Pegasus posts first-quarter loss

Pegasus Gold (PGU-T) recorded a loss of US$15,000 for the recent first quarter, compared with a profit of US$13,000 for the same period in 1996.

Hedging increased the company’s realized gold price to US$460 per oz., compared with US$428 in the 1996 first quarter. However, the higher prices were offset by an 11% decrease in gold production.

Total gold production between the two periods dropped to 87,486 from 98,160 oz. Pegasus blames the drop on three factors: residual production at the Mt.

Todd mine in Australia, a shutdown at the Zortman mine in Montana, and the mining of lower-grade ore at the Black Pine mine in Idaho.

The Spokane, Wash.-based company ceased mining at Zortman in January 1996, and residual leaching commenced three months later. Also, the Pullalli gold project in Chile was delayed.

“For us, 1996 was a year of heavy capital expenditures,” says company spokesman John Pearson. “Mt. Todd is coming into commercial production [scheduled for the end of June], and we wanted to focus on that.” For the remainder of the year, 78% of gold production, or 377,000 oz., was hedged at a minimum price of $431. “The low gold price doesn’t affect us in the near term, because of our strong hedge position,” President Werner Nennecker told shareholders at the annual meeting in Vancouver. “We hope to do a better job than most in weathering what I hope is [only] a short-Term dip in gold prices.”

As of March 31, the company had US$57.5 million in working capital and US$222 million in long-Term debt. Exploration expenditures for the current year are pegged at US$13 million.