Royalty from McLellan mine should boost Agassiz’s profit

Agassiz Resources reports net earnings of $91,152 for the 3-month pe riod ended Sept 30 on revenue of $3,555,529 compared with net earnings of $238,210 on revenue of $4,346,176 for the same period a year earlier.

The lower profit reflects price decreases and lower production of oil and gas. Agassiz gets most of its revenue from oil and gas and from an industrial mineral (sodium sulphate, used largely as a filler in laundry detergents).

Despite low oil prices, the company made a small profit of just under a million dollars or 15 cents a share in 1986 on revenue of $17.6 million (the company’s fiscal year ends June 30).

Of particular interest for the company’s future earnings is its 7% share of all the gold and silver produced at the MacLellan mine in Manitoba. That’s expected to be about 5,000 oz of gold a year for Agassiz, worth about $2.5 million at current prices.

The 7% royalty means Agassiz gets the gold right off the top — it doesn’t have to pay operating or other costs. In effect, the $2.5 million should go right to the bottom line. If other things remain equal, that would result in per-share earnings of about 50-55 cents next year.

The MacLellan mine just started production in August, so the royalty hasn’t shown up on Agassiz’s financial statements yet. It should begin to show up in the last three months of this calendar year.

The MacLellan mine is owned and run by SherrGold, a subsidiary of Sherritt Gordon Mines.



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