Eskay Creek replaces reserves — More ounces than at mine’s 1995 startup

An aggressive surface and in-mine exploration program at Prime Resources Group’s (PRU-T) Eskay Creek gold-silver mine in northern British Columbia has surpassed its objective of replacing all the reserves mined during 1997.

About 630,000 oz. gold-equivalent were added to Prime’s reserves at a cost of US$10 per equivalent ounce, representing a 15% increase in proven and probable reserves as compared with a year ago.

For the first nine months of 1997, Prime produced 391,582 oz.

gold-equivalent at a cash cost of US$173 per oz. While fourth-quarter results have yet to be released, David DeLong, manager of investor relations, expects production for the year will exceed 500,000 oz.

gold-equivalent.

Prime, which is 51%-owned by San Francisco-based Homestake Mining (HM-N), owns and operates the Eskay Creek mine and the nearby, smaller Snip gold mine. Both are remote mining operations in the province’s northwest.

“At Jan. 1, 1998, we had more ounces of gold and silver in reserves at Eskay Creek than we had when the mine commenced commercial production three full years ago,” states Prime President Ronald Parker. “We are continually reminded of the exceptional orebody that is Eskay Creek, and I look forward to further exploration success in 1998.”

As of Jan. 1, the Eskay Creek mine had a proven and probable reserve of 1.5 million tons grading 1.69 oz. gold and 78.3 oz. silver per ton, equivalent to 2.5 million contained ounces gold and 117 million contained ounces silver. An additional 371,000 tons of mineralized material, described as potentially economic, average 0.59 oz. gold and 12 oz. silver.

Proven and probable reserves at the Snip mine, which is nearing the end of its life, now stand at 232,000 tons grading 0.68 oz. gold, equivalent to 157,000 contained ounces, with an additional 26,000 tons of mineralized material averaging 0.75 oz. gold.

A price of US$325 per oz. gold was used in the calculation of reserves for the short-lived Snip mine, whereas US$350 per oz. was used for the Eskay Creek mine. The estimates include a provision for mining dilution.