Dayton posts year-end loss

Increased gold production for Vancouver-based Dayton Mining (DAY-T) was no match for higher costs and lower gold prices in 1997.

Dayton’s wholly owned Andacollo open-pit gold mine in Chile produced 91,347 oz. gold at a cash operating cost of US$251 per oz. in 1997, compared with 87,650 oz. at US$205 per oz. the previous year. The company blamed the mining of lower-grade ore, along with higher stripping ratios, for the cost increase.

Dayton has forecast production of 115,000 oz. gold at Andacollo this year at a cash cost of US$231 per oz.

Using a US$350 per oz. gold price, reserves at the beginning of 1998 were estimated at 45.4 million tonnes grading 0.87 gram gold per tonne, for 1.26 million contained ounces of gold. Total resources stand at 132.9 million tonnes grading 0.67 gram. The stripping ratio is 1.87 to 1.

Dayton realized an average selling price of US$402 per oz. gold in 1997. The company’s hedge position in 1998 and 1999 consists of 157,000 oz. of puts at an average price of US$345 per oz. and 27,000 oz. of call options at US$434 per oz.

Low gold prices in 1997 forced Dayton to write down the carrying value of its mining assets to the tune of $24 million. Marketable securities were also written down by $1 million for the year. As a result, the company posted a loss of $27.6 million (or 78cents per share) on $49.6 million in revenue for 1997. Before writedowns, the net loss was $2.6 million. This compares to a net loss of $3.4 million (10cents per share) on revenue of $46 million in 1996.

Cash flow from operations in 1997 was $10.5 million (26cents per share) compared with $9.8 million (28cents per share) for the previous year.

Dayton has about $70 million in cash.