Westmin profit climbs on Lacana sale, oil gain

The sale earlier this year of the company’s holding in Lacana Mining Corp. was one of the major factors leading to a big improvement in earnings reported by Westmin Resources for the first six months.

Westmin had net earnings for the period of $9,799,000, or 4 cents a common share (after preferred dividends), on gross revenues of $90,032,000. In the similar period last year, the company’s net earnings totalled $1,274,000 for a net loss of 18 cents per share, on gross revenue of $98,684,000.

The company attributes much of the earnings gain not only to the Lacana interest sale (made to Royex Gold Mining Corp. last February for $34.6 million) but to improvements in crude oil prices.

These gains were partially offset by sharply lower natural gas prices, lower than expected mine revenues due to development of the Myra Falls expansion, and the increased strength of the exchange rate on the Canadian dollar.

In second quarter 1987 Westmin had earnings of $4,542,000 or 1 cent a share, compared to a net loss of $281,000, or 12 cents a share in the 1986 second quarter.

Cash flow in the latest six months amounted to $24,974,000, against $26,097,000 in the 1986 first half. As of June 30, Westmin had working capital of $107,087,000, down from $117,006,000 at year-end 1986.

On the operations side, Westmin reports that in the 33% expansion program at its Myra Falls base/precious metals mine-mill complex on Vancouver Island, early delivery of equipment has allowed the start of underground development.

It says a total of $3.7 million out of a budget of $26 million has been spent on this program to date. Production at Myra Falls will expand in gradual increments over the next year toward a new capacity of 4,400 tons per day, by the fall of next year.

The company is also analysing the recommendations of a preliminary feasibility study on the Silbak Premier/Big Missouri precious metals properties near Stewart, B.C.

Initial production at these properties (N.M., May 11/87) is expected to be 80,000 oz gold and 560,000 oz silver. The capital cost of $62 million is expected to be paid back in two years, based on a gold price of $390(US) and $5.40(US) silver per oz.