Investment Comment Canada’s first heap leacher, Gordex has growth

Heap leach gold operations are usually associated with the western United States, particularly with Nevada and California, but on the eastern seaboard of Canada there exists a small mine which is the first in Canada to use this technique to recover gold.

Located 10 km northeast of Saint John N.B., Gordex Minerals’ Cape Spencer mine celebrated the pouring of its first gold dore bare last June after spending only $2.5 million in exploration and development costs.

Analysts Graham Birch and Mark Alcock of the the investment firm Kleinwort Grieveson Securities were recent visitors to the operation, which is also the first primary gold producer in New Brunswick. Although the Cape Spencer mine is not expected to be producing gold commercially until the end of 1987, production trials are likely to yield around 2,000 oz this year.

Ore reserves are currently 500,000 tonnes grading 0.07 oz gold per ton. However, the company has only concentrated its exploration efforts on 3% of its 1,500-acre property and there is considerable potential for further discoveries, say Messrs Birch and Alcock. The company has recently raised $1 million of flow-through financing and with these funds a drilling program has started which it is hoped will prove up an additional one million tonnes beneath and around the existing ore reserves.

Provided further ore reserves continue to be found, and recent diamond drilling results have been very encouraging in this direction, Gordex Minerals has the potential to graduate from a small gold developer to a medium-sized producer, say the two analysts. They, therefore, recommend Gordex to the investor who is looking for a small gold producer with growth potential.