Inspiration turns ’86 profit; moving into gold production

In the red since its reorganization in 1983, Inspiration Resources of New York has reported a net profit of $38 million for 1986, compared to a net loss of $291 million for the year before.

Inspiration is a diversified natural resources company whose subsidiaries include Hudson Bay Mining and Smelting and Inspiration Consolidated Copper. Among the reasons given by Chairman Reuben Richards for the improved results in 1986 was reduced operating costs at the company’s mining operations, including dropping the production cost for copper below 60 cents per pound.

Now into the gold-production business, Inspiration is hoping to build a low-cost gold company with substantial annual production by 1990. Late last year, the Austin gold venture, in which a subsidiary, Inspiration Gold, has a 72.5% interest, poured its first gold bars at Austin, Nev. The mine has a life expectancy of four years. International Gold’s share of the gold production there is expected to exceed 33,000 oz annually.

The company also has an investment in a large mining vessel, the Bima, which began recovering gold from offshore deposits last August at Nome, Alaska. Despite the short dredging season and unpredictable weather, Inspiration anticipates producing 40,000 oz annually from the marine placer operation.

Inspiration owns a 50% stake in Mingold Resources, a gold exploration company in Canada, and has a promising prospect near Farley Lake in northern Manitoba, where an Inspiration subsidiary and the Manitoba government have encountered combined proven and probable geological reserves of more than 1.2 million tons with an average grade of 0.18 oz gold per ton.

In the base metals field, the company has a promising nickel/copper deposit at Namew Lake, Man. An exploratory shaft has been sunk on the property by Hudson Bay Mining. The deposit contains an estimated 2.82 million tons of ore containing 2.44% nickel and 0.9% copper with traces of platinum and palladium. Hudson Bay Mining is seeking to establish a joint venture for the property.

Plans this year call for Hudson Bay Mining to boost production from known ore reserves of company-owned mines in the Flin Flon/Snow Lake area of northern Manitoba.

Hudson Bay Mining reported a 1986 operating loss of $16.2 million, compared with an operating loss in 1985 of $61.2 million. Inspiration Consolidated Copper, on the other hand, had its first profitable year since 1979, reporting a 1986 income of $13.6 million compared to a loss of $86 million in 1985.

Inspiration also reports it has identified sufficient leachable ore at its Miami, Ariz., site to produce 100 million lb of copper annually from the leach extraction method for at least 10 years.