FMC Gold slips in first quarter

A decline in production resulted in a first-quarter loss for FMC Gold (NYSE).

The closure of the Royal Mountain King mill, combined with a slowdown in heap leaching at the Paradise Peak mine in Nevada, was largely responsible for the downturn. The company lost US$3.6 million (or 5 cents per share), compared with earnings of US$4.6 million (or 6 cents per share) in the first quarter of 1994.

Sales amounted to US$9.1 million, compared with US$22.3 million a year ago, and FMC cranked out 24,000 oz. of gold, compared with 62,000 oz. in the same period last year. Most of this came from the Jerritt Canyon mine (30% owned by FMC) in Nevada, with residual production at Paradise Peak accounting for 2,000 oz.

Gold production was down at Jerritt Canyon as a result of low throughput, mill ore grades and recoveries.

Meanwhile, reclamation activities continue at Paradise Peak, and production is expected to end in the second quarter.

The average realized price of gold decreased to US$378 from US$383 per oz. between the recent and previous first quarters.

On a positive note, the resolution of a lawsuit surrounding the Beartrack gold project, near Salmon, Idaho, has cleared the way for development to proceed. Production is scheduled to begin during the second quarter.

Good news is also reported from the Penon property in northern Chile. Significant gold and silver mineralization was encountered on the primary target area, where 33 holes intercepted mineralization grading at least 0.13 oz. gold per ton for at least 13 ft. Drilling on a 100-ft spacing along a portion of the primary target has identified an oxide resource with an average grade of 0.25 oz. gold and 4.43 oz. silver per ton. The project, southeast of Antofagasta, consists of 220 sq. miles of wholly owned mining concessions.

The company expects to begin developing an underground decline into the primary target area during the second half of the year in order to confirm mineralization and obtain bulk metallurgical samples.

Meanwhile, drilling continues to identify mineralization at the Rossi gold property on the northern end of the Carlin Trend in Nevada. The material occurs at a depth of 770-1,940 ft., and surface drilling and underground access are required to confirm mineralization indicated by the geological model.