Mascot in the driver’s seat on milling deals, Steen says

Mascot Gold Mines has spent or committed $44 million on its Nickel Plate project at Hedley, B.C., which is slated to begin official production this June. At the annual meeting Henry Ewanchuk, president, said the development was “ahead of schedule and under budget,” something he expected would continue.

The $68.7-million development, which will be one of the largest single gold producers in the country, is being funded by an innovative financing arrangement with the Canadian Imperial Bank of Commerce. Mascot converted part of its $70 million CIBC loan into a gold loan. In effect it borrowed 100,000 oz of gold from the bank and sold it at $409.80(US) per oz to net $56.9 million(C).

Initial annual gold production at Nickel Plate is estimated to be 140,000 oz (N.M., Nov 17/86). Open pit reserves stand at 7.1 million tons at an average grade of 0.15 oz gold per ton, enough for eight years’ production at full capacity.

The open pit potential of the property was established by flow- through exploration funding, a classic example of just how important this is to the industry.

The gold will be paid back from mine production by April 28, 1988, and a 3% annual interest rate will apply until that time. Responding to a question about the payback period for the loan, Mr Ewanchuk agreed it would probably be “more or less” eight months after production commenced.

Noting that Mascot will have the only mill in the area, Peter Steen, chairman, said Mascot is really in the driver’s seat when it comes to making deals on surrounding properties. Picking up additional tonnage in the area could lead to an expanded Mascot mill, he added.

A few months ago Royex Gold Mining (N.M., Dec 1/86) acquired the right to earn a major interest in Golden North Resource Corp. which has an extensive land position in the Hedley area. Royex is part of the International Corona group of companies which also includes Mascot. Golden North put its various holdings into a nice tidy package for Royex which under the present agreement will be able to earn a 22% interest in the company.

According to Mr Ewanchuk, Golden North has “several million tons of material that could be run through our mill.” Two separate claim groups are being drilled now, the Mascot Fraction and the Canty claim groups. Royex is providing $2.5 million in funding for the program which will include 18,000 ft of underground drilling on the Mascot Fraction and 5,000 ft on the Canty claim group. The Mascot contains 303,000 tons of reserves grading 0.15 oz and the Canty about 755,000 tons averaging 0.12 oz.

Mr Ewanchuk, confirms that Mascot’s crushing plant is now operational and is producing road material for the mine. The open pit is being stripped and he thinks there is a good chance production will be achieved before the projected June startup date.