Based on a positive feasibility report by Flour Daniel Wright,
The first phase of mining at the 1,500-ha East Amphi property is expected to produce more than 24,000 oz. gold next year by open-pit methods, thereby boosting McWatter’s total production in 1999 to beyond 200,000 oz.
Once the open-pit phase of mining is completed — and pending the results of an independent feasibility study scheduled for completion in mid-1999 — McWatters will consider whether or not to proceed with an underground phase of mining at East Amphi.
The removal of overburden at the proposed pit is scheduled to begin shortly. During the first quarter of next year, McWatters is expected to mine 130,000 tonnes at an average grade of 5.96 grams gold per tonne. The ore will be hauled to either the company’s Kiena or Sigma mills in nearby Val d’Or, depending on their availability at that time.
Total production costs for open-pit production are expected to average US$240 per oz., generating an estimated profit of $2.4 million during this phase of production.
Using a cutoff grade of 3.5 grams, the East Amphi property is reported to host a total indicated resource of 1.9 million tonnes grading 6.38 grams in five mineralized zones. The bulk of these resources — 1.1 million tonnes grading 6.16 grams — is found in the B zone. All five zones are still open along strike and at depth.
McWatters expects to produce 180,000 oz. gold this year from the Sigma and Kiena gold mines at a cash operating cost of US$240 per oz. Though focused on Quebec, where it is the largest gold producer, McWatters signed an agreement earlier this year to acquire 50% of the Hammerdown gold project in Newfoundland. At last report, this project hosted an indicated resource of 614,400 tonnes grading 18.01 grams gold.
On the financial front, McWatters reported an operating loss of $813,253 and a net loss of $2 million (or 5 cents per share) for the latest quarter ended Sept. 30. The loss was attributed in part to the adverse affects of construction work at Sigma. For the 9-month period, the net loss was $1.8 million.
Sigma produced 65,296 oz. gold in the first nine months of this year at a cash operating cost of US$298 per oz. Kiena produced 61,604 oz. during the same period at a cash operating cost of US$200 per oz.
Last fall, McWatters began an investment program to modify the Sigma and Kiena mines. To date, more than $12.5 million has been spent, which is part of the 30-month program totalling more than $30 million aimed at lowering cash costs and boosting production flexibility.
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