Doug Ashbury
Northern News Services

NNSL (May 20/98) - Royal Oak Mines has completed construction of its Kemess mine in north central British Columbia.

Royal Oak, which owns Giant, faced a financial challenge bringing the mine to production.

Money borrowed to build the over-budget mine carried high interest rates.

Royal Oak vice-president of investor relations, Graham Eacott, said Friday gold concentrate is anticipated in about two weeks.

"We've started filling the mill with water and crushed 40,000 tons of ore to be put through the mill," Eacott said.

For all intents and purposes, the mine is 100 per cent complete, he said.

Kemess' final price tag is $470 million. Buying the property from El Condor Resources and St. Philips Resources cost Royal Oak an additional $202 million.

The new mine's gold production is estimated at 250,000 ounces per year. About 60 per cent of resource revenues will come from gold production. The remaining 40 per cent will be generated by copper.

At today's prices for gold and copper, it will take Royal Oak about five and one-half years to recoup construction and acquisition costs.

Over nine million tons of waste was stripped from the open pit during pre-production to expose the ore at the north-central B.C. mine site.

On Friday, Royal Oak announced it had reached agreement with the majority of its $253 million senior subordinated notes.

Royal Oak will now draw down funds under the terms of the previously announced $174 million senior secured debt.

Royal Oak will use the money to repay $64 million in existing senior secured debentures and bring accounts payable up to date. The money will also provide the company with sufficient working capital through Kemess startup.