Alta Gold slashes costs

Despite startup problems, Alta Gold (ALTA-Q) has reduced cash costs at the newly opened Olinghouse gold mine, 30 miles east of Reno, Nev.

During its first three months of operation, the mine incurred cash costs of US$432 per oz. The high costs were due to a combination of clogged drip lines on the heap-leach pads and an accounting glitch that failed to capitalize a portion of the startup costs.

By February, however, cash costs had been slashed to US$218 per oz., and the mine is now generating positive cash flow.

Meanwhile, the now-dormant Kinsley mine, 80 miles northeast of Ely, Nev., produced only 9,543 oz. in 1998, compared with 38,470 oz. in 1997. Alta was able to pick up the shortfall from the nearby Griffon mine, which, in 1998, produced 37,921 oz. gold at a cash cost of US$148 per oz. However, that mine is expected to close this month owing to the U.S. Forest Service’s refusal to approve plans for expansion. As a result, Alta says it will be forced to lay off 40 employees.

On the trading front, the Nasdaq-listed company faces a possible delisting if its share price does not return to above US$1. At presstime, it was trading in the US50 cents range.

The company posted a loss of US$8.4 million (or 29 cents per share) for 1998, compared with earnings of US$1.9 million (6 cents per share) in the previous year. In total, the company produced 50,377 oz. gold in 1998.