Andacollo liquidation begins (July 02, 2001)

Compania Minera Dayton (CMD), a wholly owned subsidiary of Dayton Mining (DAY-T), has been granted bankruptcy protection for four years.

In May, CMD’s creditors unanimously accepted a creditor’s agreement, which the Court of Andacollo approved.

Under the agreement, CMD will maintain control of the Andacollo mine in central Chile, under the supervision of a 3-member commission. The company must also sell its mine equipment fleet, its 3-stage crushing plant, its overland conveying-stacking system, and other assets. Proceeds from these sales, and from ongoing leaching, will be paid to creditors.

Mining, crushing and stacking operations at Andacollo have been suspended since September 2000.

Between Oct. 1, 2000, and May 31, 2001, the mine produced 35,600 oz. gold from the leaching of stacked material. Leaching continues at the daily rate of 105 oz. gold.

Andacollo was permanently closed in December 2000 because of slumping gold prices combined with low production. The failure is partly the result of a weak reserve model at the Churrumata and Natalia open pits, which resulted in higher stripping ratios and a shortfall in the number of tonnes sent to the leach pad. Also, leaching rates for ore from the Natalia pit were significantly lower than expected.

During the first quarter of 2001, the company suffered a loss of US$1.1 million (3 per share), compared with a loss of US$2.2 million (13 per share) a year earlier. Revenue between the two periods fell to US$3 million from $7.4 million.

Production during this year’s first quarter amounted to 12,190 oz. gold and 86,694 oz. silver at US$269 per oz., net of silver credits.

All the company’s production in 2001 came from its 49% joint-venture interest in the Denton-Rawhide mine, near Fallon, Nev. Production for all of this year is pegged at 49,200 oz. gold and 466,500 oz. silver.