Castle Mountain turns profit in three months since startup

Commercial production at the Castle Mountain gold mine in eastern California was established in early April of this year, just six weeks after startup.

It was good news for operator and 75% owner Viceroy Resource (TSE), which earned a profit of $1.2 million (7 cents per share) on sales of $7.7 million during its first quarter ended June 30.

During this period, the open pit mine turned out 23,571 oz. gold at a cash cost of US$203 per oz.

Viceroy President Ross Fitzpatrick said the company is proud to report a profit after its first three months of operation.

“We made a policy decision some years ago to develop the Castle Mountain project ourselves because we believed it was in the best interest of Viceroy shareholders,” Fitzpatrick added. “We not only achieved that goal, but also established a reputation for combining good engineering and sound business practices with an enlightened approach to environmental concerns.” The remaining interest in the US$50-million heap-leach operation is owned by contract miner MK Gold, a subsidiary of Morrison Knudsen. Sized at about 8,000 tons per day, Castle Mountain is expected to produce about 100,000 oz. gold annually.

At last report, proven and probable reserves stood at 24.6 million tons grading 0.047 oz. gold per ton, based on a 0.015 oz. cutoff. The project also has possible reserves of a further 13.4 million tons grading 0.046 oz. The Castle Mountain property is considered to have excellent exploration potential, and a US$3-million joint venture exploration program is planned for 1992-93. This program is aimed at drilling out the 621 zone discovery — a deep, high-grade area about 3,500 ft. from current mining activities — as well as other potential targets.

Viceroy recently announced the start of exploration drilling on the Razorback Butte gold prospect, a joint venture with Channel Resources (VSE). This property is located in Clark Cty., Nev., and covers 110 claims five miles northeast of Viceroy’s Castle Mountain mine.

Channel may earn a 50% interest in the claim block by spending US$750,000 on exploration and development during a 4-year period. Viceroy is operating the program, which

is currently aimed at drilling out an area of geochemically anomalous gold values.