Breakwater gives green light to Estrades gold project

After completing a review of a mining feasibility study by Wright Engineers, Breakwater Resources (TSE) has decided to place the Estrades massive sulphide project near Joutel, Que., into production. In early 1989, Breakwater acquired an option to earn up to a 70% interest in Estrades from Golden Group Explorations (VSE) and Golden Hope Resources (VSE). The company also holds 9.56% of the outstanding shares of Golden Group and 7.2% of Golden Hope.

As operator, Breakwater intends to start mining the gold-silver-zinc- copper-lead deposit in the third quarter of 1990 at the rate of 500 tons per day. The ore will be custom- milled in the Abitibi area.

When up and running, Estrades is expected to add 22,000 oz. gold to Breakwater’s annual production. The company’s key asset is a 49% interest in the Cannon gold mine near Wenatchee, Wash., which shipped 150,420 oz. of gold in 1989.

Breakwater recently announced plans to acquire all the shares of American Pacific Mining (TSE) which owns the profitable El Mochito polymetallic mine in Honduras. The Estrades project, which has proven and probable minable reserves of 1.03 million tons grading 0.16 oz. gold, 5.31 oz. silver, 10.68% zinc, 0.94% copper and 0.92% lead (based on an $80-per- ton net smelter return cutoff), will provide additional exposure to base metals, particularly zinc.

Based on current metal prices and a mine life of 5.4 years at Estrades, Breakwater estimates it could pay back its initial investments in about three years. The company will be entitled to receive 100% of the proceeds of production until it has recovered all costs (about $15 million), excluding exploration costs incurred before it gave notice to place the property into production.

Exploration of the Estrades property will continue with the objective of increasing reserves and extending the life of the mine.

Also to this aim, Breakwater recently optioned the adjacent 61- claim Argentex property from Greater Lenora Resources (TSE). An exploration program to include diamond drilling is planned for this property where Breakwater can acquire up to a 60% interest.

Corona (TSE) holds about a 12% interest in Breakwater and is the company’s largest shareholder.