There were no questions from the floor at the annual meeting of silver producer United Keno Hill Mines, probably reflecting the fact that shareholders generally liked what they heard from President J. C. Cowan.
Basking somewhat in the light of a silver price that “has done amazing things” in the last few weeks, Mr Cowan described an upbeat situation in which he predicted the company will make at least a slight operating profit in the first quarter this year, and has been successful enough in discovering new reserves at its Yukon silver mine that the mine’s life is sure to be extended by several years.
In 1986, United Keno had an operating profit (its first in three years) of just over $1 million, in spite of an average silver price of in that year of $5.47(US) per oz. Exploration expense charged against earnings in 1986, gave the company a consolidated net loss of $1,868,000.
The silver price at the time of this year’s meeting, though, had jumped to about $7.25 per oz, against a predicted operating cost per oz this year of $5.20.,
And, Mr Cowan told shareholders, not only has the company found several important high grade ore zones to significantly prolong the life of its mining operations, but the increased grade of the new zones will “substantially increase revenues and help to offset low silver prices.”
He told The Northern Miner following the meeting that while he is pleased with the current climb in the silver price and its implications for the company’s financial health, “there is just no way you can tell” whether the price rise will be sustained, let alone increased.
“The fundamentals at any rate are much better right now in the silver market,” he said.
The president told the meeting proven and possible reserves now stand at 190,600 tons grading 27.8 oz silver per ton, and 4.3% lead, an increase of 744,000 oz silver over 1985 reserves, and sufficient he said to sustain operations at the current level into 1989.
An additional 146,500 tons grading 37.5 oz silver and 5.2% lead have been classified as possible ore, with a total 53,300 tons grading 47.6 oz added to the possible category during the year.
Most of this addition, he said, has come from the company’s Bellekeno mine, where an underground exploration program has added 70,500 tons grading 46 oz silver, or 3.2 million oz, to the mineral inventory.
“The potential to significantly expand the current mineral inventory at the Bellekeno is extremely high,” Mr Cowan noted.
At Husky SW too, he continued, the company is going ahead with the first phase of a $3.5 million project to determine the viability of the ore zone indicated by diamond drilling below the 250 level, where a total of 47,000 tons of possible ore grading 38 oz silver and 0.078 oz gold has been estimated.
Mr Cowan noted that United Keno will spend about $5.7 million this year on exploration, with funds largely coming from the issue of flow-through shares.
“United Keno is a prime example of the benefits of the flow- through share legislation,” he commented. “The company would not have been able to finance the extensive exploration programs it has carried out in the last few years, without the flow-through share provisions.”
As a result of its exploration successes, he said, the company is not just replacing reserves, but replacing them plus, and at high grades.
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