Cusac finally wins appeal

A judgment of $2.87 million handed down in late 1988 has been ratified with Cusac Industries (TSE) coming out on top after an appeal by Total Energold (TSE) was dismissed. Cusac and Total were in disagreement over the ownership of the first 12,000 tons of production from the Table Mountain gold mine near Cassiar, B.C.

Guilford Brett, president of Cusac, noted that the company had received half of the judgment after winning the initial suit and with the payment of the second half, which he expects within days, the company will have about $1.5 million in working capital.

Brett indicated some of the funds would be used for drilling at the company’s wholly owned Cruse- Belmont property near Helena, Mont., while a large portion would be kept as a reserve.

The company did have the gold property in production at a rate of 100 tons per day for part of 1989, but because of the small scale of operations, it was not profitable.

Brett estimates that the project contains a geological reserve of about 250,000 tons grading 0.6 oz. gold per ton and that the potential for increasing the reserve was excellent.

Brett would like to raise about $3 million though an equity financing which would enable the company to bring the project on stream on a larger scale, but he stressed that the stock was at an unrealistically low level and any financing would have to be at higher levels. The stock recently sat at the 80 cents level despite the judgment in the company’s favor.

The Table Mountain mine, the subject of the initial dispute, is not currently in production although Total Energold is in the process of an extensive exploration program. Cusac is in the enviable position of not having to put up any exploration funds due to its 30% carried net profits interest.

Total Energold is driving a 7,000-ft. adit, 5,000 of which is complete, to explore some very high-grade intersects including one hole that intersected 6.2 ft. grading 9.1 oz. gold per ton. Brett noted that Total wanted to prove up 100,000 oz. of gold reserves before going ahead with production. This would ensure a continuous supply of feed for the 300-ton-per-day mill on the property.

In any event, he is confident the operation will be in production by the end of 1990.