Renewed gold emphasis starts to pay

It wasn’t necessarily a banner year for the six companies which form the Coniagas Group but the results of some exploration ventures involving the group, suggest that at least one member is progressing rapidly towards a production mode.

According to the Coniagas Mines’ 1986 annual report, recent attempts to boost the company’s involvement in gold exploration projects began to pay off.

For example, through a substantial minority interest in Anglo Dominion Gold Exploration, Coniagas established itself as a shipper of its gold-bearing high silica content ore to the Kidd Creek Mines’ smelter at Timmins, Ont.

During the year, Coniagas also acquired a 25% interest in a “grass roots” gold exploration joint venture in the Baie D’ Espoir area of Newfoundland (Anglo Dominion Gold Exploration has a similar 25% interest) which discovered stratabound gold mineralization at its Little River property, now expanded to 104 sq miles of landholdings.

Coniagas reported a loss of $9,002 for the year ended Dec 31, 1986, compared with a loss of $256,237 or 5 cents per share in 1985.

Working capital at the close of fiscal l986, which stood at $313,926, was almost identical to the company’s l985 level.

Quebec Sturgeon River Mines, 20% owned by Coniagas, reported a net earnings loss for the year of $598,452 or 7 cents per share compared with $1,582,759 or 20 cents per share for the same period last year.

Working capital at the close of l986 was $12.8 million compared with $9.8 million at the end of l985.

Bachelor Lake Gold Mines, a 51% subsidiary of Quebec Sturgeon, said higher gold prices helped to generate a 60% improvement in the company’s operating profit to over $3 million for the six months ending Dec 31, l987.

This erased the operating loss in the first half of the year to show a cash mine operating profit for all of l986 of $2.8 million, up from 1.7 million in l985.

A net loss for l986 of $497,452 or 7 cents per share, was well down from $1.3 million (19 cents per share) and $2.2 million (32 cents per share) for l985 and l984 respectively.

Working capital at the close of l986 was $1,162,294 well ahead of a $637,529 recorded in l985. A $2.5- million underwritten convertible bond issue, completed in February, has facilitated a major underground program to develop four new levels below the former bottom level at 1,050 ft.

St Andrew Goldfields’ $800,000 purchase of a 50% interest in 101 mining claims from Labrador Mining and Exploration straddling the Porcupine-Destor Fault structure east of Timmins, Ont., was the pivotal event of l986 according to Quebec Sturgeon’s annual report.

A 58%-owned subsidiary of Quebec Sturgeon, St Andrew Goldfield’s discovery of a new and high grade gold zone on the Stock Twp. property, is bringing early production planning closer to reality.

Underground work at the property successfully doubled the tonnage at the newly-discovered N2 zone, expanding total reserves to 1.5 million tons at an average grade of 0.183 oz gold per ton.

Recent drilling in the “Shoot” zone (about six miles east of the main Stock Twp. minesite) has intersected ore grade well below the previous horizon where an estimated 1.09 million tons of grade 0.126 oz was already known to exist. Additional drilling is scheduled for l987 to test lateral and depth extensions.

Earnings of $181,832 or 1.6 cents per share, were down from $245,309 or 2.3 cents per share in l985. However, St Andrew has maintained a $8.6-million cash position and will spend $4.1 million on exploration in l987.

Pheonix Gold Mines, a 77%- owned subsidiary of Quebec Sturgeon, reported a net loss of $124,583 compared with $70,485 in l985.

Under an agreement signed June 1, l987, Phoenix acquired a 8.6% net profits royalty interest in the McFinlay Bateman Twp., Red Lake Ont., area gold property joint venture for $4.2 million.

Pheonix received 214 share purchase warrants covering the right to purchase McFinley common shares at $7.75 per share for a 2- year period ending May 31, 1989. The sale of Pheonix’s interest in the McFinley venture boosted the company’s cash position which stood at $1.3 million at year-end.

Coniagas also bought a 7.1% interest in the Red Lake gold property joint venture for $714,280 cash and an approximate 1.4% net profits royalty interest.