Big increase in revenue spurs profit for Pegasus

Among gold producers reporting much higher profits this quarter is Pegasus Gold. The company recorded net earnings of $4.3 million(US) for the quarter ended June 30, compared to $1.5 million a year ago.

Net income for the six months was $4 million versus $317,000 for 1986. Production for the period from four operating mines was 74,650 oz gold and 117,596 oz silver. According to James H. Foreman, president, the sharp improvement in earnings resulted from a 240% increase in revenues to $35.5 million.

Mild winter weather permitted an early start-up of leaching and mining operations at Zortman/ Landusky in Montana. Leach pad construction was completed several weeks ahead of schedule and mining commenced in mid-March. Mr Foreman noted that a new carbon adsorption and stripping facility was brought on-line during the second quarter, slightly ahead of schedule and under budget.

Six-month production from Zortman/Landusky was 32,760 oz gold and 81,400 oz silver, compared to 29,500 oz gold and 55,500 oz silver last year. By the end of June 3.7 million tons of ore grading 0.019 oz gold had been loaded onto leach pads. This year’s production is forecast to be 88,000 oz gold and 251,000 oz silver.

The Montana Tunnels operation near Helena, Mont., poured its first gold in mid-April. Production to the end of June was 2,218 oz gold but the first three months of operation were devoted to start-up. During the quarter, problems with equipment design were identified and corrected. In the first six months, 2.4 million tons of material were mined including 473,000 tons of ore grading 0.025 oz gold per ton. There are also significant zinc and lead credits in the ore.

Mr Foreman said that over-all recoveries for precious metals are approaching forecast levels. At the moment, metallurgical test work is focusing on increasing base metal recoveries and no major problems are expected. The mine should reach forecast production and recovery levels in the third quarter, he added.

Estimated 1987 production is 45,000 oz gold, 595,000 oz silver, 13,000 tons zinc and 4,000 tons lead. In 1988, production is estimated to be 95,000 oz gold, 1.4 million oz silver, 23,000 tons zinc and 7,500 tons lead. Higher gold prices and a lower cutoff grade have boosted reserves to 52 million tons averaging 0.025 oz.

Full production at Florida Canyon in Nevada was reached later than anticipated. The crusher arrived late and modifications had to be made to the processing circuit. The operation produced 20,635 oz gold in the first six months and is now running at design capacity. The nearby Relief Canyon project is performing above expectations and original design capacity. Gold production should be 41,000 oz this year about 11,000 oz higher than originally anticipated. The two operations are expected to produce 92,000 oz gold in 1987.