Claude resumes drilling amid talks with creditors

While attempting to reschedule payments on $5 million owed to major creditors, Claude Resources (TSE) continues to make progress at its Seabee gold mine near La Ronge, Sask.

Following a 6-week production delay due to capital cost overruns, surface and underground drilling has resumed on the Seabee property where reserves stand at 1.14 million tons grading 0.4 oz. To provide additional data needed for a final mine plan, Claude will complete a minimum of 40,000 ft. of development work on the property.

In November, Claude produced 1,465 oz. gold after feeding 7,900 tons of stockpiled ore through Seabee’s 440-ton-per-day mill, which is still in the crucial tune-up phase.

An additional 4,215 oz. was poured in December from 9,000 tons of material, most of which came from the 60 stope. “The preliminary metallurgical balance indicates an average head grade of 0.35 oz. per ton for domestic production. The average millhead grade for the 60 stope is estimated at 0.36 oz. By the end of December, Claude claimed to be achieving on average 90% recovery rates and 95% through the first two weeks in January when the average belt sample grade was 0.4 oz.

Claude spokesman Ken MacNeill said he is happy with the way negotiations with Creditors Tonto Mining and Orocon are going. The cost overruns and a subsequent suspension of dividend payments on the preferred A shares recently drove that class of shares to a low of $2. But as talks progress, the preferreds have recovered and are trading in the $3.10 range, while the common shares are up to $1.40 from a low of 90 cents.

“All indications are that they are willing to work with us and let us mine our way out of this,” MacNeill told The Northern Miner recently. He was unable to say when Claude would be in a position to make an announcement with respect to those discussions.