Sigma performance drags down McWatters

Disappointing operating results from the Sigma-Lamaque complex in Val d’Or, Que., have pulled gold miner McWatters Mining (MCW-T) back into the red.

For the second quarter ended June 30, McWatters posted a net loss of $1.3 million (or 2 per share) on revenue of $16.5 million, compared with a net income of $863,511 (1 per share) on revenue of $18.2 million in the corresponding period of 1999.

The loss is attributed to falling production and higher costs related to underground and open-pit mining at Sigma-Lamaque. From underground operations (now permanently closed and written off in the third quarter), the company produced 4,289 oz. gold at a total production cost of US$358 per oz., compared with 6,481 oz. gold at a cost of US$199 per oz. last year. From the open pits, McWatters produced only 12,349 oz. gold at a total production cost of US$258 per oz., compared with last year’s 17,441 oz. at a cost of US$243 per oz.

Throughout the second quarter, financial constraints and permitting delays hindered the company’s ability to develop Sigma-Lamaque’s open-pit operations, which host reserves of 16 million tonnes grading 3.02 grams gold per tonne, or 1.6 million contained ounces gold.

Still, the company recently expanded milling capacity at Sigma-Lamaque to 3,000 from 2,000 tonnes per day, and the mill is to be expanded further, to 4,000 tonnes, by 2001.

McWatters’ nearby underground Kiena mine was a steady performer during the second quarter, producing 21,758 oz. gold at a total production cost of US$266 per oz., compared with 21,785 oz. at US$250 per oz. a year ago.

McWatters now expects its total gold production in 2000 to be 170,000 oz. at a cash operating cost of US$230 per oz.

There have been some changes in McWatters’ management: Michel Bouchard was appointed vice-president of mining development; Kevin Weston has become project manager, responsible for developing Sigma-Lamaque’s open pits; and Donald Brisebois, former chief operating officer, has left the company.