Miramar tightens belt, looks to expand

With a strike behind it and cash in the bank, Miramar Mining (MAE-T) is looking to join the ranks of intermediate gold producers, the company’s president told shareholders at the annual meeting.

The company ended the first three months of the year with consolidated working capital of $73.8 million and $69.5 million in the bank, though it recorded a loss of $2.4 million.

“Cash is king,” said Anthony Walsh, the company’s interim president. “We believe our strong balance sheet will allow us to act as consolidator in the junior sector. We are looking at assets that have significant gold production and a positive cash flow at current gold prices.”

Walsh said Miramar would like to acquire a late-stage exploration project or an existing mine with expansion potential and, with that in mind, has entered discussions with unnamed companies.

For the first quarter, the company recorded a loss of $2.4 million (or 4 cents per share), compared with earnings of $1.9 million (3 cents per share) in the corresponding period of 1998. The loss is linked to severance costs accrued in the settlement of a strike at the Con mine, near Yellowknife, N.W.T., and in other administrative positions. In all, the company reduced staff during the quarter by 25%.

Although workers at the Con mine returned to work in April, the costs associated with the settlement were logged in the first, as opposed to the second, quarter. The year-long strike, which was costing the company $600,000 a month, ended with the rollover of the union’s 1997 contract. Work at the mine resumed soon after the settlement, as did environmental cleanup.

Also taking a bite out of Miramar’s balance sheet was its bailout of Northern Orion Explorations (NNO-T), in which it owns a 54.8% interest.

Drought conditions at Northern Orion’s Mantua mine in Cuba affected the company’s ability to process gold ore and to repay its debt. Guarantor Miramar stepped in and paid, on the company’s behalf, the principle of a $3-million loan, as well as interest. Conditions at Mantua have returned to normal and gold processing has resumed.

Northern Orion plans to maintain interests in the Mantua mine and in its Agua Rica and San Jorge copper-gold projects in Argentina.