McWatters arranges loan

Val d’Or, Que.-based gold producer McWatters Mining (MCW-T) has tentatively arranged a US$10-million, 4-year loan from Standard Bank London and Canada’s National Bank.

McWatters says the loan, expected to be made available before July, will be used, in part, to repay US$7.5 million owed to Credit Agricole Indosuez New York.

In late January, McWatters closed a rights offering that raised $9.1 million, $6 million of which came from the Fonds Regional de Solidarite. About US$2.5-million was used for debt reduction, while $1.9 million was used to fund a mill expansion at Sigma-Lamaque complex in Val d’Or. There, capacity is being boosted 50% to 3,000 tonnes per day, with completion expected by July 1.

In 1999, McWatters produced 81,932 oz. gold from Sigma-Lamaque and 86,602 oz. gold from the nearby Kiena complex at production costs of US$268 and US$242 per oz., respectively. In 1998, Sigma-Lamaque produced 85,448 oz. at $325 per oz., while Kiena produced 83,807 oz. at US$241 per oz.

Last year, the company posted a net loss of $5.7 million (or 15 per share) on gold revenues of $68.4 million, compared with a loss of $4.5 million (14 per share) on revenue of $73.9 million in 1998.

In the fourth quarter of 1999, McWatters lost $662,048 (2 per share) on gold revenue of $15.9 million, compared with a loss of $2.6 million (7 per share) on revenue of $18.1 million during the corresponding period in 1998.

In the recent fourth quarter, Sigma-Lamaque’s open-pit operations produced 15,605 oz. at a total production cost of US$172 per oz., compared with 3,619 oz. at US$342 per oz. during the last three months of 1998. Also, the company stockpiled 73,000 tonnes of ore (containing about 6,500 oz.) at Sigma during the recent quarter.

In 1999, the company realized an average gold price of just US$275 per oz., compared with US$299 per oz. in the previous year.