US$12 million writedown pushes Canyon into the red

Denver — After writing down the value of the Briggs gold mine in southern California, Canyon Resources (CAU-X) posted a loss of US$12.1 million (or $1.03 per share) for 2000.

Despite the loss, which compares with earnings of US$203,500 (3 per share) in 1999, revenue was higher in 2000.

The company sold 87,397 oz. gold and 23,500 oz. silver last year at an average price of US$397 per oz. gold-equivalent, resulting in revenue of US$34.7 million. In 1999, it posted revenue of US$30.9 million on the sale of 83,565 oz. gold and 23,400 oz. silver.

Production at Briggs reached 86,621 oz. gold and 23,220 oz. silver in 2000, on par with the previous year. Cash operating costs dropped 3%, to US$267 per oz., though the total production cost climbed to US$388 from US$369 per oz.

In the fourth quarter, Canyon adjusted the carrying value of Briggs, based on a long-term gold price of US$275 per oz. This resulted in an US$11-million writedown against earnings.

During 2000, the open-pit operation crushed and leached low-grade ore (averaging 0.027 oz. per ton) from the main orebody. Starting in the third quarter, the company began prestripping on the higher-grade North Briggs deposit, removing 1.8 million tons of waste rock by year-end.

Production is expected to rise to 120,000 oz. in 2001 as a result of processing the higher-grade ore, the average grade of which is 0.06 oz. per ton. Also, President Richard De Voto says cash operating costs should fall to US$200 per oz.

The company financed much of the North Briggs project through a US$1.2-million private placement, after which the company had 13.3 million shares outstanding.