Breakwater to pay dividends

There was good news for shareholders of Breakwater Resources at the recent annual meeting. Chairman Robert Hunter said that Breakwater would probably be paying dividends after the third quarter. This could lead to a program of continuous dividends thereafter, he added.

He also confirmed the $31 million Eurobond financing in Switzerland will close June 2 and the money would be in place about a month later. A portion of the funding will be used to retire Breakwater’s its $6.4 million debt to the Bank of B.C. with the rest going to new projects and acquisitions.

At the end of March, the company had a working capital of $1.6 million and was receiving just under $1 million per month in cash flow from its interest in the Cannon mine property at Wenatchee, Wash. Mr Hunter noted that working capital was needed at the mine for exploration activities otherwise it would have been higher.

Commenting on the proposed takeover offer for Novamin Inc., he predicted that Breakwater would obtain at least 90% of the company’s issue capital. Target date for completion of the takeover is June 20 and it would boost Breakwater’s reserves to 1.7 million oz gold and 2.8 million oz silver.

Discussing the reasons for the takeover, Mr Hunter said the Novamin had good projects but no cash flow, and he conceded they were “extremely lucky to get Novamin.”

President Brian Pewsay, said that Novamin’s Rundel and Darius joint ventures would allow Breakwater to achieve 100,000 oz of annual gold production by the end of l988.

He also said that underground development was under way in the B-4 zone discovery at Cannon mine. The zone is still open at depth and also to the west which will be the focus of an upcoming drill program. Mr Pewsey predicted there would be substantial increases in the overall reserve picture at the mine by year-end.

A decline is being driven into the Tenneco option and although the reserves haven’t changed, he said the grade was significantly higher than expected.

Mr Hunter said the company has finally been telling its story to investment analysts and potential investors and forecasted a “good increase in the price of our stock.”