FMC first in North America in return on investment

Addressing the company’s annual meeting in San Francisco earlier this month, Raymond Tower, chairman and chief executive officer, noted that 1988 cash costs averaged $122 per oz gold equivalent, compared to the North American average of more than $200 per oz. The Paradise Peak operation in Nevada, the company’s major mine, had an operating cost of $94 per gold equivalent ounce.

“High ore grades and low stripping ratios, combined with extraction and processing efficiencies, contribute to this low production cost,” he said.

Last year, sales of 332,000 oz gold and more than four million oz of silver placed FMC among the largest gold and silver producers in the United States, he emphasized. The company’s historical finding costs have been under $20 per oz, “significantly below the industry average,” he added.

In 1988, FMC spent more than $13 million for exploration in the United States, about two-thirds of it geared towards grassroots exploration. At present, 31 gold prospects are in inventory, most of them in the western United States.

Exploration has expanded reserves at Paradise Peak and at Jerritt Canyon where its portion of gold reserves increased 245,000 oz last year. In total, 88% of the company’s 1988 production was replaced by new reserves, he boasted.

Innovative technology is used by the company to optimize production at its mines. Recovery rates are very high at Paradise Peak where the company introduced a dripper heap leach system to extract gold and silver from previously uneconomic waste material. A new roasting system was completed at Jerritt Canyon this year which “will also increase production and lower future operating costs,” he said.

FMC has a 100% interest in Paradise Peak, which produced 229,000 oz gold and 4.3 million oz silver in 1988. Jerritt Canyon (FMC 30%) and the Austin mine (27.6% interest) produced 93,000 oz and 9,000 oz respectively, slightly lower than the previous year.

Gold sales were 12% higher in 1988 and so was net income which jumped to $61 million or 93 cents per share from $50 million or 76 cents in 1987. After capital improvements, cash flow was $51 million which enabled the company to retire its debt to FMC Corp. At year end, cash and cash equivalents amounted to $15 million.

This year the company expects to produce 300,000 oz gold and more than six million oz silver with average costs remaining at 1988 levels.

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