Rea to recover from third quarter

Mechanical problems at the Mt. Hamilton mine have taken their toll on Rea Gold (TSE), as has the mining of a low-grade ore zone there.

Production at the mine, situated near Ely, Nev., slipped to 7,100 oz. in the third quarter from 10,100 oz. in the second.

The decline is chiefly related to the failure of four ore haulage trucks, which have since been replaced with three new vehicles.

The open-pit, heap-leach operation is expected to yield 32,000 oz. in this, its first, year of operation.

Prior to production, minable reserves were estimated at 9 million tons grading 0.052 oz. gold and 0.37 oz. silver, and annual output was forecast at 54,000 oz. gold and 141,000 oz. silver over a duration of 7.5 years.

A new mine operating plan calls for production of 50,000 oz. in 1996, increasing to 65,000 oz. in 1997.

For the nine months ended Sept. 30, Rea lost $1.6 million, compared with a loss of $60,861 for the same period in 1994.

Meanwhile, reverse-circulation drilling is under way on the newly identified Chester zone at Mt. Hamilton. To date, 26 of a planned 50 holes have been drilled.

The structure lies 1.5 miles south of the NE Seligman deposit, and infill drilling along an 1,800-ft. access road is confirming two separate horizons of gold mineralization.

The upper zone is defined over a north-south strike length of 600 ft. and averages 25 ft. in thickness, while the lower zone extends along 1,100 ft of strike length and is, on average, 15 ft. thick. Values range from 35 ft. of 0.026 oz. to 5 ft. of 0.13 oz., at depths ranging from 20 to 190 ft. below surface.