Giant Yellowknife cuts cost of gold production during ’89

The gold output of Giant Yellowknife Mines (TSE) in 1990 is expected to be similar to 1989 but should be produced at a considerably lower cost, President Adrian Fleming said at the annual meeting. The Toronto-based producer turned out 198,013 oz. last year from its Yellowknife, N.W.T., and Timmins, Ont., operations, up more than 10,000 oz. from the previous year.

Giant Yellowknife is part of the Pamour group of companies controlled by Giant Resources of Australia. Giant Resources has placed its Canadian mining assets up for sale. An international auction is being conducted, with late May being the deadline for tenders.

In Australia, Giant Resources announced a provisional liquidator has been appointed to manage its business affairs. The action resulted from a breakdown of negotiations with Giant’s financiers aimed at achieving a formal moratorium arrangement with the financiers to allow Giant to continue with an orderly realization of its assets. Debt-troubled Giant is 42.2% owned by Pioneer International of Australia, which is active in the building materials and oil industries.

Fleming said the appointment of a liquidator is not intended to affect the ongoing process by Giant Resources to dispose of its Canadian assets, which include shares in lead-zinc producer Curragh Resources. Curragh recently announced a public offering; Giant Resources said the liquidation should not affect the planned public distribution of Curragh shares owned by it.

Fleming said unit operating costs for Giant Yellowknife have fallen from US$475 per oz. in 1988 to US$449 during the first half of 1989 and US$389 during the second half of last year. The downward slide in the unit cost is expected to continue this year, Fleming said.

Debt-free Giant Yellowknife recorded a loss in 1989 of $189,000 (2 cents per share) after writing off money owed by an affiliated company, ERG Resources (owner of a tailings reclamation project at Timmins) and the decline in value of a joint venture. In 1988 Giant Yellowknife reported a net loss of $30.4 million ($3.62 per share) after writing down the carrying value of its Timmins division.

Changes to the company’s operating activities last year at both Timmins and Yellowknife contributed directly to the lower operating costs. At Timmins, manpower was reduced, a mine was sold and a mill closed, while at Yellowknife the changes included improving the organization and productivity underground and cutting back the workforce.

Current mining activity at the Timmins camp includes the Pamour No. 1 underground operation and an open pit operation. An agreement with Falconbridge Gold allows Giant Yellowknife to mine ore from the Hoyle property adjacent to the Pamour No. 1 mine.

At the Giant mine at Yellowknife, the head grade was increased last year to 0.24 oz. gold per ton from 0.21 oz. Underground work included ramping and ventilation improvements.

A tailings retreatment project at Yellowknife yielded 22,071 oz. during its second season of operation last year. Fleming said the project “essentially broke even” in 1989 but “the performance was still not satisfactory.” He expects better results this year.

During 1989, the company spent $5.7 million on exploration, including surface and underground drilling at both of its Timmins and Yellowknife camps.

Giant Yellowknife recently announced it and an affiliated company, Pamorex Minerals, plan to bring the Nighthawk Lake gold property near Timmins into production within two years. Project reserves currently stand at 1.59 million tons grading 0.17 oz.