Losses mounting for Princeton

Red ink at the Similco Mines division continues to stain Princeton Mining (TSE), which lost $5.3 million in the second quarter ended June 30.

Drooping copper prices and operational problems at its Similco copper mine near Princeton, B.C., were the main cause of losses which totaled more than $9.2 million for the first half of 1993. Similco’s net loss was $4.8 million in the second quarter, swelling to $7.2 million for the first half. Copper-in-concentrate production was 14.9 million lb. in the second quarter compared with 15.2 million lb. in the same period last year. June copper production of about one million pounds was less than expected. The shortfall was triggered by a lightning strike which caused three grinding mill motors to fail.

A drop in the price of copper to the US80 cents-per-lb. level in June prompted the company to suspend operations at Similco beginning Sept. 10. Robert Watts, chief financial officer, said the price of copper averaged about US$1.02 per lb. in the first quarter, dropping to about US90 cents for the second.

There is, however, a chance the operation could continue. Similco is consulting with the British Columbia job commissioner in an attempt to lower costs and thereby maintain production. The key topic under discussion is a potential deferral of a portion of Similco’s energy costs, Watts said. The mine’s power bill is about $900,000 per month and Princeton is hoping for a deferral of the payments in the order of 50%. (Also being negotiated is a deferral of a portion of the property taxes which total about $350,000 per year.)

As of June 30, Princeton had about $3 million in working capital, $14.7 million in long-term debt and 35.9 million shares outstanding. The long-term debt includes $12 million in 10% convertible debentures, with the balance made up of bank loans secured by the company’s Teranov Mining (owner of a wet milling project in Newfoundland).

Princeton hopes to joint-venture its Rio Lluta copper project in Chile and has had discussions with major companies to that effect.

Further work on the recently acquired stratiform oxide copper project northeast of Antofagasta, Chile, will depend on the company’s ability to raise additional funds.