River Gold boosts profit from Canadian mines

Higher production and lower operating costs translated into a strong second quarter for River Gold Mines (RIV-T).

The Canadian gold miner earned $5.5 million (or 18 cents per share) in the three months ended June 30, compared with $1 million (3 cents per share) in the corresponding period of 1997.

Cash flow between the two periods rose to $7 million from $4.6 million; gold production increased to 30,100 from 17,000 oz.; and the average cost of mining an ounce dropped to US$120 from US$208. Each ounce of gold was sold for an average of US$294 in the recent quarter, down US$42 per oz. from a year ago.

Gold production during the first half of the year topped 47,300 oz., which was mined for US$296 per oz. Output was 49% greater than in the first half of 1997, prompting River Gold to up its year-end target to 85,000 from 80,000 oz.

The company pulls its gold from two underground mines near Wawa, Ont.: Eagle River, which is wholly owned, and Edwards, which is shared equally with VenCan Gold (vcg-m) and situated 80 km northeast of Eagle River. Ore from both mines is processed at the Eagle River mill, though only the Eagle River mine has been providing feed in 1998; mining at Edwards occurs periodically and is scheduled to resume in the fourth quarter.

Exploration at Eagle River has identified four new zones, while extending several known ones. Three of the new zones are minable from surface; the fourth was partially exposed in an exploration drift and returned an average of 68.1 grams gold per tonne in samples taken along a length of 15 metres and a width of 3 metres.

As well, 220 metres of a planned 700-metre-deep shaft were completed (the deposit is currently accessible from a decline). At last report, Eagle River hosted proven and probable reserves of 1.2 million tonnes grading 10.91 grams gold.

At the Edwards mine, underground development intersected the Carbonate zone at the 150-metre level. That zone, one of five outlined to date, accounts for about a third of the property’s proven and probable reserves of 156,100 tonnes grading 12.09 grams gold. Underground development and drilling continue.

River Gold recently acquired the Mishi Lake gold deposit. The cost of the portion that contains the known gold resource will be $1.4 million, provided River Gold mines more than 700,000 tonnes from the deposit. Mishi Lake, which is only 2 km from River Gold’s mill, hosts 1.4 million tonnes grading 4.26 grams gold. Half of this is said to be potentially amenable to open-pit methods.