COAL, URANIUM & OIL SANDS — Challenging year keeps TVX Gold in the red

Fiscal 1998 proved to be a mixed bag for TVX Gold (TVX-T), with operational successes offset by depressed metal prices and obstacles in foreign jurisdictions.

For the year ended Dec. 31, TVX posted a loss of US$66 million (or 48 cents Canadian per share) on mining revenue of US$19.7 million, compared with a loss of US$49.8 million (36 cents Canadian per share) on revenue of US$29.2 million in 1997.

Much of the 1998 loss is attributable to writedowns. The carrying values of the Kasperske Hory project in the Czech Republic and the Kamchatka project in Russia were written down by US$31.4 million and US$35.8 million, respectively. At Kasperske Hory, the Czech government revoked TVX’s licence, forcing the company to file an appeal, while in Kamchatka, TVX failed to find a partner to earn in or buy properties under its control.

TVX’s share of 1998 production from its five mining operations was 324,600 oz. gold and 9.9 million oz. silver (or 499,100 oz. gold-equivalent), up from the 318,300 oz. gold and 5.1 million oz. silver (395,300 oz. gold-equivalent) reported in the previous year. The company has interests in La Coipa in Chile (50%), Brasilia (33%) and Crixas (50%) in Brazil, and Musselwhite (32%) and New Britannia (50% and operatorship) in Canada.

Cash costs dropped to US$185 per oz. gold-equivalent sold, compared with US$223 in 1997, and operating costs were also down, averaging US$287 per oz. gold-equivalent sold, compared with US$320 a year ago.

The company’s hedging program enabled it to realize metal prices in 1998 of US$370 per oz. for gold and US$4.34 for silver.

Year-end 1998 cash (US$41.2 million) and bank-term deposits (US$52 million) totalled US$93.2 million, with year-end debt amounting to US$199 million, including US$61 million drawn on the company’s revolving credit facility.

At Dec. 31, 1998, TVX’s share of proven and probable reserves from the five properties, combined with the advanced Olympias and Skouries projects in Greece, doubled to 11.1 million oz. gold and 78 million oz. silver, plus an additional byproduct credit of 40 million oz. silver at Olympias.

At Olympias, a proposed bio-oxidation process was replaced with a dual process that combines pressure oxidation and bio-oxidation. Accordingly, a revised bankable feasibility document will be submitted in the third quarter.

Bankable feasibility studies for the Olympias and Skouries projects were completed in the second and third quarters of 1998, respectively. The combined capital costs are pegged at US$465 million, a portion of which will be funded by European Union grants.

TVX is still appealing an 1998 Ontario court ruling that awarded the Alpha Group a 12% carried interest and an option to buy a 12% participating interest in the Greek projects upon payment of the costs associated with that interest (T.N.M.,/I>, Oct. 26-Nov. 1/98).

For 1999, TVX forecasts its share of production will be 305,000 oz. gold and 11 million oz. silver, with cash costs expected to drop 5% as a result of the devalued Brazilian real.

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