Kerr Addison reports small loss during half

Kerr Addison Mines has reported that high mineral exploration and interest costs contributed to a small loss from operations during the first half of 1987.

The company reported net income of $17.3 million, or $1 per share for the 6-month period ending June 30. That compares with 15 cents per share during the same period last year. Net income for the second quarter of 1987 included a gain of $13.2 million from the sale of the company’s 24% equity interest in Mining Finance Corp to Brohm Resources.

Production revenues and operating income increased over the first six months of 1987 due to the inclusion of the operating results from Minnova Inc., which was acquired by Kerr Addison in August, 1986.

According to Treasurer A. H. Cross, gold production was 60,000 oz, compared to 24,000 oz during the same period in 1986. He said the increase was due to the addition of the Lac Shortt and Opemiska mines.

Located in Chapais, Que., the Opemiska division produced 39,586 oz gold, 112,825 oz silver and 12 million lb copper during 1986. The Lac Shortt division located 115 km further west, treated an average 1,095 tons of ore per day totalling 399,647 tonnes grading 0.155 oz in 1986.

Results from Canadian Electyrolytic Zinc (cez) were better due to higher production volumes and prices. Noranda Inc. in which this company holds a 5% interest, has reported substantially improved earnings during the second quart er.

“Although oil prices have been stronger than anticipated during the first half, markets for natural gas and natural gas liquids have been particularly weak in Canada,” said Mr Cross

“This has adversely affected Canadian Hunter’s first half earnings,” he said. Kerr Addison has a 13% interest in production from all of Canadian Hunter’s oil and gas properties and a 9.8% interest in cez. Both companies are operated by Noranda.

Nevertheless, according to Kerr Addison, results from Calgary- based Anderson Exploration have improved due to stronger markets for contracted Canadian natural gas in northern California.

On June 30, the Kerr Addison mine and mill complex at Virginiatown, Ont., together with additional interests in nearby exploration properties, were sold to Golden Shield Resources.

In addition to cash and other considerations totalling $20 million, the company received five million shares of Golden Shield, or approximately 30% of its currently issued capital stock, and options to increase this equity interest.

Recognition of the gain from this transaction has been deferred.

Cash flow from all sources was $66 million for the first half of 1987 and included $47.4 million in net proceeds from the sale of investments and other assets. Capital expenditures added up to $31.6 million, of which $26.7 million was spent on mining projects and $4.9 million on oil and gas exploration and development. Total debt was reduced by $40 million, to a balance of $10 million on June 30.

The company said cash and short-term deposits amounted to $61.9 million at the end of the half.

A cash dividend of 15 cents per share was declared payable Sept 10, to shareholders of record on Aug 14.