Slipping Sleeper lowers Amax Gold’s ’91 earnings

Net earnings for the year ended Dec. 31, 1991, slipped about 25% for miner Amax Gold (NYSE).

The company reports net earnings of US$21.2 million, or 35 cents per share, compared with earnings of US$28.3 million, or 47 cents per share, for 1990. Amax attributes the drop in earnings to lower production at its Sleeper mine in Nevada as well as to an increase in exploration expenditures. Heap leach and mill production at the Sleeper mine totalled 183,346 oz. compared with 250,131 oz. for fiscal 1990. The company noted that the primary reason for the lower output was a drop in millhead grade to an average of about 0.22 oz. gold per ton from 0.38 oz. the year before. As a result, the average cash cost of production at the Sleeper mine increased to US$188 per oz. from US$125.

Cash production costs at Sleeper for the fourth quarter were even higher at about US$245 per oz.

Overall exploration expenditures increased to US$14 million in 1991 compared with US$9.4 million in 1990.

Total gold production from Amax’s three mining operations amounted to 300,233 oz., down from 354,859 oz. in 1990. The average overall cash production cost was US$195 per oz. during the year, up substantially from an average cash cost of US$147 in 1990.

Following the acquisition of the Fort Knox gold deposit near Fairbanks, Alaska, Amax estimates its total minable reserves at over 6.1 million oz. Fort Knox contains an estimated minable reserve of 122.5 million tons grading 0.026 oz. gold and the company expects to bring the project on stream by late 1994 or early 1995.

The company also expects to begin production at its Hayden Hill mill and heap leach project in California during the second quarter of this year. Minable oxide heap leach reserves are estimated at 35.5 million tons grading 0.017 oz. gold while mill reserves stand at about 9.4 million tons grading 0.086 oz. gold.

Remaining minable reserves at the Sleeper mine are estimated at 3.5 million of mill ore grading 0.15 oz. gold and 38.6 million tons of heap leach material grading 0.022 oz. gold.

For the fourth quarter ended Dec. 31, 1991, Amax reports earnings of US$300,000 compared with earnings of US$12.2 million in the year-earlier period.

The drop in head-grades at the Sleeper mine and slightly higher exploration expenditures were primarily responsible for the decline. Gold output from the Sleeper mine during the fourth quarter amounted

to 36,151 oz. compared with 62,620 oz. in same period of 1990. Exploration expenditures in the fourth quarter were US$4.3 million, up from US$3.2 million in the fourth quarter of 1990.