LATIN AMERICA — Canyon prepares for writedowns

Asset writedowns totalling about US$14 million are expected to be released by Canyon Resources (NASDAQ) for its 1992 fourth quarter ended Dec. 31.

The Colorado-based company said the writedowns reflect low gold prices, new federal fees payable on mining claims, and revaluation of a previous agreement with Addwest Gold.

The writedown is composed of US$8 million related to the Kendall mine in Montana, US$4 million related to several exploration project in the western U.S., and US$2 million related to the Addwest non-compete agreement. They do not include the more advanced Briggs gold property in California, or the McDonald gold property in Montana.

Canyon purchased Addwest Gold in January, 1990, when the gold price was US$420 per oz. Because several Addwest properties were unproven, a significant portion of the US$34-million purchase price was allocated to the Kendall mine and specific exploration properties.

At current gold prices, anticipated future production from Kendall is not expected to provide sufficient net operating cash flow to recover remaining unamortized acquisition and construction costs.

Canyon noted, however, that the Kendall mine experienced its best ever production last year, with about 59,000 oz. gold produced at an average operating cost of US$208 per oz. The company expects to turn in a profitable 1992, exclusive of the writedowns.