Cons. Nevada reports loss as mine expansion proceeds

Gold sales for Consolidated Nevada Goldfields (TSE) during the nine months ended March 31, totaled 18,294 oz. at an average price of US$384 per oz.

Despite the premium to spot prices which averaged about US$340, the company reported a loss during the period of US$1.2 million and negative cash flow of US$750,000.

Consolidated Nevada owns two operating gold mines: the Aurora (open pit/underground), near Hawthorne, Nev., which includes a mill, and the Barite Hill (open pit/heap leaching) at McCormick, S.C.

Since the beginning of fiscal 1993, the company has spent US$2.6 million expanding the two operations, including a new leach pad at Barite Hill and a mill expansion to 385 from 275 tons per day at Aurora. It expects to spend a further US$600,000 in the fourth quarter to complete the projects. Consolidated Nevada should produce about 24,000 oz. at Barite Hill and 17,000 oz. at Aurora in fiscal 1994 at a combined cash cost of about US$260 per oz., said President Peter Bojtos.

He added that ore reserves at the mines are being upgraded. Based on estimates from June, 1992 (less mine production), proven and probable minable reserves stand at about 639,000 tons grading 0.041 oz. gold at Barite Hill and 397,000 tons grading 0.15 oz. gold at Aurora. Bojtos said drilling over the past year is expected to increase both estimates.

As of March 31, the company had forward sales contracts covering 81,962 oz. of gold at an average price of US$371 per oz., a working capital deficit of about US$470,000, long-term debt of US$7.8 million and convertible debentures totaling US$3.4 million.

Repayments under the long-term debt agreement total US$2.26 million per year. If the lender determines on June 30 of 1993 or 1994 that the company’s then-current ore reserves are inadequate to repay the loan, the scheduled repayments can be accelerated.