Ronrico secures $2.5 million to bring Simkar into production

The Royal Bank of Canada has agreed to provide debt financing to help bring the Simkar gold project, 10 miles east of Val d’Or, Que., into production. The Simkar property, with proven and probable reserves of 300,000 tons grading 0.25 oz. gold per ton (diluted), is held by equal partners Ronrico Explorations (VSE) and Louvicourt Gold Mines (COATS).

The bank has agreed to provide up to $2.5 million under terms that Donald Kemp, president of Ronrico, describes as “favorable.” The loan will come due within 30 months of the deal closing.

Ronrico’s decision to apply for production financing was not based on the recent surge in the gold price, says Viviane Spiegelman, company treasurer. “We felt quite comfortable with gold at lower prices and believed we could mine profitably when gold was at US$350,” she says. The jump in the gold price, which occurred as the joint venture partners were trying to organize financing, “is just icing on the cake.”

Spiegelman says the partners expect to be shipping ore to a nearby mill in seven months. A 10,000-ton bulk sample taken last summer from the underground workings yielded an average gold grade of 0.22 oz.

La Fosse Platinum (TSE), which owns 58% of Louvicourt Gold, will send a selection of surplus underground mining equipment to the mine site shortly. Currently, the hoisting capability is about 700 tons per day.

The Simkar deposit, formerly the Louvicourt mine, produced about 30,000 oz. of gold in 1947-49. Previous mining operations focused on four separate zones varying in width from 6.5 to 97.5 ft.

In 1987, Ronrico started exploring the property. Since then, Ronrico has spent more than $7 million to rehabilitate the underground workings, erect a new head frame, and explore the property both on surface and underground. The shaft is 1,000 ft. deep and is developed on four levels.

Spiegelman was reluctant to discuss estimated production costs since she believes the proposed mining plan may change if the gold price remains above the US$400 level. The gold-bearing zones remain open along strike and to depth.