Gold price erodes Inter-Rock profits

For Inter-Rock Gold (IRO-T), low gold prices translated into a loss of $1.8 million (or 11cents per share) for 1997.

Revenue for the year amounted to $6.3 million, which was entirely derived from the sale of gold produced at the company’s 65%-owned Daisy gold mine in southwestern Nevada.

In response to low prices for the yellow metal, Inter-Rock sought to lower its per-ounce cash production cost, which was $301 per oz. gold in 1997. The company expects this figure to drop to $240 per oz. gold this year.

The Daisy mine was completed at the beginning of 1997, on time and below the forecast cost. By July, Inter-Rock and its partner, Rayrock Yellowknife Resources (RAY-T), which holds a 35% interest in the mine and serves as operator, had achieved the monthly target production rate of 2,500 oz. gold.

By year-end, production of 30,524 oz. had exceeded (by more than 6%) the forecast of 28,755 oz.

Proven and probable reserves at Daisy stand at 89,334 oz., compared with 215,700 oz. at the end of 1996. The reduction was due to lower gold prices, which have rendered some former reserves sub-economic.

The company has a working capital deficiency of $480,000.

Mining plans for the current year are focused on the Secret Pass and Mother Lode deposits.

In February, Inter-Rock acquired the Reward claims, which lie 10 km southwest of the Daisy mine. The reserve potential of these claims is now being assessed.