CoCa earnings drop

Sharply lower earnings have been reported by CoCa Mines for the 6-month period ended June 30. Net income was $317,400(US) or 4 cents per share compared to a $1.7 million profit or 22 cents last year.

The company’s 1988 earnings included a pre-tax gain of $1 million from the sale of stock in Equity Silver Mines versus a $2.9 million gain in 1987 when it also sold shares. CoCa still owns 1.9 million Equity shares with a market value of approximately $7.9 million which it considers “as a liquid asset.”

Hugh J. Matheson, president, said last year was more profitable because of production from “the higher grade (approximately 0.2 oz per ton of gold) Winkler deposit at Cactus Gold Mines.” However, 1988 production is from the lower grade (0.04 oz) Ella and Trent deposits. To offset higher unit costs, CoCa has increased average daily crushing throughput from 700 to 2,200 tons for the balance of the year.

Consideration is being given to mining the nearby Crescent/Alunite deposit which will have a relatively high cash cost of $360-$390 per oz. It’s contribution to profits has been protected “by selling approximately 60% of estimated production forward at an average price of $475 per oz,” said Matheson.

CoCa expects a feasibility study for its Hog Heaven gold and silver property in Montana sometime this month. Assuming the study by American Mining Services is favorable, production could begin in late 1989.

Approximately $436,000 was spent on CoCa’s Luning project in Nevada over the past six months. The work program included 20,000 ft of drilling and results are still being analyzed. Separately, Tenneco Minerals has agreed to spend up to $2 million before Dec 31, 1993 on CoCa’s Round Mountain property in Colorado.

In terms of exploration expenditures, 1988 will be the largest in the company’s history. About $2 million will be expended on seven key properties by CoCa and its joint venture partners. CoCa’s corporate objective is to increase gold output to 100,000 oz per year, possibly through a merger or acquisition. In the six months ended June 30, CoCa produced 11,100 oz of gold, down from 16,100 last year.