Fourth quarter offsets losses for Equity Silver

With revenues totalling some $63.7 million, Equity Silver Mines managed to post a modest profit of $22,000 last year, compared to $230,000 in 1985. Fourth-quarter earnings of $605,000 offset losses incurred in the first nine months, noted A. J. Petrina, president. Those earnings included “favorable sales tax adjustments and silver loan gains,” he added.

Cash flow was $22.2 million and Equity’s cash position at year-end was approximately $6.8 million after capital expenditures of $7.7 million for plant expansion and a $4.3- million reduction in the company’s bank loan.

Silver prices weakened during the year and averaged $5.47(US) per oz but gold prices were higher and averaged $368. Increased mill throughput and precious metal forward sales contracts helped mitigate the lower silver prices as did the weaker Canadian dollar, he said.

The expanded milling facility, which was commissioned in June, allowed main zone ore to be treated more economically during the second half. Mill throughput averaged 10,700 tons per day and the final cost of the expansion was $10.8 million, Mr Petrina said. The company has entered into a lease agreement to replace part of its haulage fleet as a means of reducing operating costs. Initial deliveries will begin early this year.

Equity has entered into forward sales contracts to sell 56,000 oz gold at an average price of $420 over a 14-month period and 442,000 oz silver at $6 over a 2-month period.

Exploration work is planned this year around the mine where encouraging assay results were obtained from drilling in the fourth quarter. Some off-property exploration is also planned and it won’t be restricted to British Columbia, he said. Up to $5 million in flow- through funds will be made available and a general manager of exploration has been appointed.