William Resources sinks deeper into red

Despite having boosted overall gold production in 1997, William Resources (WIM-T) ended up deeper in the red.

The mid-tier gold producer lost $77.5 million (or $1.58 per share) on revenue of $94 million during the past year, compared with $10.1 million (27 cents per share) on $31.7 million in the nine months ended Dec. 31, 1996.

(In 1996, the company changed its fiscal year-end to Dec. 31 from March 31).

Both fiscal periods included writedowns. In 1997, the writedown totalled $49.82 million, more than half of which resulted from suspension of mining at the Ballarat East and Rustler’s Roost operations in Australia. The lat-ter is on care and maintenance, whereas the latter was sold earlier this year.

Excluding the adjustments, the company lost $7.2 million (or 19 cents per share) in 1996 and $27.6 million (or 61 cents per share) in 1997.

Gold production between the periods rose to 209,326 from 50,682 oz., and the average cost of mining an ounce dropped to US$266 from US$349.

Currently, William is pulling gold from three mines: Pahtavaara in northern Finland; Bjorkdal in northwestern Sweden; and Jacobina in Brazil.

For 1998, the company has hedged 160,000 oz. gold for a minimum price of US$373 per oz. Similarly, 152,000 oz. have been hedged for 1999 at US$349 per oz.

In related news, William is considering restructuring its $97.7 million convertible subordinated debentures. The debentures were issued in late 1996 and mature on Nov. 22, 1999.

Under the new plan, the maturity date would be extended to June 17, 2000, and relieve the company of paying interest in 1998, while allowing next year’s payment of $7.8 million to be made either in cash of stock. The plan also decreases the conversion price of the debentures by $4.60 to 80 cents per share, which accounts for the share consolidation. However, William would have the option of redeeming the debentures in stock rather than cash, provided its market value is greater than $1 per share.

A total conversion of the debentures would result in the release of roughly 122 million shares.

William says 35% of the debenture-holders have already consented to the proposal; at least two-thirds must be in favor in order for the restructuring to take effect.

William currently has 73 million shares outstanding and, at presstime, was trading at 29 cents. At last report, it owed US$47 million to a banking syndicate led by Credit Agricole Indosuez and BHF Bank.