Wheaton River earnings slow to a trickle

With leach operations winding down at its 89%-owned, seasonal Golden Bear mine in northwestern British Columbia, Wheaton River Minerals (WRM-T) managed net earnings of just $525,000 for the three months ended June 30.

The earnings work out to 1 per share, compared with earnings of 10 per share ($4.9 million) in the same period a year earlier. Revenues between the two periods were nearly halved to $8.1 million from $15.3 million.

Operations during the latest quarter consumed just $114,000, compared with $5.5 million a year earlier. Similarly, operations ran through $1.3 million during the first half of 2001, compared with $4.65 million in the same period of 2000. The dramatic change was due to lower earnings and increased working capital requirements related to a late start at Golden Bear.

So far this year, the company’s net earnings have amounted to just $177,000 (nil per share), compared with year-ago earnings of $4.5 million. The Golden Bear mine, which operates from April to October, did not generate revenue during the first quarter of either year.

During the second quarter, Golden Bear, the company’s only operating mine, cranked out 18,984 oz., down from 31,196 oz. a year earlier. Mining operations there wrapped up prior to 2001 and the operation has been running in leach-only mode since.

Before it is mothballed at the end of the year, the mine is expected to produce about 33,000 oz. gold at cash operating costs of less than US$200 per oz. Reclamation activities are under way. Completion of key requirements during the rest of the year may allow the refund of a portion of the reclamation deposits by year-end.

Wheaton realized an average of US$279 per oz. for its second-quarter production, down from US$331 per oz. in the same quarter of 2000. The decrease is attributed to fewer sales being covered by forward-selling contracts in 2001. The total cash cost rose to US$197 per oz. from US$168 per oz. on lower production volume.

The bulk of Wheaton’s investing activities during the recent three-month period comprised $428,000 to advance the Bellavista heap-leach project, 20 km north of the Pacific port city of Puntarenas in Costa Rica.

In May, the Costa Rican government granted the project various tax advantages and the right to quick, on-site customs inspections.

The project has been put on hold pending an improvement in gold prices. The company wants to hedge a significant portion of production at no less than US$350 per oz. and figures it needs a spot price higher than US$300 per oz. before construction can begin.

Bellavista centres on an epithermal gold-silver deposit with reserves of 11.2 million tonnes grading 1.54 grams gold per tonne. The deposit is expected to yield 60,000 oz. gold annually over more than seven years at a total cash operating cost of US$179 per oz. Capital costs are pegged at US$28 million.

In Nunavut, Kinross Gold (K-T) continues to advance the George Lake project.

Goose Lake is the largest of six deposits that make up the George Lake project. A 3,000-metre program is testing Goose Lake down-plunge to depths of between 400 and 500 metres. To date, the deepest holes on the deposit cut mineralization at 320 metres, returning 13.3 metres grading 23.6 grams gold per tonne. Two other intercepts from the same hole ran 33.7 grams over 2 metres and 22.4 grams gold over and 2.8 metres.

Drilling will also test several outlying targets.

Kinross can earn a 70% interest in George Lake from Wheaton by spending $20 million by Nov. 30, 2004.

At the end of June, Wheaton had $19 million in cash and equivalents.