St. Andrew Goldfields prospers by running counter to industry's trend.

• Author: Krejlgaard, Chris
• Position: Gold Mining Report

St. Andrew Goldfields prospers by running counter to industry's trend

The belief that gold prices will rise has led officials of St. Andrew Goldfields Ltd. to push the company's Stock Township Mine into full production at a time when other mining companies are downsizing their operations in northeastern Ontario.

"We have faith in gold," said Bob Richie, mine manager for the Stock Township Mine in Matheson. "We're owned by the Conigas (Mining Ltd.) Group of Companies and they have a philosophy that gold is where the future lies.

"There are just temporary things which are depressing prices for the near term."

He added that once events in both Russia and the Middle East stabilize, gold prices should begin to increase.

Aside from St. Andrew, Conigas is also associated with Anglo Canadian Exploration Ltd., Anglo Dominion Gold Exploration Ltd., Bachelor Lake Gold Mines Inc. and Quebec Sturgeon River Mines Ltd.

The Matheson facility officially went into full production last fall, following an extensive surface exploration program.

The program established an estimated reserve of 1.3-million tons with an average grade of .186 ounces of gold per ton.

Richie said the availability of funds was perhaps the largest factor in the decision to push the facility into production. The company secured a convertible bond issue in Switzerland. The bond issue was for 25 million Swiss francs at 5.75 per cent interest and is due on June 6 1995. Until that time, the bonds can be converted into common shares at $4.75 per share, based on an exchange rate of 1.1357 francs per Canadian dollar.

According to Richie, production at the Stock Township Mine is currently surpassing projections contained in a consultant's report for the site.

Richie said an average of 550 tons per day were sent through the mill during the first quarter of 1990. Officials have projected that the mill will produce 27,000 ounces of gold from 175,000 tons of ore during 1990.

The mill is designed so that it can be expanded to handle up to 1,000 tons per day. The mine manager said the recovery rate during the first quarter of the year was 94.4 per cent, compared to a projected rate of 91.1 per cent. The reserve grade has been .148 ounces - slightly less than the .15 grade projected by consultants.

"We've been right on target," said Richie, adding that the production costs at the site total less than $50 per ton, despite the fact most of the mining is cut and fill.

Reduced costs can be attributed to...