A $10 million writedown on the carrying value of the Lac Shortt gold mine in northwestern Quebec resulted in a $589,000 third-quarter loss for Kerr Addison Mines (TSE) compared with earnings of $5.6 million in the third quarter of 1989. Minnova (TSE), a Kerr subsidiary and owner of Lac Shortt, earned $494,000 in the third quarter, down from $3.1 million in the third quarter of 1989. But despite the writedown, Minnova’s 9-month earnings jumped by 60% from 1989 to 1990, a result of added production from the Ansil and Samatosum base metal mines. For the first nine months of 1990, net income was $11 million (77 cents per share) compared with $4.4 million (31 cents per share) in 1989. Kerr’s 9-month earnings dropped to $12.6 million (72 cents per share) from $16.6 million (95 cents per share) in 1989.
A review of projected revenues and expenses for Lac Shortt’s remaining 2-year mine life indicates that in order for Minnova to recoup its investment in the mine, the gold price would have to increase substantially. The writedown reduces the carrying value of the mine to about $10 million.
Minnova’s cash and short-term securities increased by $32.6 million to a balance of $44.4 million in the first nine months. Kerr reduced its long-term debt by $50 million to $75 million as of Sept. 30.
On average, prices for the Minnova’s major metals in the first nine months of 1990 were down 10% from last year. Minnova (TSE) 3 months ended Sept. 30 1990 1989 Revenue $49,341 $39,089 Net earnings 494 3,093
per share 0.03 0.22 9 months ended Sept. 30 Revenue $148,465 $85,962 Net earnings 11,019 4,426
per share 0.77 0.31004 Kerr Addison Mines (TSE) 3 months ended Sept. 30 1990 1989 Revenue $52,192 $43,753 Net earnings (loss) (589) 5,550
per share (0.03) 0.32 9 months ended Sept. 30 Revenue $159,917 $97,938 Net earnings 12,558 16,630
per share 0.72 0.95
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