Inco Gold profit picture revealed

In the first nine months of the year, Inco Gold, a unit of Inco (TSE), showed a profit of US$6.6 million, compared to a loss of $3.7 million in the year-earlier period. The significantly improved profit picture allowed the company to transfer $5 million to its parent, compared with a cash requirement of $24 million in the comparable 1989 period.

Inco Gold’s financial results were recently revealed to shareholders of Consolidated TVX Mining (TSE) in an information circular that outlined details of a planned merger between the two companies. TVX shareholders meet Jan. 7 to approve the amalgamation.

In the nine months ended Sept. 30, Inco Gold’s share of production from its three operating mines totalled 89,000 oz. at a cash cost of US$201 per oz. The company’s share of revenue from gold production was $37.4 million.

The information circular also revealed that the relative value ratio initially agreed to by Inco and TVX for their respective gold properties has been revised to 62-to-38 from 58-to-42.

After the merger, Inco will own 62% of the new company’s 134 million issued shares. Eike Batista, the current chairman of TVX, will own 13% of the new company, TVX Gold.

Three of TVX Gold’s main projects for future development will be in Canada. One of the largest will be the 32% owned Musselwhite joint venture operated by Placer Dome (TSE) in northern Ontario. Musselwhite hosts preliminary reserves of at least 8.2 million tonnes grading 6.9 grams (0.20 oz.) gold per tonne. The property has seen nearly $36 million spent on it over the past decade.

Near Red Lake, Ont., Inco’s 67% owned Wilanour joint venture has also undergone an $11-million exploration program for which a final feasibility report is expected next year. Reserves were last estimated at around 1.2 million tonnes of 8.4 grams (0.27 oz.).

In Manitoba, Inco’s 35% owned High River Gold Mines (TSE) property has seen more than $6 million spent on it to outline reserves of nearly 3.6 million tonnes grading 6.3 grams (0.19 oz.) gold.