SherrGold’s MacLellan gold mine in northern Manitoba has commenced

During the month of January tonnage milled reached 70% of the designed rate of 26,600 tonnes, and full production is anticipated within a few months. The mill started processing ore in July.

The first gold bar was poured in mid-August. During the fall start-up period mine production was limited to about 50% of capacity awaiting completion of mine development and ore-handling facilities.

Prior to Jan 1, all revenues and expenses were capitalized as part of preproduction costs. Total capital including preproduction expenditures to the start of commercial production amounted to $45,200,000.

The grade of ore processed during start-up was below average ore reserve grade. In addition, there appears to have been an accumulation of gold in the mill circuit. Continued improvement in both grades and recoveries is expected as more experience is gained with grade control, mining methods and installation of coarse gold recovery equipment, the company says.

SherrGold will spend $7.3 million during 1987 on exploration to identify additional ore reserves. The program includes a $4-million expenditure for an underground exploration ramp and drilling activities on the Nisku occurrence located east of the MacLellan mine; $1.8 million to be spent on gold exploration on SherrGold properties in the general Lynn Lake area as Sherrgold’s part of a $3-million program planned with joint venture partners; and $200,000 to be used for four deep holes to test the depth extension of the Rainbow Zone located west of the MacLellan mine.

The remaining $1.3 million of the SherrGold program will be spent to extend mineable ore reserves at depth in the MacLellan mine and will be capitalized as mine development cost.