The second quarter of 1938 sees increasing tension in Europe as Germany sets its sights on Czechoslovakia. Amazingly, on May 23 when Hitler orders the Foreign Office to assure the Czechoslovaks that he has no demands on their territory, the world at large mistakenly believes the crisis is averted. However, a scant five days later in a conference at the Reichs Chancellery, Hitler declares his decision to destroy Czechoslovakia by military force and orders the immediate mobilization of 96 Wehrmacht divisions. We shall see later in the year that British Prime Minister Neville Chamberlain learns nothing from this demonstration, and the eventual fate of the Desert Silver mine is set in motion.
As all of this is unfolding Roy W. Moore, Vice President of Desert Silver, releases the Company’s report for the second quarter of 1938. He reports that the mill operates at full capacity during the quarter, processing 17,613 tons of ore for a production of 196,227 ounces of silver and 703 ounces of gold, and as predicted in the last report, once the poor ore from the 440 level was exhausted recovery increased from a low of 78.15% in May to a high in June of 85.22%.
As reported in the previous quarter, development work, with the exception of the “A” winze, is kept at a minimum. This consequently lowers expenditure for the quarter, enabling the company to make the property payment of June 20th and repay a portion of the money borrowed from stockholders in December of 1937.
Regarding the mining, and the little amount of development that does take place, Mr. Moore reports that “Considerable trouble was encountered with bad walls in the stopes. This necessitated use of a large amount of timber and caused considerable dilution of the ore in some places. Due in a great measure to this condition the grade of ore treated was lower than had been anticipated. Gold values during the quarter, however, increased approximately 50% over the previous quarter and during June showed considerably more increase. The grade of ore milled was 13.69 ounces silver, and 0.043 ounce gold per ton.”
Along with the lack of development came the inevitable lack of discoveries; however, the company is banking on the “A” winze making new discoveries possible during the third and fourth quarters of 1938. The Vice President freely admits that their strategy hinges on values extending into the lower levels. By the end of the quarter the “A” winze only has about 75 feet remaining to reach the 9th level and the company will have their development backbone in place.
Once again, in something you will now recognize as a recurring theme, Mr. Moore, speaking for management, sounds a cautionary note, “As stated in the last quarterly report, the future of the mine depends on deeper developments and on the price of silver. By the end of the ensuing quarter considerable information will be known regarding deeper developments.”
Kevin Hull
