Goldstream shows operating profit

The owners of the Goldstream copper mine near Revelstoke, B.C., expect to report an operating profit of about $2.2 million for the six months ended Nov. 30.

The mine is jointly owned by Goldnev Resources (VSE) and Bethlehem Resources (TSE). Bethlehem is the operator of the project.

Copper concentrate from the mine is shipped to Japan for smelting by Nippon Mining and Sumitomo, the two companies that provided the startup capital for the project.

Settlement for the shipments is made three months after arrival in Japan based on the price of copper at that time. As a result, the 6-month profit estimate includes only two months (June and July) of actual figures. For the four months August through November, net mine operating profit was estimated at $1.76 million based on shipments of concentrates containing about 11.3 million lb. copper.

With the current price of copper down to US96 cents per lb. from about US$1.08 in early December, Henry Ewanchuk, president of Bethlehem, said the actual operating profit figure may be less than estimated at the time of the respective concentrate shipments.

In addition, the operating profit does not include interest charges. The joint venture owes Nippon and Sumitomo over $6 million with interest payable at a floating rate based on LIBOR. Ewanchuk said the debt’s current rate is about 6.5%.

The Goldstream mine, a former producer bought from Noranda in 1989 for $5.75 million, was brought back into production in early May of 1991. Commercial production began one month later.

Underground reserves at the time, based on a 3% copper cutoff grade, were estimated at 2.05 million tons grading 4.81% copper and 3.06% zinc. For the six months ended Nov. 30, the mill processed a total of 211,700 tons of ore to produce 16.9 million lb. copper. The average monthly copper recovery increased from 86.16% in May to a high of 94.34% in November. The average copper grade ranged from 3.14% in May to a high of 4.13% in June. Grades in October and November were 3.75% and 3.77% respectively. Henry Ewanchuk, president of Bethlehem, noted that some lower-grade open pit ore was mined from September to November resulting in a drop in average millhead grades during October and November.

Ewanchuk conceded that average grades of just over 4% copper from June through September were lower than the average reserve grade of 4.8% copper. He said the mined material included dilution from development drifting and until a full panel of ore is mined, actual mining grades will not be known. The ore zone in the Goldstream mine is a tabular body dipping at 30-35. The orebody averages about 10 ft. in thickness and has a lateral extent of up to 1,200 ft. in its uppermost portion.

The deposit is mined by driving sublevel drifts across the deposit on 25-ft. vertical centres. The ore between sublevels, about 36 ft. along dip, is then slashed out. Mining dilution in the sub-drifts is high since the lower corner of the drift is in waste.

The joint venture is in the process of installing an 8-ft. column cell for the copper circuit. The column cell is expected to increase copper concentrate grade to 26% from 24% which will result in lower transportation costs. Copper recoveries are expected to remain at 93%.

The use of the new column cell will free up two 48-inch column cells for zinc production.

The Goldstream orebody grades about 3.06% zinc, and although zinc has not been recovered to date, the joint venture has a smelting contract with Cominco Ltd. and zinc recovery is expected to start in the first quarter of the year.