Start-up problems at McCabe

For the period, the mine produced 42,000 tons of rock grading 0.135 oz gold per ton to produce 4,350 oz gold. Stan West management attributes the shortfall to the processing of a lower grading stockpile, the mining of lower grading stopes and excessive dilution.

The problems have also been compounded by poor mill recoveries averaging 77%. When the mine entered production, Stan West said the mine would be a low-cost operation by the time the mill reached its capacity of 500 tons per day by the end of 1988. Mining a grade of 0.3 oz gold or better, McCabe was supposed to produce approximately 50,000 oz of gold and 140,000 oz of silver per year. Recoveries were projected at 95%.

Stan West is increasing its use of selective mining in an effort to reduce dilution. Also, mill testing is being conducted with the objective of improving recoveries and gold production. The company says it needs a grade of 0.25 oz gold to achieve positive cash flow.

The mine improvement effort appears to be paying off. During the last few weeks, mill recoveries have exceeded 82%. Also, an additional five to six stopes are being prepared, which with the current six stopes, will provide enough higher grading feed for the 500-ton- per-day mill.

When the mine entered production, reserves were estimated at 750,000 tons grading 0.332 oz gold and 1.7 oz silver. Exploration work suggests that the potential for significantly increasing reserves exists on the property. Encouraging results have been returned from drifting under the Gladstone mine workings, Stan West says. This work, a consultant says, has increased the mine’s reserves. Some of the better results included a 7-ft width averaging 0.4 oz gold per ton in face samples.

As a result of the start-up problems, Stan West has been forced to use up a $7-million debt facility which was arranged by Elders Finance. The loan has been restructured in order to defer the initial repayment which was due on Dec 31.

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