Breakwater well into black on gold price, productivity

Higher gold prices coupled with productivity increases at the Cannon mine in Washington State put Breakwater Resources solidly into the black during the first half of 1987. Net earnings for the period were $1.65 million or 8c per share, compared to a loss of $247,000 or 1 cent per share a year ago.

A total of 66,464 oz gold and 88,247 oz silver was produced in the half from 238,267 tons of feed at an average cash operating cost of $147(US). Second quarter gold production was 30,285 oz compared to 36,179 oz owing to lower grade mill feed.”This was the main reason for the decline in earnings in the second quarter of 1987,” says President Brian Pewsey.

In late June, Breakwater acquired a 77% equity interest in Novamin Inc. on a fully diluted basis. As a result, 4,193,000 Breakwater shares were issued in early July. This brought 70 new properties into Breakwater some of which are at advanced stages of exploration. A $7.5-million underground exploration program is under way at the company’s Rundle gold project west of Timmins, Ont. The decline is in almost 500 ft and rehabilitation of hoisting and shaft facilities is also well advanced, Mr Pewsey says.

The exploration program, which should be completed by May, 1988, is designed to prove up sufficient reserves at depth to warrant a production decision.

Exploration work is under way on the Vanguard claims in Montana where the geology is similar to the platinum-bearing bushveld complex in South Africa and the Stillwater complex in Montana.

Breakwater raised $30 million this July through a Eurobond issue. The bonds are convertible into Breakwater shares at a price of $9.97 until July 2, 1995. The company now has a strong balance sheet with no debt and short-term investments of $25 million.