Low gold sales take shine off Rayrock earnings

Poor third-quarter results took the shine off an otherwise improved year for Rayrock Yellowknife Resources (RAY-T).

The company lost US$1.8 million (or 10 cents per share) for the period, compared with a loss of US$800,000 (4 cents per share) for the same period in 1995.

Third-quarter revenue amounted to US$21.1 million, compared with US$23.8 million a year ago.

The higher third-quarter loss is due mainly to lower gold sales in 1996.

Rayrock’s share of gold sales from its three producing mines decreased to 20,935 oz. from 29,076 in the comparable period last year.

The company owns 100% of the Dee mine, 66% of the Marigold mine and 26.5% of the Pinson mine, all of which produce gold in Nevada.

The Marigold mill lay dormant through most of the quarter, thus accounting for much of the drop in sales. However, reserves at Marigold were boosted 23% to 648,000 oz., and the mine reopened in September.

Third-quarter gold sales from the Dee mine rose by almost 60% over 1995 values. The lawsuit involving the adjacent Rossi property of Meridian Gold (MNG-T) was settled and, as a result, Rayrock will be permitted to deepen and extend its pit northward — provided it pays Meridian a 5% royalty for any gold that originated on the Rossi property.

At the Pinson mine, higher throughput was offset by lower grades, resulting in a 13% drop in gold production.

Meanwhile, at Rayrock’s 35%-held Daisy gold project in southwest Nevada, construction remains on track for completion by January at a budgeted cost of US$6.7 million. Production is slated for early 1997 at 30,000 oz. gold per year over a projected 6-year mine life.

Meanwhile, Minera Rayrock, of which Rayrock Yellowknife Resources owns 37.5%, has hit capacity production volume at its Ivan copper mine in Chile. Cathode copper production at the site amounted to 16.6 million lb. in the first nine months of 1996, compared with 13.5 million lb. in the same period last year.