Aurizon narrows losses

Higher gold prices helped Vancouver-based Aurizon Mines (ARZ-T) to narrow its losses during the three months ended June 30.

The company’s second-quarter loss was trimmed to $212,000 (or nil per share), from a year-earlier net loss of $1 million (2 per share). Revenue slipped by half a million to $3.7 million. Conversely, cash swung to the plus side at $13,000 to the good, compared with the $748,000 consumed in the corresponding period of 2002.

During the first half of 2003, Aurizon’s net loss came $218,000 (nil per share) on revenue of $7.9 million, compared with a loss of $1.3 million (3 a share) on $8.7 million in the same period of 2002. Cash flow was $294,000, compared with the $1.3 million eaten through in 2002.

During the second quarter, Aurizon’s half-share of production from the Sleeping Giant mine near Amos, Que., was off 18% at 6,873 oz. Total cash cost jumped by US$63 per oz. to US$301 per oz. thanks mostly to a stronger Canadian dollar. The drop off in production is attributed to a switch to selective mining. The new mining method increased average ore grades by 22% to 12.3 grams per tonne; mine operating costs fell to $2.9 million from $3.1 million as about half as many tonnes were milled (17,796 tonnes).

Attributable production in the first-half of the year was 21% better than expected, but slipped 16.5% from a year ago to 14,545 oz.; cash costs rose 23% to US$279 per oz. As planned, ore throughput slipped 30% to 76,320 tonnes.

Aurizon realized US$363 for each oz. produced during the second quarter (up from US$302 per oz. a year earlier), and US$355 per oz. for the first half (up from US$297).

Aurizon expects production at Sleeping Giant to rebound to historic levels during the second half of the year. Full-year production is pegged at 30,500 oz. at US$258 apiece.

An ongoing shaft-deepening program at the mine is aimed at accessing deeper reserves and resources and establishing new drill bases to explore for ore extensions. Aurizon is chipping in $4 million and expects the program to wrap up in the second half of 2004.

Meanwhile, at the Casa Berardi gold project, 100 km north of Rouyn-Noranda, Aurizon has four surface drill rigs testing the eastern extensions of Zone 113 and Zones 118-120 along the Casa Berardi fault.

During the quarter, the company completed 388 metres of drifting and ramping on its way to accessing Zone 113. Aurizon figures the ramp will reach the zone at the 550-metre level in the fourth quarter. When it does, definition drilling will aim to increase grade and ore continuity confidence.

Also during the quarter, inferred resource in zones 118-120 were doubled to 1.7 million tonnes grading 6.1 grams gold, or 331,917 oz. gold, based on a cutoff grade of 3 grams gold per tonne. The zones remain open along strike and at depth. The company is investigating the impact the new resources have on a previously completed feasibility study of the West Mine.

To help fund continued exploration at Casa Berardi and extend the shaft at Sleeping Giant, Aurizon has inked a bought deal with a group of underwriters led by National Bank Financial.

Under the deal, Aurizon will issue the group 10 million units at $2 apiece. The underwriters have also been granted an option on 1.5 million additional, like-priced units. The option is good up until the deal’s closing.

One unit comprises one share plus half a warrant; one warrant is good for one share at $2.50 per share for 2 years. The offering is slated to close by September 10, and is subject to regulatory approvals.

At the end of June, Aurizon had cash and equivalents totalling $11.5 million; the company is debt free.