Goldcorp boosting production

With interests in three gold mines and plans to expand gold production, Goldcorp (TSE) has risen above the ranks of the juniors to achieve intermediate-size status.

The increase in the company’s pro forma, attributable gold production to more than 136,000 oz. in 1993 from 126,000 oz. in 1992, was partly due to its merger with Dickenson Mines and Goldquest Exploration. With the merger, Goldcorp increased its share in Wharf Resources (TSE) to 50.3% from 14.6%. Total gold production for the group — that is, Goldcorp and Wharf — exceeded 211,000 oz. in 1993 from more than 181,000 oz. last year. Total proven, probable and possible gold reserves at the end of 1993 stood at 4 million oz., of which Goldcorp’s share is 2.5 million oz.

Wharf’s assets include the Wharf and Golden Reward mines, both of which are in the Black Hills area of South Dakota. Production at these mines increased to more than 102,000 oz. and 35,000 oz., respectively, in 1993 from 95,000 oz. and 10,000 oz. in the previous year.

At Goldcorp’s wholly owned Red Lake mine in northwestern Ontario, production dropped to about 73,000 oz. in 1993 from 75,000 oz. in 1992. Having merged, Goldcorp and Wharf are now planning to increase gold reserves and, consequently, production from the three mines.

At Red Lake, almost $2.5 million has been earmarked for underground exploration in three zones in an attempt to prove up an additional 1 million tons averaging 0.3 oz. per ton.

In addition to work at the Red Lake mine, Goldcorp will spend about $3 million exploring the East Bay property (formerly held by Goldquest) over 18 months.

Goldcorp has also proposed a $25-million development plan that could see production at the Red Lake mine increase to 120,000 oz. by 1997. The money will be used to buy additional equipment and improve milling, hoisting and ventilation. It is also expected that recoveries will be enhanced to about 90% from 80%.

Reserves and production are also to be increased at the companies’ South Dakota operations.

At the Wharf mine, more than half of the known reserves are found within the unpermitted Clinton project. Goldcorp hopes to have permits for this project in place by the end of 1995 and to explore further an extensive land holding. Goldcorp hopes to be producing 120,000 oz. gold by 1997 and, to achieve this, will spend $7 million to bring the Clinton project on-stream and expand pad capacity.

At the Golden Reward mine, a similar plan of permitting reserves and expanding pad capacity will be carried out. Total costs are expected to be $6 million.

If all goes well, the group’s gold production will rise from the current 211,500 oz. to 320,000 oz. by 1997; Goldcorp’s share will be 210,000 oz. Goldcorp is in the enviable position of having other sources of cash to fund exploration and development at these mines. Recently, it raised almost $40 million by selling 5.6 million shares in Orvana Minerals (TSE). Goldcorp still holds 1.1 million shares, as well as 15% of the shares in Platinova A/S (TSE).

The company also generates revenue from the sale of lime and limestone products, which are quarried at the Havelock mine in New Brunswick, and sodium phosphate, which is produced at two plants in Saskatchewan.