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Gold Bars - Richmont Mines Inc.

 

 

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  • Volume of mineral shipments expected to decline somewhat in line with market conditions.
  • Employment to remain stable.
  • Investment to increase.
      

 

 

IOCC Investment Details:
Labrador West and Quebec
(millions):

  • $25 - environmental protection
  • $145 - technology upgrades
  • $23 - enhanced capacity to produce
    direct reduction pellets
  • $385 - equipment replacement
  • $515 - capacity increase

Building on Core Strengths

Mining

The mining industry performed well and recorded its fifth consecutive year of improvement despite a general softening in metal markets. Led by strong gains in iron ore shipments during the first half of 1998, a 6.8% increase ($62.2 million) in the value of iron ore shipments was more than sufficient to offset a decline ($26.5 million) in the value of other mineral products. Most of the decline was attributed to the drop in the value of gold production. Despite an improved performance from the Province's current gold producer, Richmont Mines, gold production was down reflecting the closure of the Hope Brook gold mine in September 1997. The rise in the value of iron ore shipments was due to higher volumes, a 3% contracted price increase for concentrate and pellets as well as a lower Canadian dollar.

Iron Ore

The acquisition of a majority interest in the Iron Ore Company of Canada (IOCC) by North Limited, a large Australian based resource company, signaled the beginning of a new era for the largest iron ore producer in Canada. Deemed to be of strategic importance to North, IOCC is targeted for a $1.1 billion investment program over seven years. The investment, 60% of which will be spent improving operations in Labrador West, is intended to diversify product offerings, enhance productivity and increase capacity. Employment at IOCC is expected to remain stable at just over 1,700 in 1999, although production volume over the near term could see some slippage because of weak markets.

 

Developing Mineral Properties
Location Mineral Type Company
Voisey's Bay nickel, copper, cobalt Voisey's Bay Nickel Company
Labrador City silica Shabogamo Mining and Exploration
La Scie silica Trinity Resources and Energy
Port au Port barite Pennecon Limited
Aguathuna limestone, dolomite Midatlantic Minerals
Coal Brook gypsum Galen Gypsum Mines
St. Lawrence fluorspar Burin Minerals
King's Point gold Major General Resources
Gander Bay peat Hi-Point Industries (1991)
St. George's peat Tiaga Resources


Exploration

Exploration expenditures reached a record high of $93 million in 1996. Due to decreased activity around the Voisey's Bay deposit as well as lower metal prices, spending declined to $68 million in 1997 and $46 million in 1998. Nevertheless, mining companies continue to demonstrate significant interest in promising geological areas in the Province including gold and base metal prospects in central Newfoundland. A sustained recovery of metal prices would boost exploration activity but this is not anticipated in the near term. Exploration spending is expected to be about $40 million in 1999 while related employment is expected to remain at about 300.

Voisey's Bay

Work on the Voisey's Bay project, site of one of the richest nickel deposits in the world, continued on a number of fronts. Exploration by Voisey's Bay Nickel Company proceeded according to plan in 1998. Approximately 52,000 metres of exploratory drilling was completed with an associated investment of about $13 million. New mineralized zones were identified and the estimated resource increased from 116.3 to 124.4 million tonnes. Further gains are expected and an updated estimate of the resource at Voisey's Bay is planned for mid-1999. Public hearings on the Environmental Impact Statement (EIS) for the mine/mill and related infrastructure were completed in November 1998. The federal/provincial panel overseeing this environmental review process must now release its recommendations in a report that is expected by late March 1999. Franco-Nevada Mining, a large international precious metals royalty company, acquired 25.4% of Inco's Class VBN shares in October 1998. In January 1999, the company increased its holdings of the special shares to 37%. The move gives the company an effective 9.25% net profit interest in the Voisey's Bay project. Upon releasing its latest quarterly report, Inco suggested that it was willing to examine alternative proposals aimed at advancing the Voisey's Bay project.


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