Milling halted at Colomac as Northgate awaits banks

With its new mill at a standstill, the remote Colomac gold mine is now on borrowed time and may have to be shut down altogether when fuel supplies run out in March. Owner NorthWest Gold (AMEX), a 52% owned subsidiary of Toronto-based Northgate Exploration (TSE), is holding discussions with its lead bankers in a bid to restructure $90-million project debt.

If the discussions prove unsuccessful, NorthWest says it will have to suspend operations at a mine that was expected to produce 200,000 oz. gold in 1991.

Having already taken a $149.5- million writedown on the project, NorthWest says it requires $20 million for 1991 working capital requirements including a winter road supply program.

Most of the equipment needed to operate the mine is trucked north from Rae/Edzo, N.W.T., along a frozen road that begins to thaw out in the beginning of April. Anything that doesn’t make it before then must be flown in by Hercules aircraft.

Meanwhile, NorthWest says current fuel supplies and materials can sustain the Northwest Territories operation until some time in March.

From mill startup in May until the end of November, Colomac produced 59,650 oz. of the yellow metal. That includes 9,400 oz. in November when an average of 5,820 tons of ore was processed per day. Average throughput in the first two weeks of December increased to 6,500 tons per day.

While November throughput was restricted by a mechanical problem in the main grinding unit, the mill head grade also increased to 0.058 oz. from 0.049 oz. During November, mill throughput was restricted by the shutdown of one of the two secondary mills for repairs. Because of a problem in one of the motors in the main grinding unit, milling has been temporarily suspended.

NorthWest says it is examining ways to replace or refurbish the offending equipment.