Golden Shield shuts Kerr mine (July 10, 1989)

The company, which purchased the Kerr Addison mine in 1987 for $38 million, has been struggling financially. Its net loss in 1988 was $6.9 million, and during the first quarter of this year the company reported a loss of $1 million.

The final blow came when Ontario Hydro, demanding payment of a sizeable electrical bill, turned off the power to the mine. About 300 mine and mill workers are without jobs.

Among the problems the company has faced is the falling price of gold. It has also had its troubles raising money — a proposed flow- through offering to provide funds for exploration work fell through last year.

Golden Shield produced 31,159 oz from its Kerr mine operation in 1988, and 8,780 oz during the first quarter of this year. Underground exploration work at the mine last year enabled the company to triple mine reserves to 3.2 million tons ore grading 0.123 oz gold per ton.

President R. J. Mongeau said he is trying to find someone who will take over the mine’s operation. Mongeau, Chairman A. D. G. Reid and Chief Financial Officer John Tait, as a group, recently acquired a 22% control block of shares in the company, along with a $3 million debenture.

Also, Mongeau said operating the Kerr mill for custom work is being considered.

The Kerr mine was once considered one of the world’s greatest gold deposits. Since entering production in 1938, the mine produced more than 10 million oz of gold from 40 million tons of ore.

The Kerr mine in Virginiatown, Ont., has been closed and the owner, Golden Shield Resources (TSE), has filed for bankruptcy.

The company, which purchased the old mine from Kerr Addison Mines in 1987, has been struggling financially. Its net loss in 1988 amounted to $6.9 million, and during the first quarter of this year the company reported a loss of $1 million.

The final blow came when Ontario Hydro, demanding payment of a sizeable electrical bill, turned off the power to the mine.

Among the problems the company has faced is the falling price of gold. It has also had its troubles raising money; a proposed flow- through offering to provide funds for exploration work fell through last year.

Golden Shield produced 31,159 oz from its Kerr mine operation in 1988, and 8,780 oz during the first quarter of this year. Underground exploration work at the mine last year enabled the company to triple mine reserves to 3.2 million tons ore grading 0.123 oz gold per ton.

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