Rayrock writes off Colomac gold mine

A $4.2 million writedown, mainly related to a royalty interest in the floundering Colomac gold mine, has made a dent in the 1990 income of Rayrock Yellowknife Resources (TSE). Net earnings for the year were $2.47 million (24 cents per share) on revenues of $67.5 million compared with $3.17 million (32 cents per share) on revenues of $53.7 million in 1989.

Rayrock has a 1.5-3.5% royalty interest in the Colomac mine near Yellowknife, N.W.T., which is unprofitable at current gold prices. The royalty yields a 1.5% interest on gross production at gold prices of less than US$450 per oz., and increases to 3.5% if the price reaches US$600.

Although the gold producer’s share of production from other projects increased to 51,379 oz. in 1990, a 38% increase over 1989 production, cash operating costs also jumped from US$207 per oz. to US$229. In selling the gold, Rayrock received US$400 per oz. in 1990 compared with US$416 in 1989. Rayrock Yellowknife Resources (TSE) 12 months ended Dec. 31 1990 1989 Revenue $67,500 $53,700 Net earnings 2,469 3,171 per share 0.24 0.32