Writedowns cut into Geomaque’s year

Non-cash writedowns forced Geomaque Explorations (GEO-T) to post a loss of US$13.6 million (or US25 per share) for 2000.

The writedowns resulted from reductions in the carrying value of the Vueltas del Rio mine in Honduras, inventory at the San Francisco mine in Mexico, and other exploration properties

The loss follows a US$20-million loss (US42 per share) in 1999. Revenue between 1999 and 2000 increased from US$20.6 million in 1999 to US$21.2 million in 2000.

During 2000, the San Francisco mine churned out a record 69,544 oz. at US$310 per oz., 7% higher than the 65,084 oz. poured in 1999. To boost cash flow at the mine, the company adjusted its mine plan to encompass the San Francisco pit and near-surface reserves at the La Chicharra deposit (1.6 million tonnes grading 1.2 grams gold per tonne), 1.5 km to the west.

San Francisco switched to leach-only mode in mid-November. The move helped boost cash flow from operations during 2000 to US$2.9 million from US$717,000 in 1999. Leaching at San Francisco will continue throughout 2001, with the pads expected to recover 18,000 oz. gold.

Mining began at Vueltas del Rio in December 2000, and the first gold was poured in early March 2001. The grade in the first four benches mined was significantly higher than expected, and the ore is leaching well. Geomaque expects Vueltas del Rio to produce 56,000 oz. gold in 2001.

Three of the six most recent holes sunk on Geomaque’s Marathon palladium project in Ontario cut significant values. The holes are part of a 15-hole, 3,000-metre exploration and infill drilling program aimed at updating and augmenting existing data in preparation for a bankable feasibility study. The three mineralized intersections were:

– hole G9, which cut 16 metres (from 58 metres below surface) grading 1.78 grams palladium and 0.54 gram platinum per tonne, plus 0.43% copper;

– hole G8, which cut 28 metres (from 17 metres) grading 1.12 grams palladium, 0.3 gram platinum plus 0.27% copper; and

– hole G7, which cut 6 metres (from 6 metres) of 0.98 gram palladium, 0.15 gram platinum plus 0.13% copper.

A 1989 prefeasibility study by BHP Engineering pegged resources at 37 million tonnes grading 1.1 grams palladium, 0.27 gram platinum, 1.85 grams silver, 0.21 gram gold, 0.38% copper and 0.032% nickel. The deposit was considered amenable to open-pit mining and conventional milling. At the time, operating costs were pegged at $11 per tonne and smelter revenue of $18 per tonne at an annual production rate of 2 million tonnes.

Geomaque can earn a 60% interest in the project from Polymet Mining (POM-V) by spending $2.7 million on exploration and $1 million in cash over four years.

The company’s cash position at the end of 2000 was US$2 million, up from US$927,000 at the end of 1999.