March 9, 2011 / 12:26 PM / 6 years ago

PDAC-Alexis working to fix Quebec mine operations

* Says operational difficulties at Lac Herbin mine persist

* Hopes to have a new optimized mine plan in 30 to 45 days

* Says Val-d'Or operations are not profitable right now

By Atsuko Kitayama and Euan Rocha

TORONTO, March 9 (Reuters) - Alexis Minerals AMC.TO is reviewing operations at its Quebec gold mine to resolve problems that have slowed production and pumped up costs per ounce, its chief executive said on Tuesday.

"The difficulties are continuing into this year and right now what we are doing (is) a thorough review of all the operations," said CEO Francois Perron, who only recently took the reins at the junior gold miner.

Perron concedes Alexis faces serious challenges at the Lac Herbin Mine, but he remains upbeat and believes that the company will be able to turn itself around.

The Toronto-based junior miner's shares have had a miserable run in recent months considering the price of bullion is near record highs. The stock has fallen 56 percent to 16 Canadian cents a share in the last 12 months.

"We are going to reestablish a mine plan that is more realistic in terms of the geology that we are dealing with," said Perron, adding that the company expects to have a plan laid out in 30 to 45 days.

"I'm an optimist. I'm in the gold business ... I believe there is potential here," said Perron, while speaking with Reuters after making a presentation to investors and miners at the PDAC mining convention in Toronto.

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For more stories from PDAC convention: [ID:nN02153893]

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COST WOES

Gold production from Lac Herbin, located in the Val-d'Or region of Quebec, failed to meet expectations in 2010, leading to higher production costs on a per-unit basis, said Perron.

"Right now our Val-d'Or operations are not profitable," said Perron. While the company has yet to release its fourth-quarter results, it recently said gold output in the quarter was just 3,044 ounces.

"It's not going to show in the immediate numbers, but we have already initiated cost-cutting, which looks good on a month-to-month basis, but given that we are delivering less ounces to surface, the cash costs are going to be going higher," said Perron.

The company is also looking to raise about C$40 million ($41.2 million) to finance the development of its Snow Lake mine in Manitoba.

Perron said the company plans to tap both debt and equity markets in a bid to finance the restart of the past producing mine.

"Once we press the button and once we've lined up the financing for the project, we will be in a position to start in 18 months," said Perron. (Editing by Frank McGurty)

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