Miramar posts loss but makes progress

Despite ongoing cost-cutting and other efforts to achieve profitability at the Con gold mine in Yellowknife, Miramar Mining (MAE-T) remained in the red during the latest quarter ended Sept. 30.

The gold miner lost $6.7 million in the third quarter, compared with a profit of $1.6 million a year earlier. The latest results include the company’s $2.7-million share of a $6.3-million writedown recorded by 54.8%-owned Northern Orion Explorations (NNO-T) at the Mantua gold operation in Cuba. The previous year’s third-quarter results reflect a $2.1-million gain on investments.

Anthony Walsh, the company’s interim president, has been overseeing an effort to reverse a drain on cash reserves that began immediately after the less-than-amicable departure of former president Walter Berukoff. Payroll and staffing costs, which have already been cut by more than 33% over 1998 levels, are expected to reach 50% by year-end.

“We made tough decisions,” Walsh states, “including cuts in our overhead and [54.8%-owned] Northern Orion’s decision to close the Mantua mine in Cuba. . . . We also invested $2.2 million in restarting the Con mine.”

Miramar ended the first nine months of the year with consolidated working capital of $60 million and $56.4 million in the bank, though it recorded a loss of $14 million (25 cents per share) for the period. At the end of June, the company had working capital of $63.8 million, down from $73.8 million at the end of March.

Meanwhile, after a long and bitter strike, the restarting of the Con gold mine came in ahead of budget and below costs. A total of 19,488 oz. gold was produced during the third quarter at a cash cost of US$269.

Miramar also confirmed that negotiations for its proposed acquisition of the Giant gold mine are at the “advanced stage.” Previously owned by Royal Oak Mines, the Giant is situated next to the Con mine, and Miramar hopes to gain access to the reserves there. According to the company, combined operations would produce 130,000 oz. per year. Over the longer term, Miramar hopes to acquire a low-cost gold project.

Northern Orion, which has now ceased operations at the 50%-owned Mantua project in Cuba, reported a loss of $13 million for the nine months ended Sept. 30, compared with a loss of $4.7 million for the same period in 1998.