Lac earnings improve on higher prices and output

A combination of stronger gold prices and increased gold production has enabled Lac Minerals to chalk up an impressive quarter. For the second quarter ended June 30, the company realized total earnings of $18.1 million or 63 cents per share, up markedly from first quarter earnings of 21 cents per share. Also, buoyed by a firm price for its shares, Lac is going to the market with a two million share offering expected to raise $88 million. Priced at $44 per share, the financing is required for capital projects planned for the near future. First half gold production of 256,555 oz, which is up 11% compared to production during the same period last year, combined with higher bullion prices are being cited by management as the reasons for the improvement in performance. During the period Lac realized an average price of $426 (US) per oz of gold compared to $338 per oz a year earlier.

For the half, the company generated revenues of $148.8 million and earnings of $23.9 million or 84 cents per share. In the corresponding period last year, Lac realized earnings of $4.9 million or 17 cents per share.

As a result of the pending appeal decision concerning the disputed Page-Williams gold mine at Hemlo, Ont., Lac presents financial data with and without the mine. Taking the Page-Williams mine out of the financial results, Lac had first half earnings of $12.2 million or 42 cents per share. For the quarter, earnings were $11.2 million or 39 cents per share.

In an effort to build reserves and, if required, partially replace lost reserves from the Page-Williams mine if the appeal fails to overturn the original court decision, Lac plans to develop its Bousquet No. 2 mine in Quebec. Scheduled to enter production by the end of 1990, the mine will yield approximately 125,000 oz of gold per year. A large part of the $88 million financing is expected to go towards a part of the $60 million capital expenditure planned at Bousquet.