Belmoral sees some hope at Val d’Or

Belmoral Mines (TSE) will put all of its cash flow into the Val d’Or gold operations, Gordon Strasser, the new chief executive officer of Belmoral, told shareholders at the company’s annual meeting. “We are committed to disposing of assets in order to take out debt,” he said. “Then we can concentrate on our assets in Val d’Or.”

The company is concerned about an $8.5-million debt due in April. Creditors have been pushing Belmoral to sell its assets and the company has responded by agreeing to hand over its stake in Roddy Resources (TSE) and in its “crown jewel,” the Astoria gold project near Rouyn-Noranda, Que.

“I don’t like getting rid of that (Astoria),” Strasser told a disgruntled shareholder. “But we have no choice — it’s costing us $25,000 a month just to sit on it.”

Belmoral will also sell its interest in 40.5% owned affiliate Yorbeau Resources (TSE), partner on the Astoria project. Other Belmoral interests include a 37% stake in Vedron (TSE) and 17% of Wrightbar Mines (ME), as well as options on several exploration properties.

Belmoral has not divulged any potential buyers but said “several parties are interested in financial participation.” All activities apart from the Val d’Or operations are now dormant.

Production from the Ferderber and Dumont mines at Val d’Or reached almost 12,000 oz. in the first quarter of 1990, and the company has brought operating costs at the two mines down to $72 per ton from a first-quarter average of $89. Strasser believes that the mines have excellent exploration potential.

But the company will need more cash flow from the producing mines if it is to develop ore reserves.

“At current gold prices we are not able to support development,” said Strasser. Meanwhile, Belmoral’s mill goes hungry, operating at well below capacity.

As a cost-cutting measure, one shareholder suggested the company move its head office back to Val d’Or. Belmoral’s office in Toronto is too big, Strasser admitted, but the company is tied to a 5-year lease. Citing a recent altercation with the building’s management over his pipe smoke, Strasser suggested, “Maybe if I smoke enough, they’ll kick us out.”

At the end of the meeting, a source close to Belmoral told The Northern Miner that Jean-Guy Masse, president of CMP, will be resigning from the board of directors. Masse was recently appointed to the board. Ken Dalton, former chief executive officer, continues as chairman.