Cominco Resources forecasts 100,000 oz gold production

Intent on becoming a major gold producer in the near future, Cominco Resources International (TSE) has established a “realistic” production goal of 100,000 oz within a few years. Addressing the company’s annual meeting, President George Tikkanen noted the production would come from a producing mine in Nevada (Buckhorn), two in Chile (Marte and Lobo) and the Kinsley Mountain deposit which is also in Nevada.

The 58.6%-owned Cominco Ltd. (TSE) subsidiary was formed in May, 1987, with $36.7 million in working capital, of which $11.7 million has been spent on exploration and development including exploration at Buckhorn.

In spite of these expenditures, Tikkanen said that Cominco Resources had $33.9 million in working capital “due to the excellent cash flow from Buckhorn.” For nine months of 1987, Buckhorn cash flow was $6.5 million before taxes. “It’s a gold operation and one we want to keep going,” he emphasized.

Vice-president Geoffrey Harden told the meeting that construction was under way at the Marte gold project in Chile. “Feasibility studies call for a 9,000-short-ton-per- day open pit mine,” he said, adding that low cost heap leaching would be used in the recovery process. Mine reserves are currently 30 million tons grading 0.045 oz gold per ton.

The mine should reach production in about a year and gold output is expected to be 95,000 oz per annum. Cominco Resources’ share will be 25,000 oz and production costs are estimated at $200(US) per oz. Capital costs are expected to be around $37 million, down from $47 million in the feasibility study six months ago.

The company has a 50% interest in the Lobo and Valy prospects a few miles from Marte which are geologically similar. A major drill program is under way at Lobo. Tikkanen emphasized that Chile has a very satisfactory tax rate — 10% if the money was reinvested and 32.5% if it is repatriated. “Chile has a strengthening economy, it is an orderly country where things get done and projects can be built. It has strong legal traditions and democratic roots,” he said.

Development work on the high grade underground Maria copper deposit in Mexico will commence when permitting is obtained which should be any day; this could be in production in late 1989 or early 1990.

Reserves at Buckhorn last April were 1.1 million tons; and after treating 840,000 tons they now stand at approximately 1.2 million, the culmination of successful exploration. Open pit ore is still a No 1 priority but several areas are being tested for higher grade sulphide mineralization. A deep hole in the West Sinter zone returned 165 ft grading 0.8 oz gold and follow-up drilling around this hole is continuing. “Results to date are mixed, with some negative holes,” said Harden.

Studies are under way to determine the economic viability of the Topaz Beryllium project in Utah. “The key to bringing in a new mine to produce beryllium will be to ensure access to the market, and we are now concentrating our efforts on this aspect of the project,” he said.