The money kept rolling in for both Franco-Nevada Mining (FN-T) and Euro-Nevada Mining (EN-T) during the last fiscal quarter, though the low gold price did take a bite out of both companies’ bottom lines.
For the quarter ended June 30, 1998, Franco posted net earnings of $10 million (or 13 cents per share) on revenue of $17.4 million, compared with $12.9 million (17 cents per share) on revenue of $22.2 million for the corresponding period last year.
Franco attributes the lower earnings to a 5% reduction in gold output at the Betze-Post mine in Nevada and a 13% fall in the price of gold. The company notes, however, that the fall of the Canadian dollar relative to the U.S. currency generated a $10-million (12 cents per share, after tax) foreign exchange gain during the quarter, a gain that has not been reflected in income.
Meanwhile, Euro-Nevada recorded net earnings of $5.8 million (6 cents per share) on revenue of $12.1 million, compared with $6.3 million (7 cents per share) on revenue of $12.6 million in the corresponding quarter of last year.
Increased production from Euro’s Meikle mine royalty was not enough to offset a 13% decline in the gold price and lower gold production at several of Euro-Nevada’s smaller royalty properties. However, the company expects the trend to reverse itself in the coming months, with the Ken Snyder mine entering production and Getchell benefitting from its new Turquoise Ridge mine. Also, higher production is forecast for the Meikle mine.
For its part, Euro generated a $6.1-million (6 cents per share) foreign exchange gain during the recent quarter, though, again, the gain is not reflected in income.
The companies report that development of the Ken Snyder mine in Nevada is proceeding on time and on budget, with startup scheduled for the end of this fiscal year.
Franco and Euro are both debt-free and have enviable working-capital positions of $408.5 million and $349.9 million, respectively.
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