Low commodity prices an obstacle for Rayrock

Rayrock Yellowknife Resources (RAY-T) reports both good news and bad news for the quarter ended March 31.

The bad news is that the Toronto-based company incurred a loss from continuing operations of US$838,000 (or 5 cents per share). The good news is that when profits from the September 1997 sale of its agricultural minerals division are taken into account, the company can be said to have earned US$158,000.

By comparison, Rayrock reported a loss of US$1.4 million (8 cents per share) in the corresponding quarter of 1997.

During the recent 3-month period, revenue continued to be hurt by low gold and copper prices. Despite increased sales volumes, gold revenues declined to US$7.3 million, compared with US$8.3 in the year-ago period, whereas copper revenue remained unchanged at US$5.6 million. Total revenue fell to US$13 million from US$14 million a year earlier.

Cash flow from continuing operations rose to US$2.3 million (3 cents per share) from US$1.2 million (7 cents per share), chiefly because of lower operating costs that enabled Rayrock to increase direct income from gold and copper in spite of lower commodity prices.

Rayrock’s share of gold production is expected to amount to 90,000 oz. in 1998, while cash costs are projected to average less than US$250 per oz.

gold.

Mining at the Dee open-pit gold mine in Nevada was significantly curtailed in the first quarter en route to a planned shutdown.

Meanwhile, affiliated company Inter-Rock Gold (IRO-T) reports a first-quarter loss of US$480,000 (3 cents per share) on revenue of US$1.5 million, compared with a year-ago loss of US$461,000 (3 cents per share) on US$884,000.

The significant revenue increase in 1998 is attributed to the company’s Daisy gold mine in southwestern Nevada, which reached its production capacity of 2,500 oz. per month in June 1997.