Doug Ashbury
Northern News Services

NNSL (Dec 16/98) - As Giant closes out 1998, a year when the gold mine marks its 50th anniversary, Malcolm Robb recently provided some insight into the mine's economic effect on the city.

Robb, Giant's exploration manager, said the mine has been responsible for about 17,500 person years of employment since commencement of production a half century ago.

That equates to 1000 people working for 17.5 years. Or, 35 years work for 500 people.

At Sept. 30, Royal Oak employed 280 people, according the City of Yellowknife's 1999 annual draft budget.

Robb discussed the mine's contribution and history during a presentation at the recent Geoscience Forum. Several delegates packed the Yellowknife Inn's Tungsten Room for the presentation.

Early on, geologists "picked up that this would be a difficult deposit to work" and there would be a need for much detailed drilling within this "complex" resource, Robb said.

Giant is approaching production of seven million ounces of gold, he said.

Peak production was in the 1960s, but by the early '70s, the high-grade reserves were depleted, he said.

Today, it is estimated that the mine has reserves which will last two to three years. But Giant's life could be extended if the price of gold improves.

Robb also said Giant has generated company revenues of $2.5 billion, adjusted to 1997 dollars over the past 50 years.

Over that same half century, operating expenditures, also in 1997 dollars, have been $1.65 billion.

The future of the mine is "very dependent on the gold price," Robb said.

But, under current market conditions, Giant is a "large resource that isn't economic."

And according to rating agency Standard & Poors, Royal Oak is a company facing huge economic problems.

Gold has spent months hovering around $290 US.

Last week, S&P lowered two Royal Oak debt ratings. S&P dropped its corporate credit rating on Royal Oak to triple C from single B-minus and its subordinated debt rating to double C from triple C. D ratings apply to companies in bankruptcy.

"The downgrade reflects the acute financial risk the Royal Oak Mines faces as a result of the liquidity problems experienced over the past year, which have led to increased debt and interest burden," an S&P analyst said in a release.

Royal Oak's debt is a very high 70 per cent of capitalization.