Operating problems spell losses for Amax Gold

Continuing operating problems have pushed Amax Gold (NYSE) further into the red.

With third-quarter losses of US$7.4 million, the total loss for the first nine months of the year stands at US$75.9 million.

Included in that figure is a US$64.1-million charge to cover a writedown of assets at the Hayden Hill mine near Susanville, Calif. Amax suspending milling there earlier this year in response to lower-than-expected head grades.

Heap leaching continues and the mill remains on standby until sufficient mill-grade ore is outlined. Gold production from Hayden Hill for the 9-month period totaled 40,718 oz. at a cash operating cost of US$485 per oz. Milling at the Sleeper mine, in Nevada, also encountered difficulties. Recoveries are down from the the same period last year.

Mining in the third quarter occurred predominantly in the upper portion of the Office Pit where gold mineralization turned out to be encapsulated in silica.

Sleeper produced 71,578 oz. in the first nine months at an average cash cost of US$332 per oz.

Meanwhile, at the Guanaco heap leach mine in Chile, cash costs rose to US$661 per oz. for the 18,158 oz. produced so far this year. This is attributable both to low crusher availability and ore grade control problems. Amax Gold’s gross operating loss for the period is US$24.1 million. As of Sept. 30, 1993, the company had a working capital deficit of US$20 million and long-term debt of US$108.5 million.

The company hopes to receive permits for its Fort Knox gold project in Alaska before 1994, and continues to work toward financing the Refugio gold project in Chile with partner Bema Gold (TSE).