared with $705,000, or 7 cents a share, in the similar period of 1986.

He said any decline in production from the three Nevada mines, (Rayrock owns 29% of Dee, and 26 1/2 % of Pinson and Preble) would be in the order of 5%, and would result from mining of slightly lower grade ore from the Preble mine.

At the Dee, a third grinding mill was started up early this year, and has increased milling capacity to an average of 1,175 tons per day from 969 tons per day last year. The grade of ore treated will be lower than in previous years, but the increased mill throughput will help to compensate for this.

Reviewing the company’s exploration projects, David Hutton, Rayrock vice-president exploration and development, said the new Marigold gold project in Nevada is the most significant of them, with “potential as another major mining camp.”

Of three new zones of gold mineralization at the Marigold the most significant he said, is the 8 South zone estimated earlier this year to contain a mining reserve of 5,028,000 tons grading 0.073 oz gold per ton. A new reserve figure is expected to be available within 3-4 weeks, he said.

The objective this year at the Marigold is to complete sufficient drilling, metallurgical testing and engineering work to produce a feasibility report, on which a production decision may be made early next year.

In Chile, where the company has been successful in locating high grade copper mineralization on the Mina Ivan project, Mr Hutton says surface drillin g to test for extensions of a breccia sulphide zone, which remains open along strike and down dip, should start by mid-June.

Noting that the company is in sound financial health, Mr Crombie said working capital is now at around $14 million. In addition the company has completed an issue of 7 1/2 % convertible debentures to yield over $24 million.

To a question from the floor, he said that while the latter funds would be just added to working capital, the longer-term plan is to invest in income-producing resource assets.