Negotiations to create a single mine property at the Holloway gold project east of Matheson, Ont., should be completed within the next couple of months, says Ian Bayer, president of Hemlo Gold Mines (TSE).
Speaking to a gathering of gold analysts, Bayer said a $12-million underground exploration and reserve validation program on the Lightning zone is expected to begin in May, after the joint venture agreements are signed. Today, the Lightning zone straddles two separate properties, one with a complex ownership structure. Participants include Hemlo, with a 55% direct and indirect interest in the zone, Freewest Resources (TSE), Teddy Bear Valley Mines (CDN) and Newmont Mining (NYSE).
Although control of Teddy Bear is under scrutiny following the revival of a 65-year-old shareholder syndicate, Vice-President Joseph Baylis says Hemlo feels comfortable striking a deal with the current management. The underground program, which is expected to take 18 months to complete, includes an exploration shaft to 430 metres, drifting for 1,100 metres and 25,000 metres of drilling.
As of September, 1991, the Lightning zone is estimated to contain preliminary reserves of 5 million tonnes grading 9.2 grams (0.27 oz.) per tonne. The deposit is expected to enter production in late 1994 at a rate of 1,500 tonnes per day. Projected capital costs, excluding a mill, are $60 million while operating costs are expected to average US$180 per oz. Major writedowns during the fourth quarter, mainly in junior companies, reduced Hemlo’s annual income to $13.7 million (15 cents per share) in 1991 compared with $23.6 million (27 cents per share) in 1990. The Golden Giant mine at Hemlo, Ont., produced a record 443,478 oz. gold at an average cash operating cost of US$126 per oz. last year.
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