Santa Fe records low profits in ’95

Santa Fe Pacific Gold (NYSE) recorded lower earnings in 1995 as a result of decreased production.

The company earned US$39.8 million (or 30 cents per share) in 1995, down from US$56.7 million (46 cents per share) in 1994.

A 15% production decrease at the Twin Creeks gold mine in northern Nevada contributed to low gold sales. Revenue in 1995 was US$350.4 million, down US$24.8 million from 1994.

The company produced 845,796 oz. in 1995 at a cash cost of US$197 per oz., compared with 936,310 oz. at US$184 per oz. in 1994. The loss was partially offset by the fact that the price of gold was up slightly in 1995 to US$406 per oz., from US$398 in 1994.

Santa Fe increased its reserve, however, by 2.5 million oz., or 16%, to 17.9 million oz. during 1995. It will also start production at the Mule Canyon and Trenton Canyon mines in northern Nevada this year. Santa Fe’s production is expected to top 900,000 oz. in 1996.

Santa Fe can earn a 70% interest in the Golden Eagle mine in northeastern Washington state by spending US$7.5 million and completing a feasibility study. Hecla Mining (NYSE) reported a resource of 11.3 million tons grading 0.1 oz. gold per ton at the site.

In addition, Santa Fe has signed a deal with the government of Kazakhstan to explore 7.5 million acres in the northeastern part of the country, and drilling continues at the Gurupi joint-venture project in Maranhao, Brazil. Santa Fe and TVX Gold (TSE) have drilled more than 70 holes and await assay results. In all, Santa Fe plans to increase exploration spending to US$31.2 million in 1996.