El Mochito mine contributor to Breakwater earnings hike

Lower operating costs at Breakwater Resources’ (TSE) El Mochito polymetallic mine in Honduras contributed to higher first-quarter earnings for the Vancouver-based company. Breakwater, which is attempting to diversify from gold to base metal production, had earnings of $3.7 million or 6 cents per share in the three months ended March 31, compared to $2.5 millon or 4 cents per share in the same period last year.

However, first-quarter revenues dropped to $16.9 million from $21.3 million in the equivalent 1989 quarter.

Held by Breakwater’s wholly owned subsidiary American Pacific Mining, El Mochito produced 128,862 tonnes (141,748 tons) of ore grading 7.43% zinc, 1.75% lead, and 2.97 oz. silver during the quarter. That compares with 113,140 tonnes (124,454 tons) of grade 5.88% zinc, 1.65% lead and 2.903 oz. silver in the first three months of 1989.

With cash operating costs standing at $5.4 million or $42 per tonne, El Mochito produced 16,379 tonnes (18,016 tons) of zinc and 2,578 tonnes (2,835 tons) of lead concentrates in the 1990 first quarter.

According to Breakwater, the installation of a conveyor system and continuing ramp development should provide easier access to high-grade ore and reduce costs.

Meanwhile 31,372 oz. gold and 63,475 oz. silver were shipped from Breakwater’s 49% owned Cannon mine in Washington during the quarter compared with 36,414 oz. gold and 83,817 oz. silver in the equivalent 1989 period. In the first three months of 1990, Breakwater realized an average US$412 per oz. for its gold output compared with US$405 last year. The company has sold forward 21,000 oz. of the yellow metal through to Feb. 21, at an average price of US$424 per oz.

Also, Breakwater has agreed to acquire 100% of the Caribou lead- zinc mine in New Brunswick from Bathurst Base Metals through the amalgamation of a Breakwater subsidiary with Bathurst.

Under a proposed agreement that is subject to certain conditions including corporate and regulatory approval, Bathurst shareholders would receive one common share of Breakwater for each 3.75 shares of Bathurst.

With proven reserves standing at 1.9 million tonnes (2.09 million tons) of grade 7.93% zinc and 3.58% lead, the mine is now running at a rate of 2,000 tonnes (2,200 tons) per day. Shaft sinking is also in progress. Breakwater Resources (TSE) $000s except per-share items 3 months ended Mar. 31 1990 1989 Revenue $16,916 $21,280 Net earnings 3,732 2,498

per share 0.06 0.04