Andacollo liquidation begins (June 22, 2001)

Dayton Mining‘s (DAY-T) wholly owned subsidiary, Compania Minera Dayton (CMD), has been granted bankruptcy protection for a period of four years.

In May, CMD’s creditors unanimously accepted a creditor’s agreement, which the Court of Andacollo approved.

Under the agreement, CMD will maintain control of the Andacollo mine in central Chile, under the supervision of a three-member commission. The company must also sell its mine equipment fleet, its three-stage crushing plant, its overland conveying-stacking system and other assets.

Proceeds left after amounts owed (in the case of the mining fleet) will go directly to creditors. Proceeds from the ongoing leaching operation (in excess of operating costs) will be paid to the creditors on a quarterly basis.

CMD’s creditors have agreed to a four-year period for the repayment of all outstanding obligations, with interest calculations made on May 15 of each year.

Mining, crushing and stacking operations at the mine have been suspended since September 2000.

Between Oct. 1, 2000, and May 31, 2001, the mine produced 35,600 oz. gold from the leaching of stacked material. Leaching continues at a rate of about 105 oz. gold per day.

Andacollo was permanently closed in December 2000, due to slumping gold prices and low production.

Its failure is attributed to a weak reserve model at the Churrumata and Natalia open pits, which resulted in higher stripping ratios and a shortfall in the number of tonnes sent to the leach pad. Also, leaching rates for ore from the Natalia pit were significantly lower than expected.

During the first quarter of 2001, the company suffered a loss of US$1.1 million (3 per share), compared with a loss of US$2.2 million (13 per share) a year earlier. Revenues between the two periods fell to US$3 million from $7.4 million.

This year’s first-quarter production tallied 12,190 oz. gold and 86,694 oz. silver at US$269 per oz., net of silver credits.

All of the company’s production in 2001 came from its 49% joint-venture interest in the Denton-Rawhide mine near Fallon, Nevada. Production for all of this year is pegged at 49,200 oz. gold and 466,500 oz. silver.