St. Gen and KWG end 1997 awash in red ink

St. Genevieve Resources (SGVE-C) and affiliate KWG Resources (KWGR-C) combined to amass a whopping $196 million in net losses during 1997, a year that ended with the revelation that $21 million had been misappropriated from St. Genevieve Group members to fund KWG’s Ametistovoe gold project in Russia.

St. Genevieve suffered a net loss of $92.1 million (or $1.10 per share) on income of $3.4 million during the fiscal year ended Dec. 31, 1997. This compares with a net income of $19.2 million (32 cents per share) on income of $30.3 million during 1996.

The company’s net loss for 1997 include a $61-million writedown of its investments (compared with a $14.7-million net gain in value of investments in 1996); a $16-million loss on the disposal of investments and conversion of promissory notes ($10-million net gain in 1996); and a $7.2-million share in loss of companies subject to significant influence ($97,920 in 1996).

For its part, KWG recorded a net loss of $104 million ($2.97 per share) during 1997 on revenues of $434,000, with most of the loss arising from an $89-million writedown on its mining assets and a combined $7.5-million loss on the disposal of its investments and mining assets. For the previous year, KWG posted a net loss of $3.3 million (14 cents per share) on revenues of $775,000.

St. Gen and KWG have scheduled special and annual meetings in Montreal on April 14, when shareholders will be asked to approve the restructuring plan filed in January by the two companies, both of which remain under bankruptcy protection.

The two companies’ creditors will meet on April 30 to vote on the same restructuring plan, which would convert a portion of the debts owed by each company into shares, on the basis of one St. Gen share for each 20 cents of the company’s debt and one KWG share for each 40 cents of its debt.

Both companies are also preparing a prospectus for a rights issue.