Fast Blackdome payback shows mine’s strength

Bigger is not necessarily better.

Very few gold mines in this country have been able to pay a dividend within the first year of production. And few indeed will show net earnings of 29 cents per share for the past quarter. That’s the rather remarkable accomplishment of Blackdome Mining Corp. — a young upstart and already a real success story.

Located just 150 miles north of Vancouver, it’s B.C.’s newest gold- silver mine, starting up a 200-ton mill in May. And it has made money since day one.

Revenue for the third quarter reached $7,473,120 from production of 12,888 oz gold and 28,551 oz silver. Operating profit for this first 3-month period of operation was $4,790,627 or 58 cents per share, while net earnings were $2,378,898 or 29 cents .

From the commencement of production May 16 through Sept 30, operating profit is $5,954,215 or 72 cents per share, with a net of $2,886,722 or 35 cents .

And under this company’s generous dividend policy of paying out approximately 65% of annual cash flow, it has just declared an initial dividend of 15 cents to be paid Dec 15. This in itself is something of a record.

Blackdome has no debt “and never has had,” President R. Carl Ashenhurst tells The Northern Miner with some pride, pointing out that the company used equity financing “all the way.” It currently has about $2 million in the bank — and that’s after allowance for the upcoming dividend payout.

(Mr Ashenhurst is a former senior executive of Noranda Mines who looked after that big firm’s interest when it was financing the Blackdome project in 1982-3. When it dropped its option, Ashenhurst resigned from Noranda and took over the top Blackdome executive post on a full-time basis. Noranda apparently sold the bulk of its stock position, getting more than its money back and still retains a minor stock position.)

Blackdome currently has developed ore reserves of approximately 200,000 tons grading 0.79 oz gold and 3.76 oz silver, good for about a 4-year mill supply, with plenty of potential for finding more. In fact the company just recently found several small but very rich new ore shoots just now coming under developent. It should have little trouble maintaining output at the planned rate of 40,000-45,000 oz gold and 220,000 oz of silver annually.

Mr Ashenhurst is also chairman of the board of MFC Mining Finance Corp., the former Cons. Barrier Reef Resources, which holds a 50.3% controlling interest in Blackdome as well as a 50% joint venture interest in the Stibnite seasonal heap leach gold mine in Idaho which produced its first bullion in July. Kerr Addison Mines, in turn, holds 2,760,000 shares (22.4%) of FMC Mining.

MFC itself is something of another success story. It reports a 9-month consolidated cash flow of $7,259,429 or 59 cents per share and consolidated net earnings of $2,389,153 or 20 cents per share before the writeoff of extraordinary items amounting to $1,934,,472. This represents exploration expenses incurred in prior years and is the final phase of MFC’s transition from an exploration company to an aggressive mining finance entity. The share s of both Blackdome and MFC are now listed on both the TSE and VSE. Blackdome’s high-low range for the year to date has been $10 and $4.80, while MFC’s is $5 and $1.32.