Wheaton eyes George Lake

The George Lake gold project, near Bathurst Inlet, N.W.T., has caught the eye of Wheaton River Minerals (WRM-T).

The Toronto-based junior recently bought another 5.4 million shares in project-owner Kit Resources (KIT-T). The shares, which were purchased from Echo Bay Mines (ECO-T) at 13.5 cents each, raise to 23.3% Wheaton’s total equity in Kit.

As part of the deal, Ian McDonald has been appointed chairman and chief executive officer of Kit, replacing John Zigarlick, who remains as a director. McDonald, who holds similar positions in Wheaton, has also replaced Morris Medd on the company’s board of directors.

The George Lake deposit, which hosts 6.5 million tonnes averaging 9.76 grams gold per tonne, is Kit’s main asset. Two-thirds of the resource is classified as indicated; the remainder is inferred.

The resource was estimated by MRDI Canada using a 5-gram cutoff and a cutting factor of 34.29 grams. It consists of six deposits that have been drill-tested by more than 900 holes. Each deposit is within 300 metres of surface and open at depth.

Metallurgical tests indicate that between 93% and 95% of the gold can be recovered using conventional milling followed by carbon-in-pulp extraction.

The project, however, suffers from high transportation costs associated with this infrastructure-poor region.

Wheaton earned $1.8 million in 1998, compared with a loss of $3.4 million in 1997. Revenue between the periods remained essentially unchanged, at $15.7 million.

Wheaton attributes its success to lower operating costs at the seasonal Golden Bear heap-leach mine in northern British Columbia. The company has an 87% interest in the mine, which it also operates.

In 1998, Golden Bear cranked out 36,100 oz. at a total cash cost of US$147 per oz., or 5,500 oz. more and US$79 per oz. less, respectively, than in 1997. This year’s production is expected to top 59,000 oz., with total cash costs pegged at US$184 per oz.

The company sold its gold for an average $432 per oz. last year, which is $90 less per oz. than in 1997.

Wheaton began the year debt-free, with $5.7 million in cash.

Aside from Golden Bear, the company owns the Bellavista gold project in Costa Rica, where a feasibility study is nearly complete. Proven and probable open-pit resources were last pegged at 9.6 million tonnes grading 1.66 grams gold, whereas diluted resources potentially minable by underground methods stood at 1.6 million tonnes grading 4.37 grams gold.

A total of $4.3 million was spent on the project in 1998.