Disappointing operating results and a poor forecast prompted Crown Resources (TSE) to withdraw from the Kettle River joint venture in northeastern Washington state. The project originally went into production in early 1990 as a 70-30 joint venture with Echo Bay Mines (TSE).
Echo Bay financed Crown’s 30% share of the capital cost with a non-recourse loan of US$20 million repayable out of 50% of the project cash flow at prime plus 1%.
Crown stated that recently completed life-of-mine cash flow forecasts indicate that the project will not provide sufficient economic benefit to the company at current and foreseeable gold prices.
At prevailing gold prices, Crown estimates a negative cash flow for the company of about US$5 million over the 1993-94 time frame with the prospect of no principal reduction in the project loan. By withdrawing from the project, Crown eliminates more than US$19 million in non-recourse debt owed to Echo Bay.
As a result, the company will have about US$6 million in cash and gold bullion while long-term liabilities will total about US$20 million, including deferred income taxes and US$15 million in convertible debentures.
Be the first to comment on "Crown drops Kettle River"