Amax Gold blames Nevada taxes for 1989 cost hike

Although its average production costs rose significantly in 1989, Amax Gold (TSE) can still extract an ounce of gold from the ground for less than most of its North American competitors. The Colorado-based subsidiary of New York metals giant Amax (NYSE) produced 307,387 oz. gold last year at a cost of US$132 per oz., compared with 239,980 oz. at a cost of US$110 per oz. during 1988.

The company attributed the higher production costs to an increase in the Nevada net proceeds tax and more higher cost production at its Wind Mountain and Waihi mines.

Amax’s 1989 net earnings dropped to US$33.3 millon or 55cents per share, compared with US$43 million or 72cents per share reported Dec. 31, 1988. Sales for 1989 were up 16% to $121.6 million from $104.4 million a year earlier.

The company’s forward-selling program enabled it to realize an average US$411 per oz. last year despite the Comex average price for 1989 of US$382 per oz.

Amax reported unaudited fourth- quarter net earnings of US$5.1 million or 8cents per share, compared with US$4.4 millon or 7cents per share in the fourth quarter of 1988.

Fourth-quarter sales increased to $33.2 million from $29.2 million at the same time last year. Amax Gold, an 87% owned subsidiary of Amax, has a 48% stake in Vancouver-based Canamax Resources (TSE).006 Amax Gold(TSE)* Year ended Dec. 31 1989 1988 Revenue (000s) $121,600 $104,400 Net earnings (000s) $33,300 $43,000 Net earnings (per share) 0.550.72 *US dollars.004