Giant Yellowknife planning layoffs at Timmins operations

The gold producer, active in the Timmins, Ont., and Yellowknife, N.W.T., areas, reported a loss for last year of $757,000 (9 cents per share) and a write-down of the carrying value of assets at its Timmins division worth $29,620,000 after related income tax credits, for a net loss in 1988 of almost $30.4 million ($3.62 per share).

In 1987, the company, whose controlling shareholder is Pamour Inc. (TSE), recorded a profit of about $12.3 million ($1.67 per share).

The company says a lower gold price, in part, has forced a re- assessment of its ore reserve potential and the development of a new operating strategy to ensure its long- term survival. The company says it has a continued commitment to exploration.

Mining activities are to be significantly curtailed in certain locations around Timmins and have ceased entirely at the Schumacher (formerly McIntyre) mine.

Projects which will not be affected include the No 1 mine (formerly the Pamour mine), No 3 and 4 pits, and a small heap leach operation. Won’t stop flooding

To be allowed to flood are the old Hollinger shaft and two other separate underground workings; the Delnite pit has been closed; and a planned capital expansion program at the Ross mine will not proceed. Although the back end of the Schumacher mill has been mothballed, the crushing and grinding equipment is still in operation.

Gold output from the Timmins division totalled about 115,000 oz during calendar 1988; production from the same area for fiscal 1989 is expected to drop to about 100,000 oz.

Giant Yellowknife also manages the large Timmins-area tailings recovery project of associated company ERG Resources (TSE); the ERG project was started up again at the first of March following its winter shutdown. (Slurry from the Schumacher mill is being processed at the ERG facility.)

The labor force at the Timmins division, which numbers about 650 workers, is expected to decline by 25% during the next few months.

No write-downs were necessary at the Yellowknife division, the company says, although it anticipates making cost reductions, varying its operating strategy and laying off workers.

During 1988, Giant Yellowknife produced 187,354 oz gold, down from 214,779 oz the previous year. Output during the fourth quarter, at 39,112 oz, was down from 46,758 oz during the same quarter in 1987. Production costs for 1988 were not announced; for 1987 the company reported consolidated operating and administrative costs of $351(US) per oz and $306 in 1986.

Revenues in 1988 totalled $123.9 million, down slightly from $125 million the year before.

The company has a number of forward gold sales agreements good to the end of this year and 1990.

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