The third quarter of 1999 was another bad one for
The considerable size of Vengold’s recent loss is attributable to the sale of its interests in
The disposal of 12.7% interest in Australian-listed Lihir for US$117 million rebounded as a loss of US$47.1 million. A smaller investment in Niugini, sold for US$6.8 million, incurred a loss of US$7.2 million. Interest expenses took another US$10.1 million off the earnings statement, and foreign-exchange losses hit the company for US$7.5 million.
However, the asset sales did allow Vengold to clear about US$105 million in debt and repay about US$10 million on a continuing loan facility. Vengold now has US$11.7 million in cash and indirectly holds 53.8 million shares, or 5%, of Lihir. On Nov. 8, these shares had a market value of about US$40 million.
Vengold produced a record 188,000 oz. in the quarter thanks to improvements in equipment and efficiencies at the Lihir gold mine in Papua New Guinea. Expenses incurred in fixing the operation’s autoclave circuit brought Lihir’s cash costs to US$225 per oz. for the first nine months of 1999, up from US$199 during the year-ago period.
Third-quarter earnings from mining operations rang in at US$298,323, compared with US$195,827 a year ago. Meanwhile, Vengold’s average realized price of gold rose to US$357 from US$349 per oz. between the two periods.
The company expects to have produced more than 600,000 oz. gold before the end of 1999.
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