NEVADA & THE WESTERN STATES — Olinghouse weathers rough startup

Following a dismal fourth quarter in 1998, Alta Gold (ALTA-Q) returned to profitable form in the first three months of this year.

Income for the period ended March 31 totalled US$30,000 (or nil per share), compared with US$366,000 (1 cents per share) in the corresponding period in 1998.

The fourth-quarter loss amounted to US$9.6 million (29 cents per share), including a US$9.3-million writedown. Contributing to the loss was a poor performance by the new Olinghouse gold mine, 30 miles east of Reno, Nev., where clogged drip lines on the heap-leach pad slowed gold recovery, sending cash operating costs beyond US$400 per oz. Also, the mine got a late start in December as Alta awaited final permits from Washoe Cty.

The loss prevented Alta from meeting its financial obligations, and the company filed for bankruptcy protection in April in order to restructure its debt. The Nasdaq subsequently halted trading as the stock plunged to US50 cents from US$1 per share.

Trading of shares has yet to resume, and if Alta cannot convince Nasdaq that its troubles are over, the company will be delisted from the National Market, with trading to be resumed on over-the-counter bulletin boards.

Alta intends to demonstrate to Nasdaq that production has improved dramatically since it fixed the clogged drip lines. During the first quarter of 1999, the company mined 690,000 tons averaging 0.037 oz. per ton. Gold production reached 7,917 oz., whereas cash costs dropped to US$265 per oz.

Alta has increased capacity at the mill to 2,000 tons per day in an attempt to pull down cash costs to the previously projected US$200 per oz. Annual production is expected to remain at 100,000 oz.

Meanwhile, near Ely, Nev., Alta has ceased operations at the Griffon gold mine as it waits for the U.S. Forest Service to approve an expansion plan.

Alta President Robert Pratt says production is unlikely to resume before 2000, possibly even later if gold stays at current levels.

In the first quarter, the company mined 449,000 tons of ore, from which 12,230 oz. were produced at a cash cost of US$146 per oz.