NEVADA SPECIAL — Nevada mine key to Granges’ growth

The Hycroft open-pit, heap-leach mine, 60 miles west of Winnemucca in northwestern Nevada, is key to the growth strategy of Granges (GXL-T).

The company’s mission is to find, acquire, develop and operate profitable gold mines in North and South America, and cash flow from the Hycroft mine will help finance that effort.

In 1995, Granges boosted to 100% its interest in the Hycroft mine (previously known as Crowfoot-Lewis) after acquiring all of Hycroft Resources & Development, a 51%-owned subsidiary at the time.

Production from the Hycroft in 1995 totalled 101,128 oz. gold and 417,823 oz.

silver, representing a new record.

Over the past two years, the mining fleet has been replaced with new 23 cu.-yd. hydraulic shovels and 150-ton haulage trucks, resulting in an increase in mining capacity and a reduction in mining costs. Mining costs averaged US54 cents per ton in 1995, down from US62 cents in 1994.

The company has also lowered operating costs by reducing the amount of ore crushed. Since 1994, only higher-grade ore has been crushed before leaching.

In 1995, about 56% of the ore process was run-of-mine (not crushed), compared with a level of about 36% in 1994.

Lower mining and crushing costs helped reduce cash production costs last year to US$272 per oz., down from US$294 in 1994.

The Hycroft processed 9.9 million tons grading 0.019 oz. gold per ton, which represents a higher tonnage, but lower grade, than the 9.3 million tons grading 0.02 oz. processed in 1994.

Hycroft reserves, as of Jan. 1, 1996, stood at 58.8 million tons grading 0.019 oz. gold, providing the mine with sufficient feed to last to the year 2001 at current production rates.

Most of the remaining reserves are in the Brimstone deposit, a few thousand feet southeast of current operations.

Proven and probable reserves in the Brimstone deposit are estimated at 46.5 million tons grading 0.019 oz. gold (with a 2.3-to-1 stripping ratio), and Granges’ studies indicate a large portion of the reserve can be processed without using crushing.

Mining of the Brimstone deposit will start this year, and Granges expects to be processing ore in the final quarter of 1996, after it constructs leach pads and a Merrill Crowe plant.

Granges will continue exploring for additional oxide zones.

President Michael Richings says potential exists both for finding new oxide reserves and discovering deeper sulphide feeder zones.

He adds that costs associated with deep exploration are high (up to $100,000 per drill hole), and, as a result, Granges is considering seeking a partner to help fund a deep sulphide exploration program.

Granges’ other major asset in Nevada is its joint venture with Atlas (AZ-N) at the Gold Bar project, 180 miles southeast of Hycroft at the southern end of the Battle Mountain-Eureka gold trend.

Granges can earn a half interest in a 34-sq.-mile package of claims surrounding the mined-out Gold Bar pit, which produced some 315,000 oz. gold.

It is testing an area of known gold mineralization extending beyond the open pit to the northwest.

On a regional basis, Granges is exploring Nevada’s Sulphur mining district, which encompasses a large area, including the Hycroft mine and the Gold Bar joint venture.

In addition to its Nevada assets, Granges holds property interests in Peru, as well as Ecuador, through its equity interest in Zamora Gold (ZMRA-C).

As of March 31, 1996, Granges had US$18.4 million in working capital, no long-term debt and 46.2 million shares outstanding. Subsequent to the end of the first quarter, the company completed a private placement of 9.7 million units at $2.60 per unit. Each unit includes one share and half a warrant, with each whole warrant exercisable into one share at $3 until Oct. 31, 1997.