Lac reports quarterly loss

A decision to spend an additional $5.5 million on increased exploration of the Red Mountain gold project in British Columbia has led to a quarterly loss, Lac Minerals (TSE) reports.

The gold producer recorded a third-quarter net loss of US$5.4 million (4 cents per share) compared with a loss of US$1.1 million (1 cents per share) for the same 3-month period last year.

The company said a cost-reduction program initiated earlier in 1993 is producing results. It said it made the Red Mountain decision in order to maximize exploration activity during seasonable temperatures. In addition to Red Mountain, Lac is exploring three gold properties in Chile — El Indio, Tambo and El Nevada — which the company says have the potential for a resource greater than 5 million oz.

Lac intends to dedicate about US$60 million during the next three years to new exploration activities.

Relatively low gold prices this year have contributed to a decline in company revenues and earnings. Lac has no hedging commitments with respect to its future metals production.

Cost-cutting has helped the company lower its average cash operating cost to US$194 per oz., down from 11% last year. Total gold production to Sept. 30 this year was 826,000 oz., down from 848,000 oz. for the same period last year.

For the first nine months of 1993, Lac reported a loss of $5.6 million (4 cents per share) compared to net earnings of $7 million (5 cents per share) for the same period in 1992.

The Toronto-based company has undergone a corporate reoganization and created two regional business units, Lac South America and Lac North America. Michael Richings was named president of the former, and Michael Bates president of the latter.