NNSL (NOV 08/96) - Royal Oak Mines said the life of its Colomac gold mine may be shorter than anticipated.

Tests on the property about 220 kilometres northwest of Yellowknife show gold grades lower than originally calculated and production costs on the way up.

"Mine life at Colomac beyond the year 1999 cannot be estimated at this time but still appears promising," reads a company media release.

Production costs at Colomac were $369 (U.S.) per ounce for the first nine months of the year.

While the company's nearby Kim and Cass projects, just north of Indin Lake about 15 kilometres from the Colomac mill, are to supply higher-grade gold to the mill, Royal Oak needs permits to develop the properties, and it's not known how long that process will take.

New calculations on the Colomac and Kim-Cass properties show proven and probable reserves at 358,000 ounces, at the end of September 1996.

A re-calculation of the grade of gold at Colomac saw Royal Oak drop its reserve figures by 253,000 ounces.

"The company believes, however, that the Indin Lake land position still hosts excellent exploration potential and Royal Oak will be increasing its exploration focus in the area," the release states.

With the revision of mineable reserves at Colomac, Royal Oak dropped its production projections to 400,000 ounces for the year. Initially the company hoped to produce about a half-million ounces this year.

The company also announced Wednesday it will close its Hope Brook Mine in Newfoundland in the third quarter of 1997.

In the third quarter of 1996 company-wide gold production jumped 13 per cent from the same period last year.

This year 104,012 ounces of gold were produced, up from 92,159 last year. The increase comes from higher production at Royal Oak's Pamour Mine.