Miramar Mining posts big loss

Miramar Mining (MAE-T) saw its losses double from 1996 to 1997.

The company posted a loss of $63.8 million (or $1.12 per share) in 1997, compared with a loss of $29.1 million (51cents per share) in the previous year. The loss reflects a $58.7-million writedown comprising a $54.1-million reduction of the carrying value of the Con mine in Yellowknife, N.W.T. and an additional $4.6-million writedown on its exploration properties.

Before writedowns, Miramar reported a loss of $5.1 million, compared with earnings of $8.4 million in 1996. The loss was said to be the result of lower production levels at the Con mine. The company finished the year with consolidated working capital of about $112 million.

For the quarter ended Dec. 31, Miramar posted a loss of $48.1 million (84cents per share), compared with a loss of $22.6 million (40cents per share) in the corresponding period in 1996. The fourth-quarter loss is a partial consequence of the Con mine writedown, and includes a $2-million provision for severance related to the reduction of the work force.

An aggressive hedging program in 1997 enabled Miramar to realize an average gold price of US$428 per oz., up from US$408 in 1996. Through the forward sale of gold over a 2-year period, the company has made contracts to deliver 117,000 oz. at an average price of US$428 per oz.

Production at the Con mine in 1997 tallied 94,410 oz. gold from 337,478 tons grading 0.28 oz. gold per ton. The overall gold recovery was 90.2%.

Cash operating costs for 1997 rang in at US$351 per oz. gold, compared with US$336 per oz. in 1996. Fourth-quarter gold production was 22,389 oz. at a cash cost of US$381 per oz., compared with 25,626 oz. at US$354 per oz.

during the corresponding quarter of 1996.

Miramar reduced production at the Con mine to 600 tons per day. The mine reported a year-end proven and probable reserve of 2.5 million tons grading 0.33 oz. gold per ton, for 825,000 contained ounces.

In related news, Northern Orion Explorations (NNO-T), which is 53.9% owned by Miramar, ended the year with a net loss of $7.1 million (10cents per share). The company attributes the loss to administrative and exploration expenses written off during the year.

In February 1998, Northern Orion poured its first gold at the Mantua mine in Cuba. A minable reserve estimate pegs the gold-rich gossan cap at Mantua at 1.7 million tonnes grading 1.7 grams gold per tonne. The secondary-enriched copper deposit under the gossan cap is estimated at 12 million tonnes grading 2% copper. The $10-million project is held equally by Northern Orion and the Cuban government.

The company states that its most important development during 1997 was the successful completion of an initial feasibility study on the Agua Rica porphyry copper-gold-molybdenum deposit in Argentina. The study, which was based on 103 drill holes and used a cutoff grade of 0.4% copper, indicated a sulphide resource of 802 million tonnes grading 0.61% copper, 0.034% moly, 0.24 gram gold and 3.17 grams silver per tonne. The values are equivalent to a contained resource of 10.8 billion lbs. copper, 601 million lbs. moly, 6.2 million oz. gold and 82 million oz. silver.

Northern Orion holds a 30% interest in the property and BHP Copper, a unit of Broken Hill Proprietary (BHP-N), holds the remaining 70%. Projected capital costs for developing the Agua Rica property are estimated at US$760 million.

Northern Orion ended the year with working capital of $5.2 million.