Edwards mine hits a dry spell (July 16, 2001)

Low gold prices and dwindling reserves have put the kibosh on the Edwards gold mine in north-central Ontario, though River Gold Mines (RIV-T) says it may resume deep exploration once prices improve.

In the first quarter, Edwards’ production was adversely affected by unexpectedly low grades, and costs were driven up by heavy snowfall and higher fuel prices.

River suffered a quarterly loss of $1.9 million (or 6 per share), compared with a loss of $500,000 (2 per share) in the corresponding period of 2000. Revenue between the periods fell to $7.9 million from $9.1 million. Cash flow fell to a deficiency of $300,000, compared with $1.1 million a year ago.

River is considering a rights issue to bolster working capital and help fund shaft-sinking at the Eagle River mine, 50 km west of Wawa, Ont.

The shaft is slated for completion by the end of September and should be operational in February 2002.

Production for 2001 remains on target for 87,000 oz. gold, with output in the second quarter exceeding 23,000 oz.

Mining at Eagle River has moved back into the 6 zone, where grades are significantly higher than average. Preliminary estimates for 2002 production are 75,000 oz. gold.

Meanwhile, the company says it intends to place the Mishi mine in production as soon as permitting is completed. The wholly owned, 30-claim property is 2 km west of the River Gold mill and is estimated to host a resource of 1.4 million tonnes grading 4.2 grams of gold per tonne. Included in that figure is an open-pit resource of 772,000 tonnes grading 3.3 grams gold to a depth of 56 metres.

The company’s in-house evaluation has outlined an open-pit resource of 450,000 tonnes grading 3.1 grams gold to a depth of 35 metres, with a stripping ratio of 3-to-1.

River envisages Mishi as a low-cost, seasonal operation that will provide mill feed in the years to come.