River Gold hums along in Wawa

In the past two years, River Gold Mines (RIV-T) has started up two operations in the Wawa camp of northern Ontario, and, in spite of the downturn in gold prices, the company’s balance sheet augurs well for the current year.

Earnings in 1997 totalled $3.9 million (or 13cents per share) on revenue of $34.7 million, compared with a profit of $5.9 million (19cents per share) on $34.3 million in the previous year.

Total gold production from the Eagle River and Edwards mines amounted to 75,484 oz., derived from 219,255 tonnes grading 11.04 grams per tonne.

For the current year, River Gold hopes to crank out 80,000 oz. from 260,000 tonnes milled.

Gold production between 1996 and 1997 rose by 17%, costs were reduced by 5% (to US$235 per oz. from $US247) and mined-out reserves were replaced, the company reports.

Capital expenditures at the Eagle River mine totalled $7.3 million. A shaft-sinking and exploration program is expected to be completed by late 1999 at an overall cost of $10 million. The company hopes the planned 700-metre shaft, reached from a new access adit, will open up the mine for production and exploration at depth. The mine is currently accessible by a decline ramp.

Eagle River is described as a classic shear-hosted, narrow-quartz-vein, high-grade deposit. It occurs within the Eagle River regional deformation zone of the Mishibishu greenstone belt. Several separate mineralized zones have been identified along the 14-km strike length. These vertically dipping zones display moderate to steep east plunges and minable widths of 1.5 to 7.5 metres. Previous drilling identified high-grade values over minable widths to a maximum depth of 550 metres, River Gold states.

At year-end, proven and probable reserves at Eagle River stood at 1.2 million tonnes grading 10.91 grams gold per tonne, equivalent to 408,000 contained ounces (fractionally higher than at the end of 1996).

The Eagle River mine has a substantial inventory of broken and stockpiled ore (159,000 tonnes as of Sept. 30, 1997).

For the current year, exploration at Eagle River is budgeted at $1 million.

The program will entail prospecting of the Eagle River shear zone immediately east of the No. 2 zone, and surface and underground drilling between the No. 6 and No. 2 zones.

Diamond drilling at the property continues to yield encouraging results. The identification of wide, high-grade lenses in the No. 6 zone continues to add to the reserve picture. A recent hole intersected one such structure 140 metres below surface that returned 34.1 grams gold (uncut) across a true width of 13.4 metres.

Summer prospecting 5 km east of Eagle River identified a new structure, the Iron Hat vein, which yielded surface samples of up to 150 grams gold.

According to a company spokesman, several vein systems that merit diamond drilling have been identified in this area.

Meanwhile, the Edwards mine, 50 km northeast of the town of Wawa, is expected to produce 30,000 oz. gold and a profit in its first year of production. Milling began in August 1997.

The mine is being managed, financed and developed by River Gold under the terms of a formal lease agreement. The owner, VenCan Gold (VCG-M), received a non-refundable $500,000 advance royalty payment and is entitled to half of the net operating profit.

At the end of 1997, proven and probable reserves at Edwards totalled 156,000 tonnes grading 12.09 grams gold, equivalent to 60,000 contained ounces. This represents an increase of 30% over reserves reported at the end of 1996.

River Gold operates a milling complex (formerly known as the Magnacon mill) not far from the Eagle River mine. Last year, 219,300 tonnes were processed, compared with 162,075 tonnes in 1996. At last report, the company had 30.8 million shares issued and outstanding.