Royal Oak: a mining upstart with an appetite for growth

Royal Oak, based in Vancouver, B.C., owns and operates four Canadian gold mines — the Pamour in Timmins, Ont., the Giant and Colomac in the Northwest Territories and Hope Brook in Newfoundland.

In 1989, Margaret (Peggy) Witte assumed the helm and, three years later, the company became an intermediate gold producer through the amalgamation of its predecessor company, Royal Oak Resources, with four companies in the Pamour group. The company quickly developed a reputation for buying assets at fire-sale prices and then adding to their value by either increasing production or cutting costs, thereby enhancing its share price. Since 1991, the company has increased gold production by 42%, to more than 276,000 oz. in 1993 from 195,000 oz. in 1991. With the recent decision to start production at the Colomac, Royal Oak hopes to increase production to 375,000 oz. in 1994 and 475,000 oz. in 1996.

Royal Oak’s minable ore reserves have also increased significantly since 1991. At that time, reserves were 1.1 million oz.; currently they are 2.6 million oz.

The company is very active on the Canadian exploration scene. In western Canada, it is entering the second year of a 4-year program on a 70,000-acre property known as the Mirage Bay, south of Yellowknife, N.W.T. Last year, Royal Oak drilled 11 holes totaling 11,569 ft. to test large-scale shear zones similar to those hosting Giant and Con mines.

The company has also optioned claims north of its Con mine to Nebex Resources (ASE). About $4 million is expected to be spent on exploration there this year.

Meanwhile, in eastern Canada, Royal Oak is continuing to develop reserves at an open-pit deposit in Timmins, east of the Pamour mill, where the company says there is a geological potential reserve of 1.5 million tons grading 0.06 oz. per ton.

Drilling in the Nighthawk Lake area continues to prove up additional mineralization. Royal Oak is planning to start open-pit mining on the ramp zone this year.

Drilling near the Hallnor mine has intersected three high-grade veins parallel to the mined-out Hallnor vein. Currently, Royal Oak has dewatered the mine to the 17th level and plans call for downdip drilling on the Broulan to the south of the Hallnor.

Last year, a feasibility study was completed on the Matachewan property in northeastern Ontario. Royal Oak has a 60% working interest in the property, which has a geological resource of 600,000 oz. Plans call for additional deep drilling and further feasibility work in 1994.

Royal Oak also holds interests in four other exploration and mining companies. It formed a strategic alliance with Asia Minerals (ASE), with a 35.9% interest, and is participating in four gold and two base metal exploration projects in China.

Royal Oak also holds interests in Trader Resources (TSE), Geddes Resources (TSE) and Athabasca Gold Resources (TSE).