Belmoral Mines looks ahead to improved gold output

Although Belmoral Mines (TSE) had record earnings in 1987, both income and production were lower than expected. The company continues to look ahead, and is projecting gold output of 97,000 oz in 1990.

Belmoral produces gold from two Val d’Or, Que., projects. Total output in 1987 was about 53,000 oz, down from a projected 72,000 oz. The company attributes the lower total to a shortage of working places which resulted in the processing of too much low grade ore.

President Steven Harapiak, addressing his first annual meeting of Belmoral shareholders, said fourth- quarter production, with an average grade of 0.2 oz gold per ton and mill recoveries of 94%, signalled a return to a more normal performance. During the first quarter of 1988, the company produced 13,023 oz gold from 49,829 tons ore grading 0.28 oz. Projected gold output for 1988 is about 50,000 oz.

Ore reserves at the Ferderber and Dumont mines, which make up the company’s Val d’Or operations, amounted to more than one million tons grading 0.24 oz at the end of 1987.

For 1987, Belmoral reported net income of $3.5 million (11 cents per share) on working capital of $32 million, compared with net income of $1.4 million (5 cents per share) on working capital of $5.2 million the year before. The company is debt free with cash reserves of more than $28 million. First-quarter earnings

During the first quarter of 1988, the company recorded net income of $2.3 million (6 cents per share) on sales of $7.8 million, compared with net income of $1 million (4 cents per share) on sales of $8 million for the same period in 1987.

The company’s current production cost is $350(C) per oz.

In addition to its interests in the Wrightbar project which is located in the Val d’Or area, in two Timmins-area projects — the Vedron and Broulan — and in Canreos Minerals (1980) (VSE) and its holdings in the Missanabie area of northern Ontario, Belmoral holds equity positions in Quebec-based Yorbeau Resources (TSE) and Roddy Resources (TSE), owner of the Bighorn heap leach gold mine in Arizona.

Yorbeau reports reserves of 1.4 million tons grading 0.18 oz at its Astoria property which, combined with Belmoral’s Val d’Or tonnage, would give the Belmoral group more than 2.5 million tons of reserves in Quebec.

The Roddy deal provides Belmoral with its first heap leaching venture. The mine is not currently operating but Harapiak indicated it should be back in production by mid-1988. Reserves at the mine stand at one million tons grading 0.059 oz.

The Wrightbar project, Harapiak said, should be in production by the last quarter of this year, with the Vedron project ready to start up shortly thereafter. The Broulan and Astoria properties could possibly be in production towards the end of 1989.

Total gold production by the Belmoral group in 1989 is projected to be 90,000 oz, with Belmoral’s share amounting to 64,000 oz. In 1990, the group is expected to have total output of 113,000 oz, with Belmoral claiming 97,000 oz.

Asked about the current market price (in the $2-$2.20 range) of Belmoral shares, Chairman Kenneth Dalton said he thinks the price should be about double. The main reason for the low price, he said, is the drop in anticipated gold production by the company last year.