Princeton president confident of healthy balance sheet

With net earnings of $2.3 million for the 1990 first quarter, Princeton Mining (TSE) is still firmly in the black and paying dividends even though this year’s results are off considerably from the 1989 comparable period when earnings totalled $7.3 million. At the company’s first annual meeting of shareholders since a corporate reorganization was completed last winter, President James O’Rourke said the reduced earnings were largely the result of lower copper production and prices and increased costs at the Similco mining operation near Princeton, B.C.

O’Rourke stressed, however, that earnings for the balance of 1990 for all operations are expected to show considerable improvements from first-quarter results at current product prices.

The company produces about 60 million lb. copper each year from its open pit Similco mine near Princeton, and about 100,000 tonnes per year of asbestos fibre from its mine near Cassiar in northwestern British Columbia.

At the Similco mine, earnings were adversely affected in the 1990 first quarter by higher production costs and reduced recoveries resulting from the introduction of ore from the newly developed Pit 1.

O’Rourke said the increased production costs were mainly the result of a temporary accelerated waste stripping program, while the reduced recoveries were the result of higher than expected oxidized ore from the upper benches of Pit 1.

The strip ratio is expected to improve later this year, and recoveries are expected to return to normal levels as the mining progresses below the oxidation.

As part of a new 5-year mine plan implemented in mid-1989, about 30% of the ore mined last year came from the new pit where the ore was found to be fine-grained and harder than originally expected.

In order to keep throughput levels up to target, O’Rourke said the mine plan was “revisited and readjusted” so that mill feed would be an approximate 50-50 blend from the new pit and from Pit 3 which has been the source of mill feed for the past several years.

This year Princeton plans to continue upgrading the mill at Similco and it will also carry out an aggressive exploration program. The 1989 drilling program at Similco outlined a potential deposit which is still open to the west, northwest and at depth. This will be further tested as will other known targets on the property.

Meanwhile, up at the Cassiar operations, Princeton is continuing development of the McDame underground mine which will soon become the primary source of ore into the next century. Production is expected to start later this year.

Having eliminated its long-term debt associated with the 1988 leveraged Similco acquisition, Princeton is now looking to continue its objective of diversification in the mineral business.

The company has set up a subsidiary in Chile to examine a number of base and precious metal targets in that country. Drilling is planned to start shortly on the Holy gold project where preliminary work has already been completed with encouraging results.

Princeton appears satisfied with its approximate 20% equity interest in Rea Gold (TSE) which has a 30% interest and a 5% net smelter return at the producing Samatosum polymetallic mine near Kamloops, B.C.

But O’Rourke said the company may sell its stake (about 2.6 million) shares in Western Canadian Mining (TSE), “if the right opportunity came along.”

In a more recent development, Princeton announced plans to gain control of Cliff Resources (TSE) which is building a wet milling process plant to treat asbestos tailings in Newfoundland. A due diligence study is continuing. If the proposed transaction is completed by Princeton, it would be with a view to apply the wet milling technology to treat tailings at its Cassiar operations.