Hemlo expects growth from project portfolio

First-quarter production from Hemlo Gold’s (TSE) two Canadian gold producers was higher than anticipated, and overall production is expected to expand further.

Hemlo’s wholly owned Golden Giant mine near Marathon, Ont., and its 55%-owned Silidor mine near Rouyn-Noranda, Que., cranked out more than 108,000 oz. combined during the 3-month period, and the company is confident its overall production for the year will reach 450,000 oz.

Meanwhile, new sources of ore are being sought from two advanced-staged projects. Hemlo anticipates that when the Holloway joint venture and the New World project come on stream in 1996 and 1997, respectively, each will constitute 10-15% of annual gold production.

Shaft-sinking at Hemlo’s 84.7%-owned Holloway project began in January and, while progress was somewhat impeded by the presence of water seams, work is now proceeding on schedule. Once operational, the mine will produce 100,000 oz. annually for 13 years.

Meanwhile, in Montana, Hemlo’s 60%-owned subsidiary, Crown Butte Resources (TSE), is awaiting the first draft of the environmental impact statement (EIS) for its New World project.

The company has been under attack from U.S.-based environmental groups which, according to Crown Butte President Joseph Baylis, “are operating on misinformation.”

Responding to arguments that the proposed mine could damage the Yellowstone ecosystem, Baylis points out that two mountain ranges lie between the national park and the New World project. Moreover, he says, water from the proposed mine site would have to flow uphill in order to enter the park.

“Over the past three years, we have concentrated on the regulatory process, which is well under way, and we now want to inform the public of the merits of the project,” Baylis says.

At Hemlo’s annual meeting in Toronto, Crown Butte took the opportunity to blow its own horn by stressing that Montana state officials have concluded the project will improve the water quality of the region. This is a direct result of efforts by Crown Butte to clean up “mining disturbances” created in the 1890s.

Crown Butte expects to have the first EIS draft in hand by late June or early July; a final draft is expected six months hence. If all goes well, mine construction will be completed by the fall of 1997, enabling startup in the fourth quarter of 1997.

In addition to the advanced-staged projects, the company is hoping expansion will result from early-stage, grassroots exploration.

In Canada, it is exploring along a 60-km stretch of the Destor-Porcupine fault, which hosts the Holloway venture. Within the Hemlo camp, the company has been revising the geological model for its Golden Giant mine. And in the Timmins area, the search is on for “Hollinger-McIntyre” type gold deposits.

Hemlo is also evaluating projects in Nevada, Mexico and Australia. And over the next six months, it will assess the risks and potential rewards of exploring in South and Central America and some African countries.