A drop in head grades at the Lawyers mine in north-central British Columbia pushed first-half results into the red for mine owner, Cheni Gold Mines (TSE).
The company reported a loss of $1.7 million for the first six months of 1991, compared to net earnings of $2.5 million for the comparable period in 1990.
Revenues in the first half dropped to $10.4 million from $16.3 million in the same period last year. The company’s hedging program resulted in an average realized price of US$403 per oz. for gold and US$5 per oz. for silver. This compares with an average spot price of US$366 per oz. for gold and US$4 per oz. for silver in the year-earlier period.
Head grades averaged 0.22 oz. gold and 4.75 oz. silver per ton, compared with an average of 0.29 oz. gold and 8.08 oz. silver during the first six months of 1990.
Operating costs were negatively affected by the drop in grade, increasing to US$322 per oz. of gold equivalent from US$196 per oz. during the same period in 1990.
Despite the losses, the company managed to generate a positive cash flow of $819,000 for the 6-month period. Cheni reported a cash flow of $5.96 million in the first six months of 1990.
As at June 30, Cheni had working capital of about $2 million and long-term debt of about $8.4 million.
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