Dome Mines looking upbeat

A bright, definitely upbeat picture of the gold mining operations of the Dome Mines’ group of companies was painted by Dome management during a tour here of the famous Big Dome mine, and later, of Sigma Mines and Kiena Gold Mines in Quebec’s Val d’Or area.

Greater gold production, longer reported life for mines in the group, continued low-cost production and a rosy earnings scenario for 1986 were among the predictions.

A number of analysts and press representatives on the tour learned for instance, that this year the Dome group will produce over 553,000 oz of gold, bringing its share of total Canadian gold production to over 19% and consolidating the position of Dome as one of the largest gold producers on this continent.

And those 553,000 oz, President Henry Brehaut tells The Northern Miner, will be produced at an average cost per oz of $180(US).

The production figure, up from 466,000 oz last year, does of course reflect Dome’s acquisition earlier this year, (through Campbell Red Lake Mines) of the Kiena gold operation from Falconbridge Ltd.

Dome management, including Chairman Fraser Fell, as well as Mr Brehaut, were at some pains during the visit to make it clear that the venerable Dome mine at Timmins, now 76 years young, is still very much a force to be reckoned with.

This year for example the mine, where just a couple of years ago a $97-million expansion and modernization program was completed, is expected to produce 137,000 oz of gold, well up from an original projection of 122,000 oz. Cash cost per oz will be $250.

And, says Mr Brehaut, while reserves for the Dome have so far always been given only for a period of about two years, and only in the proven classification, studies are being made in an attempt to report both proven and probable reserves. (It has already been done for Sigma Mines, and will be done for Campbell Red Lake).

As a result, the life of the Dome mine would be considerably extended.

In fact, as the Dome president told The Northern Miner following the tour, if the ore-bearing structures at the Dome extend to at least the 5,100-ft level, based on other experience, “this could mean a minimum of 20 years future life” for the mine.

The mine is still taking out 50% of its ore above the 2,000-ft horizon, as an indication of its longevity.

What’s more, Chairman Fell told the visiting group, the company plans a $14-million improvement and expansion program next year for the existi ng mill which would see the gold extraction process changed from cyanidation to the more modern carbon-in-pulp process. A 5%-10% improvement in production is anticipated from this.

The required stamp of approval for the expansion from the company’s board of directors, would likely be received by about the end of October, Mr Fell said.

Meanwhile, Mr Brehaut said at the Detour Lake mine northeast of Timmins, where reserves in the proven and probable categories of 6.2 million tonnes at a grade of 5.1 g gold per tonne have been confirmed, joint venture partners Campbell Red Lake and Amoco Canada Petroleum at the end of the month will restart underground work, with a 3-month program consisting mainly of drifting and major level development.

He says it is Campbell’s belief that complete development of an underground mine at Detour is economically justified, certainly at today’s gold prices, but that a decision still had to be made by a Campbell/Amoco joint venture committee.

That decision is expected to be made soon. Profit will be up

Douglas Scharf, Dome vice- president, finance, adding to the generally positive picture for Dome Mines as a whole, told the visitors it’s expected there will be significantly better earnings this year from Sigma, Kiena, and Campbell Red Lake.

Sigma earnings, he said, will be in the $5 million range in 1986, those of Kiena will roughly double to approximately $7 million, and Campbell’s will be up, too, to around $38 million from $26 million last year. The Campbell 1986 figure, though, is before writeoff for the Lac Minerals interest acquired earlier.

Mr Scharf declined to estimate earnings for Dome Mines itself, but Mr Brehaut said later he expected it would be in the $14-million range, on a consolidated basis, ($12 million last year). Dome Pete shadow

Dome Mines, meantime, still has to deal with the detrimental effects of the overhang on the market of the 20.9 million shares of Dome Mines still held by Dome Petroleum.

Mr Fell insisted that Dome Mines is in a healthy financial state, despite its guarantee of a $225-million portion of Dome Pete’s huge debt, and said his company is currently negotiating with four chartered banks to have that guarantee terminated.

“It’s a first priority to disentangle ourselves from Dome Petroleum,” he told the visiting analysts, adding a prediction that the problem would be behind Dome Mines within “a matter of months.”

During the 2-day tour, the group went underground at both the Dome mine and the Kiena mine, and toured the surface facilities of Sigma. As well, there was a brief visit to the metallurgical plant of Kidd Creek at Timmins, in which Dome Mines has an interest through its 24% direct and indirect holding in Falconbridge.

At Sigma, Andre Carrier, general manager, said as a result of examination of reserve estimates by an independent consultant, it’s estimated at least 10 years of proven and probable reserves will be stated for the mine at year-end, with significant additional tonnage in the possible category.

The mine will produce an estimated 63,000 oz gold this year at a cost of $268 per oz, against an average production over the last three years of 59,325 oz.

Mr Carrier noted that Sigma will be receiving funds from Hydro Quebec for conversion at the mine from 25 to 60-cycle power, a move he said would enable the company to modernize and upgrade some of its major equipment.

At Kiena, general manager Raynald Vezina said this year 440,000 tonnes will be mined for a production of 73,000 oz gold, increasing next year to 450,000 tonnes mined, but producing 67,000 oz because of a slightly lower grade.

The mine’s reserves of 6.2 million short tons at a grade of 0.166 oz gold, give it a 14-year life, he said.

A highly-mechanized operation, the Kiena mine is pioneering application of a technology new to underground hardrock mines, with the use of a tunnel boring machine to excavate an exploration heading.

Mr Vezina said the machine will drive some 4,000 ft on the heading this year. It is currently just past 1,000 ft.

Kiena is encouraged by exploration drilling just to the north of the mine’s North zone, where one hole in a winter program returned a mineralized intersection of 4 m grading 15.2 g gold per ton, at bedrock.

Senior mine geologist Michel Comier said the area would be further tested this coming winter with a reverse circulation diamond drill program.



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