New mines signal growth for Euro-Nevada

The best may be yet to come for Euro-Nevada (TSE), as four new gold mines in the company’s royalty portfolio are being readied for production over the next 24 months.

Chairman Pierre Lassonde recently told shareholders at the annual meeting that he expects these mines to be long-life, low-cost producers that will dramatically increase Euro-Nevada’s revenues and earnings.

The first new mine to come on stream will be the Eskay Creek deposit in northern British Columbia. Scheduled to enter full production by January, 1995, the mine is expected to yield 250,000 oz. gold and 11 million oz. silver per year. Euro has a 1% net smelter return (NSR) royalty on Eskay. The next deposit to start up should be the Briggs deposit in California. The project is currently awaiting permits and, barring any delays, should be in production by late 1995 at 80,000 oz. gold per year. Euro has a 2% NSR on this deposit.

While no production decision has yet been made by Hecla Mining (NYSE) on the Rosebud property in Nevada, Euro is confident the current underground program will firm up a production target of 80,000 oz. per year. Euro holds a 2.5% NSR, with the right to buy a further 1.5% NSR when a production decision is made.

Last but not least are the company’s 4% NSR and 5% net profits interest royalties on American Barrick Resources’ (TSE) Meikle mine, also in Nevada. The mine, which is expected to produce more than 400,000 oz. gold per year beginning in late 1996, should generate some $500 million in revenue for Euro, at today’s gold price.

Lassonde believes the Meikle deposit will be to Euro what the Goldstrike mine has been to sister company Franco-Nevada (TSE).

In other news, Euro has formed a subsidiary called Pacific Nevada. The new company, to be based in Australia, will be seeking mineral royalties in Southeast Asia.

Over the past 12 months, Euro has been amassing new ground in Nevada. Recent acquisitions include the 3,000-acre Midas property at the north end of the Carlin Trend. Unlike the company’s other transactions, this is not a royalty deal — Euro owns these claims outright and plans to carry out a $1-million drill program later this year.

In addition to their royalty interests, both Euro and Franco have considerable cash reserves of $175 million and $190 million, respectively. Sister company Redstone Resources (TSE), which is involved in base metal royalties, has cash reserves of $31 million.