Aurizon Mines (ARZ-T) managed to turn a tidy profit during the three months ended June 30, despite the fact it didn’t own a producing asset for most of the quarter.
The company sold its 50% stake in the Sleeping Giant in northwestern Quebec in mid-May to co-owner Cambior (CBJ-T) for $5 million to realize a gain of $3.95 million. The sale’s effective date was April 30, and Aurizon received its share of gold production up to that date.
In all, Aurizon took home net earnings of $4 million from Sleeping Giant, up from $400,000 a year earlier.
Meanwhile, the company’s continuing operations, which comprise corporate and administrative expenditures, generated a net loss of $1.3 million, compared with a year-ago loss $600,000, owing to higher corporate costs associated with increased investor relations activity and financial advisory and consulting fees related to financing efforts for the Casa Berardi project in Quebec.
During the second quarter, Aurizon spent $9.7 million on surface infrastructure related to the new shaft, underground development, and continued exploration of the West Mine area at Casa Berardi.
All told, Aurizon posted second-quarter earnings of $2.7 million (or 2 a share), a turnaround from the $200,000 loss turned in during the corresponding period of 2004. Revenue climbed by 13.4% to $233,323.
By quarter’s end, Aurizon’s cash and working capital position exceeded $25 million; the company remains debt free. The company has also inked $36 million worth of contracts related to construction and development at Casa Berardi; some $17 million is due in the second half of the year, with the balance due in 2006.
Another $1.2 million has been commitment toward the purchase of mine equipment in the fourth quarter of 2005, with $120,000 put down as a deposit.
At Casa Berardi, Aurizon has wrapped up an internally updated feasibility study incorporating the high-grade lower portion of the new Zone 113, situated below the 700-metre level. The revised study aimed to increase reserve, optimize the mine plan, lower unit costs and increase annual gold production. Roscoe Postle Associates will review the study and release an independent technical report by the end of the third quarter of 2005.
Meanwhile, Aurizon says that surface construction is on budget and schedule for completion in September. The company has built a new hoist building for the new West Mine shaft, and the hoist itself is now finished; electrical installation is underway. Significant progress has also been made on the headframe and related infrastructure.
Underground, a ventilation raise has been sunk to the 550-metre level, and the ramp has been extended to the 590-metre level.
Commercial production is slated to begin in the fourth quarter of 2006.
Infill drilling around Zone 113 continues to confirm the continuity of mineralized. More than 20,830 metres of infill definition drilling were completed in 87 holes during the first half of 2005. The company plans to sink another 22,000 metres of definition drilling and 3,000 metres of exploration drilling in the second half.
The exploration track drift at the 550-metre level has been extended by 468 metres to allow for exploration and in-fill drilling of the lower portion of Zone 113 and Zones 118-122 to the east.
Surface exploration during the second quarter focussed on targets west of the West Mine where a new vein system was discovered earlier in the year.
Drilling about 1.5 km west of the West Mine cut a 20-metre length of quartz vein material with 50 metres of stockwork sulphides in the host volcanic rocks. The intersection yielded low gold values — the best being 1 gram per tonne over an 18-metre core length — but Casa Berardi is known to host gold mineralization with similar geology, often near to relatively barren quartz-sulphide bodies.
Two drills are testing structural extensions of the zone to see if any high-grade shoots exist.
Looking ahead, Aurizon expects to begin a 12-month campaign aimed at sending the shaft to its ultimate goal of 810 metres in September. Refurbishment and modification of the mill will begin in August. Underground development is already under way with the aim of stockpiling three months worth of production ahead of start-up by late 2006.
Aurizon says it will need further funding, including a project debt facility, in the second half to complete pre-production work; negotiations are ongoing.
As of August 5, Aurizon had nearly 118.8 million shares on issue.
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