New mill, gold mine are planned by Lac

A new mill for Kirkland Lake and a decision to develop Bousquet No 2 mine in northwestern Quebec have been announced by Lac Minerals.

The $13-million mill, to process ore from Lac’s Macassa operation and treat tailings from the old Lake Shore mine deposit, should be in operation by the third quarter of 1988, President Peter Allen said at the company’s annual meeting in Toronto.

The initial capacity of the mill will be 500 tons per day of ore and 750 tons per day of tailings material.

The tailings should initially generate an additional 20,000 oz gold from the Kirkland Lake camp annually at a production cost of $130 per oz, Mr Allen said. Design of the mill will enable Lac to double its capacity for the treatment of tailings whenever economic expansion is justified.

Macassa, Lac’s oldest mine and which has the deepest single-lift shaft in the western hemisphere, produced 63,000 oz gold in 1986; this year, the company is hoping it will produce 70,000 oz. New Bousquet mine site

The Bousquet No 2 mine site is located on the eastern boundary of the Bousquet property, which is located close to the producing Doyon joint-venture project. Confirmed geological reserves at Bousquet No 2 stand at 7.86 million tons grading 0.19 oz gold per ton, to a depth of 3,500 ft.

Lac has a $60-million capital program planned for Bousquet No 2. A permanent headframe is being designed, and construction of a 4,230-ft shaft is to begin in August. The shaft should be completed by late 1989, with the mine ready to go into full commercial production, at a rate of 2,000 tons per day, by the end of 1990. Mr Allen said that at the current price of gold, Bousquet No 2 should manage a payback in less than two years.

Lac reported earnings for 1986 of $6.6 million, excluding the Page- Williams operation at Hemlo, and earnings of $19.1 million with the Page-Williams operation included. (In 1985, earnings totalled $6.1 million, before extraordinary items.) First-quarter revenues this year were $40.4 million excluding the Page-Williams operation (for the same period in 1986, earnings were $31 million), and $67.7 million including the Page-Williams operation ($49.4 million for the same period in 1986).

The Page-Williams gold operation, originally developed by Lac, was awarded to International Corona Resources in March, 1986, by the Supreme Court of Ontario in an ownership dispute, for a payment of almost $154 million plus interest. Lac appealed that decision in November, 1986, to the Ontario Court of Appeal; the appeals court has yet to release its ruling. Production target 300,000 oz

Excluding the Page-Williams operation, Lac expects to produce 300,000 oz gold during 1987, and to boost that to 500,000 oz by late 1990.

At the Doyon project, in which Lac is involved 50/50 with Cambior Inc., total reserves at the end of 1986 stood at 11 million tons containing 1.8 million oz gold. Lac is in the process of doubling the capacity of the mill there.

On the exploration side, Lac has budgeted $25 million this year. One of Lac’s promising gold exploration projects is the 34-sq-mi Ortiz property in New Mexico, which is currently undergoing reconnaissance drilling. Lac owns 100% of the Ortiz property’s mineral rights.