Fischer-Watt sells stake in Hayden Hill property

In a move to eliminate its long-term debt, Fischer-Watt Gold (NASDAQ) recently agreed to sell its 5% net operating profit royalty in the Hayden Hill property to Amax Gold (NYSE) for about US$3 million.

The purchase price includes US$250,000 in cash, the cancellation of US$2 million in debt and US$737,000 in accrued interest due to Amax. Tim Watt, chief executive officer of Fischer-Watt, said the transaction provides the company with operating capital and eliminates long-term debt. After reviewing anticipated cash flow for the interest, even based on substantially higher gold prices, the company determined it was in its best interest to sell the royalty.

Construction at the mine, north of Susanville, Calif., is continuing and Amax plans to start pouring gold toward the end of the second quarter. Hayden Hill is projected to produce about 145,000 oz. gold per year at an average cash operating cost of about US$250 per oz. Amax estimates production for 1992 at about half the annual average at a slightly higher cash operating cost.