In the black, Royex plans more exploration activity

Solid financially after recording a profitable year in fiscal 1987, Royex Gold Mining is planning to beef up its exploration side and that of its associated companies.

Addressing the topic of exploration at the annual meeting, President Peter Steen told shareholders “we expect you’ll find Royex is going to be a lot more aggressive than it has in the past.”

Management is currently considering a plan to direct its exploration activity, which through Royex’s own and associated companies involves projects from Newfoundland to British Columbia, out of Toronto. The Royex group spent about $20 million in 1987 on exploration, and plans to spend a similar total this year.

One prospect Royex has a direct interest in is the Jolu gold property in northern Saskatchewan, for which Royex has agreed to arrange financing in order to bring the operation into production in 1989. Royex is manager and a 30% owner of the Jolu project; the other 70% is held by Mahogany Minerals Re sources. Forecast for the mine is output of 40,000 oz in fiscal 1989.

Through International Corona Resources (49% interest) and Lacana Mining (44% interest), Royex is involved in a host of North American producing mines and exploration properties. By the end of fiscal 1987 (to Sept 30), Steen said Royex was directly and indirectly involved in eight gold mines in North America and four properties at an advanced stage of development.

“This year, 1988, we expect to control about 465,000 oz of low-cost gold production, with an average production cost of about $175(US) per oz. By control, I mean Royex will have the benefit of cash flow from this amount,” Steen said.

“That’s not bad for a company that had only 15,000 oz gold production three years ago.” In the black

For fiscal 1987, Royex recorded income before unusual items of $6.5 million (6 cents per share) compared to a loss of $2.6 million (7 cents per share) for 1986; after unusual items, income totalled $47 million (84 cents per share) compared to a loss of $3 million (8 cents per share) in 1986. The unusual items include a gain on the sale of shares of Mascot Gold to Lacana and a write-down on resource assets.

(Above figures do not include income from the Williams mine at Hemlo, Ont., which Corona was awarded in a decision by the Supreme Court of Ontario in March, 1986. Mine operator Lac Minerals has appealed to the Supreme Court of Canada; no date has been announced for this final Lac appeal.)

Royex’s working capital as of Sept 30 stood at $134.8 million.

During the first quarter of fiscal 1988, Royex reported a net income (unaudited) of $4.97 million compared to a loss of $1.44 million for the same period last year. Earnings per share, after preference share dividends, were 7 cents for the first quarter of 1988 compared to a loss of 5 cents for the same period last year. Including unaudited earnings from the Williams mine, 1988 first-quarter net income rose to $8.4 million or 13 cents per share, after preference share dividends.

The company has a direct interest, through a wholly-owned subsidiary, in the Renabie mine near Wawa, Ont., which produced 38,180 oz gold during fiscal 1987 and is expected to turn out 40,000 oz this year. Royex, the operator, effectively has a 50% interest in the mine; its partner in the venture is American Barrick Resources.

Current reserves at the mine, which won a regional safety award last year, stand at one million tons grading 0.25 oz gold per ton. A $5-million program is planned this year to open up the mine’s lower levels for production.