Prime aglow over ’96 earnings

Prime Resources Group (PRU-T) enjoyed higher earnings and increased gold production in 1996.

The company earned $42.1 million (or 55 cents per share) on revenue of $198.7 million, compared with $36.5 million (48 cents per share) on $155.9 million in 1995, while cash flow from operations declined to $84.9 million from $92.5 million.

Prime owns a 100% interest in both the Eskay Creek and Snip gold mines in northwestern British Columbia.

Total gold and gold-equivalent production rose by 24% to 474,106 oz. in 1996 from 382,610 oz. in the previous year. The increase reflects Prime’s purchase of the balance of the Snip mine last April, as well as a 12% boost in production from Eskay Creek.

Total cash costs declined by 5% to US$174 per oz. gold-equivalent, compared with US$184 per oz. in 1995.

In its second full year of operation at Eskay Creek, Prime produced 211,276 oz. gold and 12.05 million oz. silver, which equates to 372,279 oz.

gold-equivalent. Increased ore sales and higher grades accounted for the rise in production from the 331,300 oz. gold-equivalent produced in 1995.

Productivity gains, increased production and reduced underground development contributed to an 8% reduction in cash costs to US$170 per oz.

gold-equivalent from US$185 per oz. in the previous year.

Prime spent $5.2 million on exploration at Eskay Creek, with surface and underground drilling totalling more than 35,000 metres. The program resulted in 418,000 oz. gold-equivalent in the NEX and Hangingwall zones being upgraded into the proven and probable category.

Eskay Creek hosts proven and probable reserves of 1.4 million tons grading 1.73 oz. gold and 79.3 oz. silver per ton, equivalent to 2.4 million contained ounces gold and 110.8 million contained ounces silver.

An additional geological resource is estimated at 278,000 tons grading 0.54 oz. gold and 31.6 oz. silver.

As a reflection of its increased ownership of the nearby Snip mine, Prime saw its share of production rise to 101,827 oz. in 1996 from 51,310 oz. in the previous year.

As expected, cash costs for the year rose to US$190 per oz., compared with US$176 in 1995. The company expects cash costs to remain at current levels through 1997.

A $1.8-million exploration program at Snip, comprising more than 15,000 metres of drilling, upgraded a geological resource of 101,000 oz. into the category of reserves.

Proven and probable reserves now stand at 369,000 tons grading 0.72 oz. gold, equivalent to 267,000 contained ounces. Only 19,000 tons grading 0.55 oz.

gold remain categorized as a resource.

Prime has allocated $6 million for a first phase of exploration work in 1997.

The company’s largest shareholder is Homestake Mining (HM-N), which owns about 51% of its stock.