United Coin gold production falls short of 24,159-oz. target

During the first six months of the year, gold production from the Golden Reward heap leach operation in the Black Hills gold camp of South Dakota amounted to about half of United Coin Mines’ (TSE) targeted output. To date the new mine has produced 13,230 oz. of gold, well short of the projected 24,159 oz. The shortfall is largely a result of an unexpected cold snap in South Dakota which hampered leaching operations, Chairman Thomas Skimming told shareholders at the company’s annual meeting. After the meeting, he told The Northern Miner that an unusual amount of fines in the crushed ore has been jamming the leach pads, impeding the flow of the gold-bearing solution, and thereby slowing production. The production cycle was also interrupted by delayed off-loading of spent and detoxified ore. The off-loading has since been approved by the government.

Recently, MinVen Gold (TSE), United’s joint venture partner, announced plans to sell its 33% interest in the property and use the proceeds to finance properties with greater potential (T.N.M., April 2/90). United is negotiating with MinVen to purchase the interest, which would give United 100% ownership of Golden Reward.

Golden Reward contains minable ore reserves of 13.1 million tons grading 0.042 oz. gold per ton, at a cutoff grade of 0.015. Along with gold, the property also produces about 200,00 oz. of silver annually.

As a result of the poor output during the first half of the year, United has readjusted its annual production forecast to 60,000 oz. from the original estimate of 74,155 oz. If cash operating cost remains at US$188 per oz. of gold, the company expects to have a positive cash flow by the end of July. Some of the proceeds will go toward paying off a 43,408-oz. gold loan, which United used to finance development at Golden Reward. In June, the company paid off about 23% of the loan, Skimming said.

Shareholders at the meeting voted in favor of a proposed shareholders’ rights plan to prevent a hostile takeover of the company. Wharf Resources (TSE), with a 10% common share interest in United, voted against the proposal. Wharf also holds $9.6 million worth of United’s 11% convertible notes.