Canyon Resources sees improved earnings in 1989

The Colorado-based company reported a net loss of $371,162(US) on total revenues of $2.9 million in 1988, as compared with a net income of $939,588 achieved in the previous year by the sale of assets. The open pit Kendall mine began production last October with reserves of 7.1 million tons averaging 0.055 oz gold per ton. The event was soon upstaged by the emergence of a large gold deposit on the Beartrack property in Idaho where Canyon exploration staff had discovered a gold showing in 1984.

Canyon’s stake in the Kendall heap leach operation is expected to provide a source of cash flow for the next eight years to add to revenues from its diatomite (an industrial mineral) operation in Nevada. Last year, the company reported an operating profit of $1.39 million from all operations.

The company projects that the Kendall mine will produce 50,000 oz of gold per year, with 20,000 oz of that to its own account. From start-up to Dec 31, the mine produced 4,377 oz of gold and 11,458 oz silver. Although severe weather conditions hampered production in the first quarter of 1989, a spokesman from Canyon Resources said the mine is now processing 6,800 tons per day.

For long term growth, Canyon is looking to its holding in the Beartrack deposit which has geological oxide and sulphide reserves reported at 36.9 million tons grading 0.055 oz gold.

But faced with capital commitments to the Kendall mine and ongoing exploration costs at the Beartrack property, Canyon reduced its interests in both its key projects last year in order to improve a rapidly declining working capital position.

The company now holds a 40% interest in the Kendall mine after selling a further 10% interest to joint venture partner Addwest Gold for $500,000.

Canyon also transferred 1% of its 16% working interest in the Beartrack project to partner and project operator Meridian Minerals in return for an agreement that will see Meridian finance all its capital requirements through to full-scale mine development.

Current ownership is Meridian 71%, Canyon 15% and Minex 14%. A $7.7 million program is planned for 1989 to continue reserve expansion, definition drilling, metallurgical and engineering studies and mine permitting so that a feasibility study can be completed by the end of this year.

Canyon’s project loan, estimated to be $18-$20 million of financing, is to be paid back only out of production revenues over a 6-year period. Meridian also loaned the company $1.75 million for general corporate purposes.

Elsewhere, Canyon recently started a program of advanced- stage gold and other mine property evaluations in Latin and South America.

In recent months the company has come increasingly under the wing of the VenturesTrident Group which will soon hold about two million of the company’s shares.

]]>