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TABLE OF CONTENTS Jan 5 - 11, 1987 Volume 72 Number 43 - 0 comments

Investment Comment Overlooked Hycroft Resources offers capital

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Amidst the plethora of new up-and-coming heap leach situations, Hycroft Resources and Development Corp. appears to have been overlooked. Considering the production and earnings projected for 1988, its shares hold above-average capital appreciation amongst the second-tier Canadian gold stocks. For these reasons, David R. James, mines and metals analyst with Richardson Greenshields of Canada, recommends the purchase of Hycroft shares in a recent research report. At that time, this Vancouver-listed company was trading at the $4.20 level. Currently it trades at the $4.30 level.

A positive production decision is anticipated to be made early in 1987 on the company's Crofoot heap leach gold project, located about 60 miles north of Lovelock, Nev. Supported by leachable ore reserves of 10 million tons (plus) averaging 0.035 oz gold per ton at a 1.0 to 1.0 stripping ratio, annual production is projected in the 45,000 to 50,0000 oz range, beginning in 1988, says Mr James.

Don Duncan, mining consultant and now a Hycroft director, is co-ordinating the feasibility study including mine and plant design, says the analyst. Current plans are to begin mining of two million tons of shallow mineralization averaging about 0.04 oz gold per ton with a 0.7 to 1.0 stripping ratio. Expansion to 2.5 million tons per year is planned for the second operating year. Capital costs are now believed to be in the $8 million(US) region. Funded by Granges and Goldbelt

A decision on the structuring of the project financing has not yet been made. Exploration has and continues to be funded by share takedowns by Toronto-listed Granges Exploration and Vancouver-listed Goldbelt Mines. Currently Granges owns 14.6% of Hycroft's 4.9 million shares now outstanding and has options to purchase a further 720,000 shares at $1 per share and 453,390 shares at $1.50 per share.

Granges has also agreed to accept 946,160 shares at $2.08 per share in satisfaction of $1.97 million advanced to Hycroft for the development of the Crofoot property. Granges also intends to undertake a private placement of 1.2 million Hycroft shares at $2.08 per share for funding the next development stage.

The combination of the above transactions would bring Granges' shareholdings to 4.04 million Hycroft shares or 48.9% of the outstanding shares and would raise about $4 million.

This percentage ownership assumes that Goldbelt Mines, which currently owns some 480,000 shares has not exercised its option on 480,000 shares at $1 per share and on 302,260 shares at $1.50 which would raise an additional $0.9 million. Offer on adjoining mine

The Crofoot project adjoins an existing production known as the Lewis mine owned by the Standard Slag Co. This property has been in production since 1984 and it is believed that leachable reserves are in the order of 3.5 to 4 million tons, also grading about 0.035 oz.

Granges has made an offer for this operation which, if successful, would be vended to Hycroft for a minimum of probably 2.5 million shares. Should the acquisition be made, it is thought that a 1.5-million-ton-per-year operating rate could be supported adding 25,000 to 30,000 oz annually to Hycroft's account.

A small amount of additional capital would be required to upgrade the Lewis operation but its cash flow could be supportive to the Crofoot development, says Mr James. Combining the Crofoot and Lew operations in 1988, annualized gold output could be in the 70,000 to 75,000 oz range and at a $400(US) per oz gold price, Hycroft's earnings could be in the 90 cents per share area (after depreciation, interest expense and a provision for taxes).

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