Aurizon suffers loss despite record gold production — Closing date extended on Casa Berardi

A drop in both head grade and realized gold prices pushed Aurizon Mines (ARZ-T) into the red for fiscal 1997, despite the company’s record gold production of 39,668 oz.

For the year ended Dec. 31, 1997, the Vancouver-based company posted revenues of $17.9 million, for a net loss of $2.54 million (or 7 cents per share). This compares with revenues of $20.5 million and net earnings of $3.3 million (9 cents per share) during 1996.

In the fourth quarter of 1997, revenues were $5.13 million, for a net loss of $305,000 (1 cents per share), compared with revenues of $5.4 million and net earnings of $483,000 (1 cents per share) during the corresponding period in 1996.

Aurizon currently produces gold from its two half-owned mines in Quebec’s Abitibi belt: the Sleeping Giant mine, which is shared by operator Cambior (CBJ-T); and the Aurizon-operated Beaufor mine, which is shared with Richmont Mines (RIC-T).

At Sleeping Giant, 148,000 tonnes grading 10.8 grams gold per tonne was milled during 1997, producing 49,521 oz. gold at an operating cost of US$264 per oz. During 1996, 131,000 tonnes grading 12.5 grams gold was milled, producing 50,683 oz. gold at an operating cost of US$229 per oz.

At Beaufor, 118,500 tonnes grading 7.9 grams gold was milled during 1997, producing 29,816 oz. gold at an operating cost of US$295 per oz. During 1996, the operation milled 92,200 tonnes grading 8.5 grams gold, producing 24,993 oz. gold at an operating cost of US$274 per oz.

During the fourth quarter of 1997, Aurizon’s share of gold production was 8,167 oz. from Sleeping Giant and 4,069 oz. from Beaufor, up from 6,086 oz.

and 4,051 oz., respectively, during the corresponding period in 1996.

Aurizon expects that increased mill throughput this year at both Sleeping Giant and Beaufor will result in an 18% increase in the company’s gold production, which is targeted at 47,000 oz., and an operating cost of US$260 per oz.

Aurizon realized a gold price of US$330 per oz. in 1997, down from US$390 in 1996. The company has sold 45% its 1998 production at an average price of US$303 per oz.

At Dec. 31, 1997, Aurizon had no long-term debt, $4.1 million in cash, bullion settlements of $1.6 million and working capital of $3.4 million.

Regarding Aurizon’s acquisition from TVX Gold (TVX-T) of a 100% interest in the Casa Berardi gold mine in northwestern Quebec, the two companies have agreed to extend the deal’s closing date to May 31.

Aurizon says it is in the final stages of negotiations with financial institutions and government agencies to secure the required funding.

Aurizon’s shareholders recently approved the issuance, by way of private placements, of shares totalling up to 50% of the issued and outstanding common shares.

Under the terms of the extension, Aurizon has deposited $1 million in trust and has assumed responsibility, as of April 1, for Casa Berardi’s direct on-site care and maintenance costs. As well, Aurizon’s cash payments have been reduced to $6 million from $8 million, of which the deposit and another $1 million are payable on closing and the balance payable in three years. A further $10 million will be paid through a net smelter return royalty.

After the deal is closed, Aurizon plans to launch a major exploration program at Casa Berardi, including 50,000 metres of diamond drilling, with an aim to proving up sufficient resources to restart commercial production at historical levels of at least 80,000 oz. gold annually.

Golden Knight Resources (GKR-T) recently sold its 40% interest in the Casa Berardi mine to TVX for

$1, with TVX assuming Golden Knight’s obligations and liabilities at the mine and releasing the junior from all amounts owed to TVX.