Dayton works to reverse falling profits

Higher costs and lower production have driven Dayton Mining (DAY-T) deeper into the red.

For the three months ended June 30, the company lost $3.9 million (or 13 cents per share) on revenue of $8.9 million, compared with losses of $730,000 (5 cents per share) on $12.7 million in the equivalent period in 1997.

Gold production from the Andacollo open-pit mine in central Chile dropped to 18,804 oz. in the recent quarter from 23,895 oz. in the year-ago period. Cash costs, on the other hand, increased $33 to US$271 per oz., while production was sold for $77 less at US$325 per oz.

Consultants are assessing grade control techniques at the mine and considering how to increase crusher throughput. Dayton expects this work will improve operating performance.

At last report, reserves at Andacollo were pegged at 45.41 million tonnes averaging 0.87 gram gold per tonne. This is based on a cutoff grade of 0.3 gram gold, a gold price of US$350 per oz. and an average life-of-mine stripping ratio of 1.87-to-1.

Stripping ratios are currently higher than this; consequently, the company has changed its accounting policy to allocate mining costs based on the life-of-mine average.