With ‘$24 million financing Eastmaque to produce in ’87

Armed with more than $26 million, the bulk of which came via a $24 million units offering completed by London-based James Capel & Co., Eastmaque Gold Mines expects to be producing gold by the first quarter of 1987.

First production will come from the company’s Cargo Muchacho mine in California; currently being readied for heap leaching. “The leach pads will be in place by mid- December,” Michael Gordon, a James Capel representative, told a group of investors in Toronto.

Purchased for $7.5 million(US) from Newmont Mining Corp. in 1986, the Cargo Muchacho mine will ultimately yield more than 55,000 oz of gold per year starting in 1989. Gold production for 1987 and 1988 is estimated at 9,800 oz and 23,537 oz respectively.

Reserves, which are based on extremely detailed drilling of more than 335,000 ft, completed by Newmont on 5-ft centres, total 6.4 million tons grading 0.051 oz gold per ton — most of which is amenable to open pit mining. Underground reserves total 1.2 million tons grading 0.23 oz gold per ton.

Based on a James Capel study, “a large portion of the 26 million tons of waste is believed to be low grade material,” Mr Gordon explained. “Approximately 33% could carry 0.015 oz gold per ton.” Adding this to the mine analysis enables the total in place gold to be increased from 615,929 oz to more than 750,000 oz. At current gold prices, it would be economic to leach this material, based on a recovery of 60%, Mr Gordon added.

Recoveries for the main open pit reserves are estimated at 70% whereas higher grading ore underground, which will be conventionally mined and milled, will yield 90% gold recoveries. Cash operating costs are forecast to range between $155(US)-$175(US) per oz during the first five years of production.

Underground production is sheduled to start in early 1988. “We will start our decline shortly and expect to be in ore within 45 days,” Adolf Lundin, a director of Eastmaque and one of its principal shareholders, told the meeting.

Another potential 20,190 oz of gold is planned to come from the company’s Kirkland Lake tailings program. Located near Kirkland Lake, Ont., the project will involve recovery and processing of mine tailings deposited from the mill operations of several past producing mines in the camp. Tailings recovery pro jects in Canada, although tried by numerous operators, have failed miserably in the past. In many cases, inadequate technology is blamed for uneconomic operations.

Eastmaque, however, feels it will not only meet its operating criteria, but will make a healthy profit on the project as well. Such forecasts are based on a reserve of 7.7 million tons grading 0.038 oz gold per ton. “We are quite confident of these reserve and grade figures,” Ernest Bazinet, a director of Eastmaque told The Northern Miner. “When we did our re-drilling, the grades stood up.”

A barge will be used to pump the tailings from the basin of Kirkland Lake, which is essentially filled. The slurry will then be pumped to a flotation circuit which will recover a concentrate. Recovery of gold will be performed by Noranda Inc. The projected recovery is 67%, James Capel & Co conclude.

Costing $7.4 million, the Kirkland Lake project will reach full production by 1989. Initial production is scheduled to start by the first quarter of 1988.

If any problems do arise during the initial stage of production, Mr. Gordon noted that “Anglo American Corp. could be approached for technical expertise.” The giant South African mining company controls Ergo, currently the largest tailings recovery operator in the world which expects to process 32 million tons in 1987. Another Lundin-affiliated company, East Daggafontein, is involved in a tailings retreatment project with Ergo.

Total gold production, when both projects are operating at capacity, is estimated at more than 75,000 oz. According to a financial analysis completed by Mr Gordon, fully diluted earnings per share in 1989 will reach a high of $1.22.