Total Energold year-end results not 100% of story says president

Januard said there was a strong upside to the company’s oil and gas business because of low finding costs. He also noted that the Total Energold Group has no long-term bank debt and only $1.3 million outstanding on a convertible debenture.

Emphasizing the company’s desire to maintain a balance between oil and gas and mining, he said the former generated an operating profit of $9 million last year “reflecting six months’ full consolidation of Ranchmen’s and Consolidated Trans-Canada.”

Those results also reflect the pooling of interest of Getty Resources and Total Erickson Resources as well as the consolidation of Ranchmen’s Resources since July 1, 1988, and Consolidated Trans-Canada Resources since Nov 1, 1987.

A $34-million write-down of mineral properties constituted the biggest portion of the company’s overall loss. The Mount Skukum gold mine south of Whitehorse, Y.T., suspended operations last August owing to a lack of reserves, and the Erickson gold mine at Cassiar, B.C., ceased milling operations three months later for the same reason.

Total Energold’s 100% interest in the Erickson mine is being carried at $13 million while the company’s 37% interest in Mount Skukum has been valued at $3.6 million. Plant and equipment at both properties are being carried at $9.2 million.

Consolidated oil and gas production in 1988 at Ranchmen’s and Consolidated Trans-Canada was 3,617 bbl oil per day and 21.1 million cu ft gas. Gold production credited to the company’s account last year was 21,956, less than half the previous year’s output because of the mine closures. The mining division reported an operating loss of $1.7 million for the year.

Januard noted that Total Energold has current assets of $38 million including cash and investments of $26 million. The carrying value of the company’s oil and gas reserves (proven and probable) is $119.5 million and of mining assets $47.9 million, he said. The net book value after 1988 results and write- downs is $133.6 million or $5.03 per share, he added.

This year’s budget for the Tundra gold project in the Northwest Territories will be $9 million; Total Energold has a 49% interest in Tundra with Noranda holding the balance. Januard was confident this year’s expenditures will take it to feasibility which could begin in the second half of 1990.

Shaft sinking is under way and the joint venture hopes to begin drilling by June, he confirmed. Total Energold’s participation in any future mining development at Tundra would probably involve the raising of some equity or be project financed. “Our parent company will help fund it if need be,” he commented.

Ranchmen’s has a $14 million capital budget this year to develop exploration properties in Alberta and increase oil production. Turning to Consolidated Trans-Canada he said it has been completely turned around and it now has no debt, cash flow of $4.3 million in 1988, and a $4 million exploration and development budget for 1989. Trans-Canada is primarily a gas producer.

Total Energold will spend $17 million on capital programs this year, $9 million at Tundra, $3.7 million at Erickson and the balance throughout Canada and the United States. The company has 26,974,000 shares outstanding.

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