Earnings rise for Rayrock Yellowknife

A major sale made the second quarter a strong one for Rayrock Yellowknife Resources (RAY-T).

The company, which mines gold in Nevada, reported earnings of US$5.4 million (or 30 cents per share), compared with US$786,000 (4 cents per share) in the same period of 1996. The increase is primarily due to a US$4.6-million gain on the sale of Rayrock’s holdings in Discovery West, an oil and gas company, to Magin Energy.

Earnings for the six months ended June 30 amounted to US$5.6 million, compared with $2.3 million in the first half of 1996.

Second-quarter operating revenue dropped slightly to US$28.3 million from US$28.5 million between the second quarters of 1996 and 1997. The decline stemmed from lower gold prices, and also from low volumes as gold production from the Daisy mine replaced that of the Pinson mine. Rayrock sold its 26.5% interest in Pinson to two of its partners in late 1996.

Operating revenue for the first half of 1997 totalled US$55.4 million, compared with US$57.1 million in the year-ago period. Cash operating costs fell to US$236 per oz. gold in the second quarter from US$319 per oz. in the first quarter, primarily as a result of reduced production at the Dee gold mine. Mining operations at the Dee have been reduced substantially, though leaching and milling are ongoing. As a result, total ounces produced at Dee fell to 10,122 in the second quarter, compared with 13,756 oz. in the same period of 1996.

Production from Dee in 1997 is projected to be 30,000 oz.

At the Marigold gold mine (in which Rayrock has a 66.7% interest), an increase in the tonnage milled boosted second-quarter output to 21,311 oz.

— 20.5% higher than in the second quarter of 1996. Substantially lower year-to-date depreciation costs resulted from an increase in the mine’s reserves.

At the Daisy mine, 9,155 oz. gold were cranked out in the first half of 1997.

Rayrock, which owns a 35% interest in the mine and also acts as operator, expects per-ounce costs to decline in the second half of 1997 now that higher production is being achieved.

Meanwhile, Rayrock is seeking regulatory approval to sell its agricultural minerals unit, Western Ag-Minerals, to IMC Global for $53 million. The deal is expected to be approved in the third quarter.

Minera Rayrock (mrn.a-t), which is 37.5%-owned by Rayrock Yellowknife, saw second-quarter production at the Ivan copper mine in Chile reach 105% of design capacity, equivalent to 5.8 million lb. copper.

Cash operating costs averaged 76 cents per lb. during the second quarter, compared with 61 cents in the same period of 1996. The increase is attributed to the purchase of solution pumping equipment. Also, extractant consumption proved higher than expected.

In other news, Minera Rayrock has arranged to sell the Bellavista gold project, near San Jos, Costa Rica, to Wheaton River Minerals (wrm-t). The latter will issue to Minera 2 million of its shares and 2 million share purchase warrants, excercisable at $1 per share over five years. Wheaton River will also pay $1 million to Minera upon the commencement of gold production from the project.