Atlas hoping ’94 a turnaround year

After three years of continuous losses, Atlas (NYSE) has adopted a plan to lift itself out of the red in fiscal 1994.

The turnaround strategy is being implemented by a new management team headed by Steve Manz and Michael Gross, both former executives of Royal Oak Mines.

The company’s key asset is the 3,000-ton-per-day Gold Bar project near Eureka, Nev. The open-pit project, now in its sixth year of operation, produces an average of 80,000 oz. gold per year.

In fiscal 1993, however, the operation turned out only 55,080 oz., with total production costs of US$485 per oz. (US$323 cash cost plus US$162 non-cash). This 33% decrease in production, as well as an increase in minesite costs, was attributed to three factors: lower grades and recoveries, permitting delays and failure in the pit highwall.

The new plan aims to reduce costs at both the corporate and minesite levels, and includes US$3 million of exploration spending to rebuild the reserve base. Targets include a 40% reduction in head office costs, a return of production to 80,000 oz., and numerous operational improvements. The benefits of the program are already being reflected in financial results for the first quarter ended Sept. 30, 1993. Atlas reported a loss of US$913,000 for this period, compared with a loss of US$2.4 million in the same quarter a year earlier. The total cost to produce an ounce of gold fell to US$376 (all minesite and head office costs) for the latest quarter, compared with US$490 a year earlier.

During the quarter, Atlas sold certain securities for US$8.4 million to Phoenix Holdings of Toronto. Atlas’s new chairman, David Birkenshaw, says the latest quarter represents a turning point:

“Since taking over management of Atlas, we have been aggressively pursuing programs to cut costs at both the corporate and minesite levels. Operating changes include raising the cutoff grade at Gold Bar and instituting a screening program to improve simultaneously the grade of ore milled and reduce hauling costs. We are also examining various underground mining plans which could enhance the mine’s performance in areas where high open-pit stripping ratios are expected.”