The company, controlled by Noranda Inc. (TSE), says it received a lower gold price in Canadian dollars for its production which totaled 85,939 oz during the quarter, down from 87,886 oz for the same period last year.
Hemlo Gold recorded first- quarter net earnings of $6.4 million (7 cents per share) on revenue of $45.2 million, compared with $14.5 million (17 cents per share) on revenue of $51.5 million for the same three months of 1988.
The daily milling rate during the quarter was almost 3,200 tons at a head grade of 0.31 oz gold per ton. Operating costs averaged $147(US) per oz, up from $106 for the same period last year.
Also reducing earnings was lower than planned production because of an abnormally long period of extreme weather which slowed backfilling operations and increased maintenance downtime, the company said.
In addition, the company says it charged, as exploration expenses, $3.3 million of previously deferred exploration expenses on the Interlake property when exploration work was discontinued there. The after tax effect on this charge was 1 cents per share.
Hemlo Gold attributes the higher operating costs mainly to extra development work required to reach the high grade section of its Golden Giant mine at Hemlo in northern Ontario.
Development headings at the mine have reached the high grade section at the lower east side of the mine, so grades and production during the second quarter should increase, says the company.
Development and construction on the lower level will be completed during the second quarter, and the materials handling systems will be in full use this summer, Hemlo Gold reports.
The company reports its hedging program, including forward sales, puts and a gold loan, increased first-quarter revenues by $59 million(C) over prevailing market prices.
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