Galactic takes $40 million write-down for Summitville

A $40 million(US) write-down has been taken by Galactic Resources (TSE) for its Summitville mine in Colorado. And Galactic chairman, Robert Friedland, is now downplaying the operation’s importance in light of the company’s interest in the Ridgeway mine and “the prospects for the Ivanhoe and Bodie properties.”

Summitville has been a chronic under-performer and this year gold output is expected to be only 65,000 oz, a 26% drop from last year. Friedland says that Summitville represents approximately 16% of the company’s total reserves and its share will drop to less than 5% by 1991. Ridgeway will be one of the lowest grade conventional mining operations in the world and Ivanhoe is generally considered low grade by heap leach standards.

Future production plans at Summitville are being optimized and the company may do its own mining rather than have it done on a contract basis. “These plans will also consider reduced levels of annual production which, in conjunction with reduced depreciation charges, may maintain profitable operations at Summitville and extend mine life until 1992 or beyond,” he states.

The company recently concluded two private placements which in aggregate total about $14 million. Caisse de Depot et Placement du Quebec and Homestake Mining each subscribed for one million shares of Galactic at $7 per share.