Ore being hauled at Mt. Hamilton

A fleet of trucks is busy hauling ore at the Mt. Hamilton gold mine near Ely, Nev., only three months after Rea Gold (TSE) started construction.

Rea secured an option on the property in December, 1993, and subsequently completed a due diligence review, as well as a financing to cover the US$5.2-million purchase price.

The financing netted the company a total of $22.8 million from the issue of 13.7 million units, including one share plus half a warrant. Each full warrant enables the holder to buy an additional share at $2 until Sept. 30, 1995.

Rea now owns the property entirely, subject to a 2.5% net smelter royalty capped at US$2.5 million and two underlying net profits interests totaling 5.5%

Minable reserves are estimated at 9 million tons in two contiguous pits grading an average of 0.052 oz. gold and 0.38 oz. silver per ton. The combined stripping ratio of the two deposits is about 5.5-to-1. The capital cost of the 1.3-million-ton-per-year heap-leach operation is expected to be US$12.6 million, not including US$17 million in equipment leases.

Based on recoveries of 75% for gold and 45% for silver, yearly output is projected at 50,000 and 193,000 oz., respectively.

Production in 1995 is expected to reach 55,000 oz. gold and 141,000 oz. silver at a cash cost of US$237 per oz., including US$17 per oz. relating to the financing portion of the lease cost.