Improvements Continue at Miramar's Yellowknife Operations
- Focus on Reducing Costs Delivers Results, - - Fourth successive quarter with costs below budget -
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VANCOUVER, Aug. 21 /CNW-PRN/ - Miramar Mining Corporation today announced that its Yellowknife operations, the Con and Giant Mines, produced a total of 30,060 ounces of gold at cash costs of US$269 per ounce, an increase of almost 4,000 oz over the 26,142 ounces of gold produced at cash costs of US$285 per ounce in the first quarter.
``We have completed the majority of this year's capital expenditures and expect lower operating costs for the balance of the year. As a result, our Yellowknife operations are expected to be cash flow positive on a total expenditure basis for the remainder of this year and next at current gold prices(+),'' said Mr. Walsh, Miramar's President & CEO.
Operational Performance
Improved performance at the Con Mine was primarily due to better than anticipated grade for free-milling ores, while Con refractory production was on budget. Higher free mill grades are largely attributable to reduced dilution, resulting from improved backfill quality, and the tactical use of more selective mining methods. Production from the Con Mine totaled 78,775 tons grading 0.337 oz/ton gold with 23,597 oz of gold produced at a cash cost of US$279/oz. Mining operations at the Giant Mine produced 25,682 tons grading 0.318 oz/ton gold, for 6,463 oz of gold produced at a cash cost of US$236/oz. Although operations at the Giant Mine continue to improve, the ramp up to full production has not progressed as rapidly as forecast. The Giant Mine was forecast to produce approximately 350 tpd of refractory ore feed over the 2000-2001 period until development of additional refractory ores from the Con Mine is completed. However, the operation is generating positive cash flow on an incremental basis and production is expected to improve over the coming months.
``I am pleased to see that our focus on cost controls is delivering results,'' said Mr. Walsh. ``This is the fourth consecutive quarter where the Con Mine has met or surpassed our cost forecast, the autoclave is performing well and, although the Giant Mine has not reached our target production level, it is contributing cash flow positive production. The Yellowknife operations are on track to achieve our forecast cash cost of US$265 per oz for 2000(+).''
``We continue to focus on reducing costs through operating improvements in light of sustained low gold prices, and to identify and implement opportunities that will average costs downward(+),'' said Mr. Walsh. Several initiatives are already underway, including simplified ore handling to eliminate the second shaft, improved flotation capacity and a switch over from hydrated to slaked lime at the Con Mine. The benefit of these improvements is expected to start showing during the second half of 2000(+).
Con Mine Bonding
Subsequent to the quarter end, the Con Mine was issued a new six-year water license by the NWT Water Board. This license covers all key environmental aspects for the mine including the usage, treatment and disposal of water, tailings and mine waste, abandonment and restoration requirements once operations cease and reclamation security deposits.
``I am pleased to see this matter resolved in a manner that provides long term certainty to operations at the Con Mine,'' said Mr. Walsh. ``This also puts to rest the debate over the total reclamation liability at the Con Mine, as the permitting agencies have agreed with our consultant's estimates(+). The amount to be bonded corresponds very closely to that estimated by Miramar and our consultants and these amounts are already incorporated into our mine plan's total cash costs. We are also evaluating the merits of concurrent reclamation and providing asset backed security as alternatives to full cash collateralization of the security deposit.''
The license requires Miramar to increase its current bond of $1 million by $0.5 million in August 2000, with further increases of $1.5 million each anniversary to a maximum amount deposited of $9.0 million. This total amount is comparable to the independent estimates for abandonment and restoration of the Con Mine commissioned by Miramar. This bonding requirement will not result in any increases in total cash expenditures as compared to the current plan under which the Con Mine is operating, as this plan assumes that all the reclamation costs are incurred as cash expenditures on depletion of the currently defined reserves, at the end of 2003. The amounts ultimately to be bonded may be reduced if the required reclamation activities are completed concurrently with operation of the mine, as planned.
Miramar believes that by completing certain aspects of the reclamation concurrent with on-going operations, the actual costs will be less than the $9.0 million total proposed to be bonded over six years(+). This stepped approach to security deposits allows Miramar to gain credit for concurrent reclamation activities designed to reduce the final abandonment costs at closure of the mine. Discussions are underway with the NWT Water Board and DIAND on treatment of concurrent reclamation spending and utilization of non-cash assets, such as the autoclave or the Bluefish hydroelectric power plant, as a form of reclamation security as opposed to cash bonding.
Exploration Underway
Miramar has commenced exploration activities designed to increase the reserves at the Con Mine through the discovery of new areas with grades more typical of historic production levels. The Con Mine has produced 5.5 million oz of gold at an average grade of 0.5 oz/ton gold. ``Discovery of new, higher grade reserves at the Con Mine could have a positive impact on our production profile at the Con Mine(+),'' said Mr. Walsh. ``These programs will test these best targets and could provide an opportunity to further reduce operating costs or increase the mine life(+).'' The exploration budget for the Con in 2000 is $1.5 million, with similar amounts expected in 2001.
Exploration drilling has begun to test the potential for extensions to the Con Mine to depth. A 40,000-foot drill program is now underway to test for new reserves up to 700 feet below the current reserves. Work also continued on completing drill platforms to test the southern extension of the Con mineralization in an area where wide spaced surface drilling intersected significant gold mineralization. Drilling will commence here in early 2001(+). Planning is also underway for drilling of two promising refractory targets in an area where drilling returned numerous high-grade gold intercepts over mineable widths. Suspension of refractory mining in the early 1970's precluded any follow-up programs in these areas. Drilling could commence in these areas in mid-2001(+).
(+) This News Release contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 concerning an increase in mine production and reduction of costs, the plans for exploration drilling at the Con Mine and the potential to increase the life of the mine through the discovery of new ore. These forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in this forward-looking statement, including, without limitation, uncertainties involved in the interpretation of drilling results and other tests; recovery rates; accidents, equipment breakdowns, labour disputes and severance costs or other unanticipated difficulties with or interruptions in production, and variations in ore grade; that drilling at the Con Mine may not discover any new ore or that the discovery of any ore may not extend the life of the mine, risks of future changes in bonding requirements and the availability of asset backed security in lieu of cash bonding; risks and uncertainties relating to fluctuating precious and base metals prices; the possibility of unexpected costs and expenses relating to environmental issues, uncertainties relating to the need for government approvals and the cooperation of government agencies in regards to any environmental liabilities and other risks and uncertainties, including those described in the Company's Annual Report on Form 20-F for the year ended December 31, 1999 and Reports on Form 6-K filed with the Securities and Exchange Commission. Certain forward-looking statements in this report are indicated with a ``(+)''.
SOURCE: Miramar Mining Corporation |
