Noramco Mining tallies massive loss

Since acquiring control of Noramco in June of 1988, Breakwater Resources (TSE) has carried out a detailed and thorough review of all Noramco’s projects, including its Golden Rose mine in Ontario which operated at a significant loss for 13 months in 1987 and 1988. The mine has since been closed and all the company’s near-term production targets down-graded, resulting in an extraordinary write- down of $51,758,000. The loss before these extraordinary items for the 9-month period was $9,636,000 or 66 cents per share.

The loss also had an impact on Breakwater’s bottom line which currently reflects a large write-down of interests in various properties that were recently determined to be “overvalued based on their estimated future economic potential.”

Breakwater has accordingly adjusted the carrying value of its 19.9% investment in Noramco, which has resulted in an extraordinary loss of $13,920,00 and a net loss of $11,638,000 for the year ended Dec 31.

“The write-down of our investment in Noramco provides a more realistic value of the investment and does not involve the loss of cash,” noted Brian Pewsey, president of both Breakwater and Noramco. Among the development projects down-graded to the exploration stage are Noramco’s 100%- owned Pickle Crow property and the Favourable Lake property owned by Zahavy Mines (VSE) and managed by Noramco. Both are located in Ontario.

Breakwater had expected that an extensive exploration program would establish continuity in known mineralized zones on both projects. But according to Pewsey, the results obtained “were generally disappointing and had the effect of reducing reserve estimates.”

Two of Noramco’s affiliates, Golden Hope Resources (VSE) and Golden Group Explorations (VSE), are continuing negotiations with Breakwater and Teck Corp. (TSE) for further development of the Estrades polymetallic project near Casa Berardi, Que. Breakwater has acquired about 9.5% of both companies and has expressed its desire to fund future exploration and place the property into production given favorable exploration results.

Over the past several months, Pewsey has strengthened Noramco’s management team, with the emphasis on adding experience and technical expertise. The latest appointment saw Alfred Burgoyne become president of Noramco’s 100%-owned exploration subsidiary, Noramco Explorations.

]]>