Rea Gold records quarterly loss from operations

For the first three months ended March 31, 1996, owner Rea Gold (REO-T) recorded a loss of just under $1.2 million (or 3 cents per share), compared with a profit of $369,095 (1 cents per share) for the same period last year.

Revenue for the three months was $4.6 million, compared with $2.4 million in the first quarter of 1995, while operating costs rose to $4.1 million from $1.1 million.

The results are a reflection of the Mt. Hamilton open-pit, heap-leach mine near Ely, Nev., which, during the quarter, produced 7,930 oz. at a cash cost of US$340 per oz.

Minable reserves stand at 10.8 million tons grading 0.038 oz. gold and 0.24 oz. silver per ton for a contained resource of 414,000 oz. gold and 2.6 million oz. silver.

Exploration drilling will begin before the end of the second quarter on the newly identified Chester zone, which lies 2,500 ft. south of the Centennial deposit. About 20,000 ft. of staged reverse-circulation drilling are planned.

At the Bissett gold mine in Manitoba, a $37-million development program is under way, in anticipation of startup in the first quarter of 1997. The 1,000-ton-per-day underground operation is expected to produce 80,000 oz. per year over 10.5 years at an operating cost of US$238 per oz.

Minable reserves are calculated at 3.2 million tons grading 0.25 oz., or 830,000 oz.

On June 26, shareholders will vote on the proposed merger with American Resource (AREE-Q). Under the agreement, American Resource shareholders would receive 2.2 Rea shares for each share held.

Once the merger is completed, former American Resource shareholders will own 40% of the Rea shares then outstanding.

American Resource assets include the San Gregario open-pit gold project and more than 1,200 sq. miles of exploration concessions in Uruguay. San Gregario contains minable reserves of 5.6 million tons grading 0.075 oz. It is under development and scheduled to come on-stream in the first quarter of 1997 at an annual rate of 70,000 oz.

In other news, Rea has optioned its half interest in the South Comstock open-pit, heap-leach project in Nevada to partner BMR Gold (BGL-T). BMR can increase its ownership to 100% before Dec. 31, 1996, by paying Rea US$500,000 in cash, US$250,000 in shares and a 5% net profits interest capped at US$115,000.