Princeton postpones rollback, suffers loss

Poor market conditions have forced Princeton Mining (PMC-T) to postpone a planned 5-for-1 share rollback.

The transaction had been approved previously, but, because of the battering many mining stocks have been facing in the aftermath of the Bre-X Minerals scandal, Princeton decided to put off the rollback until it has an acquisition or merger to announce.

“If we implement the rollback without any good news, the share price could suffer,” President William Myckatyn told reporters after Princeton’s recent annual meeting.

Managers of mutual funds have told Princeton it has too many shares in the market. Currently, the company has 152.9 million shares outstanding. The 60%-owned Huckleberry project, near Smithers in northern British Columbia, is its main asset.

For 1996, Princeton recorded a loss of $16.4 million, which, according to Myckatyn, is attributable to two main factors: the mid-year drop in copper prices and the $10.7-Million writedown in the carrying value of the Similco mine. Before it closed in November 1996, the Similco had produced close to 41 million lb. copper, 29,000 oz. gold and 86,000 oz. silver. Also, the company posted a $2.2-Million loss for the first quarter of 1997.

“The loss is a direct reflection of the fact that we are in the position of not having any revenue until cash starts to flow from the Huckleberry mine,” Myckatyn told shareholders.

An open-pit operation, Huckleberry is being built at a capital cost of $137 million and is scheduled for startup in September. It will produce more than 70 million lb. copper in each of its first two years of production, and, on an annual basis thereafter, 65 million lb. copper, 6,000 oz. gold, 270,000 oz. silver and 1 million lb. molybdenum over a 16-year mine life.

“The Huckleberry project has good economics and will be a long-Term cash generator,” Myckatyn said. “However, in the short to medium term there will not be a large amount of free cash flowing back to Princeton.” Minable reserves at Huckleberry are estimated at 90.4 million tonnes grading 0.51% copper (based on a 0.3% copper cutoff), 0.06 gram gold and 2.18 grams silver. The operator, Huckleberry Mines, is 60%-owned by Princeton and 40% by a consortium of Japanese companies, including Mitsubishi Materials, Dowa Mining, Furukawa and Marubeni.

Meanwhile, market conditions may force Princeton to postpone an initial public offering on Aquest Minerals, the Chilean subsidiary that holds the company’s properties in Chile. Projects there include the Elenita manto copper deposit, the Tierra de Oro gold-copper prospect, the Rio Lluta porphyry copper prospect, and the Nancagua and Milagro gold prospects.