Consolidated earnings of US$20.3 million (17 cents per share) were reported by LAC Minerals (TSE) for 1990, but after a write-down of its mining interests and investments, the company reported a net loss of US$64.3 million (53 cents per share) for the year.
LAC said the writedowns are largely attributable to a re-evaluation of the assets of 65% owned Bond International Gold (TSE). Bond recorded a loss of US$25.4 million (44 cents per share) for 1990. After a writedown, Bond’s net loss for 1990 grew to US$125.4 million ($2.17 per share).
LAC recently made an offer to acquire all of the outstanding shares of Bond it does not own by exchanging 0.53 of a LAC common share for each ordinary share of Bond.
As well, LAC’s board of directors has adopted a shareholder protection rights plan aimed at placing all shareholders on an equal footing in the event of a takeover bid.
LAC’s writedown for 1990 totalled US$84.6 million: US$66 million from writing down assets, mainly exploration proerties, of Bond; $8.8 million from redcing the carrying value of LAC’s 50% interest in the Francoeur gold mine in northwestern Quebec to US$4.7 million from $13.5 million; US$9.6 million from writing off several advanced LAC exploration projects; US$7.5 million from writing down certain of its investments in shares of otehr mining companies to year-end market values; and a gain of US$7.3 million from deferred tax recovery (which lowered the overall writedown).
In 1990, LAC’s total gold production mre than doubled to 785,000 oz., while the avergae cas production cost (net of byproduct credits) dropped to US$251 per oz. from US$278 in 1989.
Total proven and probable gold ore reserves at the end of 1990 stood at 7.7 million oz., down by 650,000 oz. from a year earlier.
During 1990, LAC said it spent US$39.5 million on exploration, about half of which went toward pure exploration.
Bond’s writedown amounted to US$100 million ($1.73 per share): US$84 million related to pxplortion properties and US$16 million related to mining properties.
Bond wrote down by US$15 million (to US$6 million) the value of its Colosseum mine in California. Proven and probable reserves at the mine have been reduced drastically, reflecting a decrease in part in the grade and tonnage in the north pipe. At current production rates, the project could be mined out in three years.
Total gold output in 1990 rose by 27.7% to 628,859 oz., silver production increased to 1.7 million oz., and copper production remained constant from the previous year at about 30,000 tons.
Bond’s average cash cost of production (including byproduct credits) increased to US$244 per oz. from $209 in 1989.
LAC’s offer to acquire all of Bond’s outstanding shares is worth about US$85 million. Bond’s total share float (including LAC’s interest) is about 57.6 million shares.
Shareholders must vote on the rights plan for it to become effective. Under the plan, each shareholder would receive one right for each common share owned. A “hostile” takeover bid would allow rights-holders to acquire additional shares of the company at a 50% discount to the market price, effectively diluting the total shares outstanding.
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