Asamera turns corner at Cannon gold mine

The Cannon mine project at Wenatchee, Wash., appears to have turned the corner. According to Bruce A. Kennedy, senior vice-president minerals for Asamera Inc.,”the mine is working beautifully” and mill throughput is averaging l,500 to 1,650 tons per day. He says this rate is the most economic and results in the lowest operating costs.

Head grades are expected to average about 0.29 oz gold per ton in 1987 and he says the mine is producing about 11,000 oz per month at present. Some of the gold production is being sold forward which locks in the price and allows them to process lower grade material. “When there’s a price spike, we will probably sell more,” he states.

Asamera and Breakwater Resources are discussing the feasibility of combining their Cannon mine interests into a separate corporation. Breakwater President Robert Hunter says they are looking at the “tax implications” and it will probably be a U.S. company although it’s not certain yet.

Breakwater is raising approximately $7 million through a private placement which is expected to close Feb 2. The proceeds will be used for general working capital and the purchasers will have to hold the shares for a year. The company had a $10-million loan with the Bank of B.C. which was recently taken over by the Hong Kong Bank. He says Breakwater wants to clean up that loan because the Hong Kong Bank is “getting rough with us.”

Claiming that Breakwater is getting “nice cash flow” from the Cannon mine operation, he says rolling their respective interests into one company will simplify things for investors.

Mr Kennedy says underground mining equipment has been downsized somewhat, which has not only increased mobility but also productivity. A backfill system is fully operational and is totally automated, he adds. He describes it as a low moisture backfill as opposed to hydraulic, claiming it sets up to 1,200 psi within 30 days.

There are no immediate plans to produce dore bullion on the property. New smelter terms have been negotiated in the U.S. and Japan and it is just as cost efficient to ship the silica concentrate out, he notes.

Exploration work is continuing throughout the underground and a ramp is being driven down to the Tenneco option for evaluation purposes. A drill station will be established in the ramp to test the potential of the zone, he says.