Bond International takes big loss

The company recently reported a net loss of $69.9 million(US), or $1.26 per share during fiscal 1989, compared with a net loss of $20.4 million last year

The loss includes asset writedowns and losses totalling $70 million from Bond’s Australian affiliate, Gold Mines of Kalgoorlie (GMK), and a $13-million writedown on the company’s Colosseum and Yuba operations in California.

In August, Bond sold most of its interest in Gold Mines of Kalgoorlie to Australian-based Poseidon Ltd., and last month sold its majority interest in the Yuba placer gold operation to Denver-based Western Gold Exploration (WestGold).

One mining analyst in Toronto said the recent asset shuffling came as no surprise, mainly because BIG is still a relatively new company with an over-all corporate consolidation under way.

“Keep in mind there is also a consolidation of people going on at Bond International Gold,” said Catherine Gignac of Merrill Lynch.

She noted that many North American mining analysts are still unsure of Bond’s corporate direction, largely because they are unfamiliar with Australian businessman Alan Bond, who owns 58% of BIG through his private family holding company, Dallhold.

“Analysts might feel more confident in the company if Mr Bond would either step back, or take a more active role in management,” said Gignac. “We don’t really know him, and it’s hard to feel confident in management if you don’t know him.”

Some reports out of Australia have suggested that Bond may himself be financially strapped. That has left analysts wondering if those troubles might eventually carry over to his publicly traded gold mining company.

Corona had been seeking to acquire control of BIG, but backed away from the deal last month, leaving open the question of what Bond will do with his majority shareholdings in BIG.

The company’s total attributable production from its 12 mines during fiscal 1989 was 477,340 oz gold, 1,288,772 oz silver and 28,480 lb of copper. In May, Bond predicted it would boost its annual gold production to over 500,000 oz in fiscal 1989.

For the year, the company realized an average gold price of $393, and a silver price of $6.01. The copper price realized was $1.14 per lb.

The average cash cost of production reported by Bond for the year was $204 per oz of gold. Cash costs of $161 per oz were reported for its North and South American mines which account for more than 80% of the company’s output, or roughly 404,010 oz gold.

Bond’s chief executive Alan Birchmore noted, “In the past year the company has completed an ambitious development program, constructing three new mines.”

Highlights for the year included the opening of the new Bullfrog open pit gold mine near Beatty, Nev. Bullfrog is Bond’s biggest North American mine, and hosts reserves of 14.3 million tons grading 0.11 oz gold per ton. It was the third new mine to be commissioned by Bond during fiscal 1989.

Birchmore also noted that the company’s estimated gold production for the first quarter ended Sept 30 is 116,500 oz of gold from all North and South American operations.

There were 55.5 million shares of Bond International Gold issued and outstanding at the end of June. The company is 58%-owned by Dallhold, the family holding company of Australian businessman Alan Bond.

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