Rayrock Yellowknife highlights exploration and production

Shareholders received encouraging news at the annual meeting of Rayrock Yellowknife Resources (TSE).

Fiscal 1993 marked the 18th consecutive year of profitability, with more than $8 million having been earned from three sources:

* Western Ag, a wholly owned, fertilizer-producing subsidiary of Rayrock, posted profits of $5.5 million for the year.

* Another wholly owned subsidiary, Rayrock Mines, has interests in three gold mines in Nevada: Pinson (26.5% owned); Dee (44% last year, now 100%) and Marigold (66.7%). Rayrock’s revenue from these producers amounted to $17.75 million in 1993.

The company also increased its share of contained ounces in these mines to 800,000 from 625,000.

* Additional income was derived from a 39% interest in Discovery West, a Canadian producer of oil and gas.

Rayrock recently increased its ownership in the Dee mine to 100% from 44%. Situated in the Carlin Trend, the open pit operation is believed to possess considerable exploration potential.

Several geophysical conductors — some coincident with large soil geochemical anomalies — could represent deep, potentially rich, sulphide gold deposits, the company said. In addition, drilling near the existing Dee pit has outlined three new deposits: South Extension, North Extension and Deep North. It is estimated that 1 million oz. are contained in Deep North alone. Within the next two years, annual production at Dee is expected to increase to 70,000-80,000 oz. from the current 35,000 oz. To this end, Rayrock will carry out delineation drilling, metallurgical test work and a final calculation of reserves, with a mine plan due for completion by October. A feasibility study is to be submitted by March, 1995.

To explore and develop its other properties in the western U.S., Rayrock plans to spend $4.1 million this year.

Another $4 million will be spent, through 37.4%-owned subsidiary Minera Rayrock (TSE), in an effort to explore and develop the Bellavista gold project in Costa Rica and the Ivan and Sierra Valenzuela copper projects in Chile.

At Ivan, startup is scheduled for the second quarter of 1994, with annual production projected at 22 million lb. Production costs over the 10-year mine life are estimated at US56-59 cents per lb., with reserves pegged at 4.7 million tonnes grading 2.5% copper.

Additional drilling will be carried out at Bellavista, where proven and probable reserves stand at 15.1 million tons grading 0.049 oz. per ton. Meanwhile, at Sierra Valenzuela, 25 miles northeast of Ivan, work will be aimed at determining the potential for what Rayrock believes could be a major copper deposit.

In other news, the company plans to raise $45 million through the sale of 2.5 million subordinate voting shares to a syndicate of underwriters, including Bunting Warburg, First Marathon Securities and Gordon Capital. The underwriters will then sell the shares to the public throughout Canada. A substantial portion of the net proceeds will be used to repay bank debts and replace other funds expended in the recent US$21.1-million acquisition of the 56% interest in Dee Gold Mining.

In a separate transaction, Discovery West, an associate company, and Rayrock’s chief executive officer, David Crombie, have agreed to buy 160,000 multiple voting shares for $3.4 million. The purchase is being made to maintain their combined 41.4% voting interest in Rayrock.