Record production fails to improve Hope Brook results

Despite record production at Hope Brook Gold’s (TSE) underground gold mine on the southwest coast of Newfoundland, lower gold prices and high production costs continue to hurt the company’s balance sheet. In the second quarter of 1990, Hope Brook lost $5.2 million (17 cents per share), compared with $2.6 million (9 cents per share) in the same period last year. The loss overshadows significant operating improvements at the mine. Modifications to increase the rate of throughput in the grinding mill by removing mafic material are on schedule, the company says, and should be complete by the end of September. A plan to improve the performance of electric haulage trucks has been successful, and a lower-cost effluent treatment system will be in place by September.

In June, output reached record levels of 12,124 oz., for an overall quarterly production of 28,892 oz. Another record was set in July when monthly gold production reached 15,124 oz.

But although revenues increased to $13.1 million from $9.7 million in the second quarter of 1989, average production costs still hover at around $500 per oz. During the quarter, the company received about $452 for every ounce produced.

“As we put more through the system, we expect to see improvement in costs,” says an optimistic John Auston, president of Hope Brook. He says the company was particularly encouraged by recent drilling into deeper reserves at the mine. Grades were higher than expected, and Hope Brook has extended the haulage ramp and established new drilling stations to probe the deep reserves.006 0600,0206,0300,0008 Hope Brook Gold (TSE) $000s except per-share items Quarter ended June 30 1990 1989 Revenue $13,123 $9,665 Net earnings (loss) (5,191 ) (2,604)

per share (0.17 ) (0.09)004