JUNIOR MINING SPECIAL — TVX expands reserves and develops

Toronto-based TVX Gold (TSE) is optimistic about the coming year now that Inco (TSE), has sold the public its 61.8% stake in the company.

The sale prompted TVX Chairman Eike Batista to assemble a new management team which is looking to increase reserves and production at six producing mines and three projects in North and South America.

Financial highlights from the junior’s 1993 annual report show just how well the new team is doing. Net earnings rose dramatically, to US$15.7 million from US$10.4 in the previous year, and cash flow increased to US$52.9 million (or US39 cents a share) from US$49.2 million (or US37 cents a share). Production increased to 439,000 oz. from 406,000 oz. of gold and gold equivalant, while cash costs dropped to US$172 from US$179 per oz. The cornerstone of TVX’s operations is its La Coipa mine, which the company owns 50-50 with Placer Dome (TSE). Nestled in the Andes, 500 miles north of Santiago, Chile, La Coipa is South America’s largest gold producer and one of the largest silver mines in the world. The deposit is part of an epithermal vein system, contained within structurally controlled stockworks in the Maricunga tertiary volcanic belt.

Proven and probable reserves are 40.8 million tons averaging 0.059 oz. gold equivalent. Last year’s production amounted to 258,200 oz. gold and almost 13.3 million oz. silver at a cash cost of US$154 per oz. gold equivalent. Reserves will support a mine life of 11 years and TVX believes strongly that additional ore can be found on the vast property.

The company also owns half of the Crixas gold mine, 155 miles north of Brasilia, Brazil, where production hit a record 125,000 oz. in 1993. Reserves stand at 9.6 million tons averaging 0.27 oz. gold, which are expected to support a 19-year mine life.

Production at the underground operation began in 1989 from three vertically stacked mineralized zones within folded Archean metavolcanic and metasedimentary rocks. And surface exploration this past year identified a new orebody, containing a possible 1.3 million tons at 0.17 oz. The 22.7%-owned Brasilia mine, 120 miles southeast of the city of the same name, is unusual in that no overburden stripping or blasting were required before production. Reserves are estimated at 245.2 million tons grading 0.015 oz.

The Morro do Ourro deposit at Brasilia, which entered production in 1988, is hosted in a sandstone and shale unit within the central Brazilian shield. Ore is trucked to crushers and the coarse gold is separated by gravimetric methods. The remainder is processed by cyanidation and a carbon-in-pulp circuit.

As a result of expanding the plant and lowering the cutoff grade, TVX has increased reserves by about 100 million tons.

The company’s other Brazilian gold mine, the half-owned Novo Astro, lies within the Amazon Basin and contains 284,000 tons grading 0.43 oz. It was originally mined from saprolitic and alluvial zones, but production now comes from underlying gold-quartz veins and silicified zones within the Precambrian Guyana Shield.

Although exploration in the area has thus far proved disappointing, a drill program has nonetheless been scheduled.

Not all of TVX’s mines are in South America. Late last year, the company bought Homestake Mining’s (NYSE) half interest in the Mineral Hill and Jardine joint venture in Montana. As a result, TVX now owns the project entirely.

Reserves are estimated at 550,000 tons grading 0.27 gold per ton. The Mineral Hill orebody is stratiform, hosted within banded iron formations and biotite schists.

An exploration budget of US$2 million has been earmarked for the Crevice Mountain area of the Jardine concession, the goal being to confirm the previously outlined resource.

At the 60%-owned Casa Berardi gold mines, north of La Sarre, Que., TVX devoted part of 1993 to repairs and refurbishment to rectify problems stemming from inflow of overburden material.

Reserves at the two mines total 5.4 million tons averaging 0.21 oz. The ore is hosted within quartz-carbonate veins and stockworks in zones of silicification and sericite-carbonate alteration associated with the Casa Berardi fault.

Exploration led to the discovery of two new zones north of the fault, northeast of the Est mine, where previously no mineralization had been found. The area surrounding the Ouest mine, also north of the fault, is being explored as well.

Meanwhile, TVX is hoping to augment its overall reserve base by exploring three other projects: Musselwhite, Pachicutza and Snow Lake. Musselwhite, in northwestern Ontario, is owned 32% by TVX and 68% by Placer. The partners have increased expenditures to $19.7 million from $12 million and hope to have the project at the feasibility stage by the first quarter of 1995.

At the Pachicutza gold project in Ecuador, major gold-bearing skarn and porphyry deposits were outlined by previous work. TVX will spend US$3 million over three years, with initial plans calling for construction of a 6-mile road, as well as drilling.

TVX recently acquired a half interest in the Snow Lake gold project, east of Flin Flon, Man. In return, the company had to transfer a 32% equity interest, which it held in High River Gold Mines (TSE), back to High River. The property has a geological resource of 1.1 million oz. within 13 gold occurrences.