Treminco reports successful year even though small loss was taken

Although Treminco Resources (TSE) reported a net loss of $70,000 for the year ended July 31, cash flow was $1.61 million. This compares with net income of $317,000 and cash flow of $1.96 million in 1989. For the three months ended Oct. 30, Treminco lost $21,000 on revenues of $3.7 million. Cash flow for the period was $450,000 or about 7 cents per share.

Treminco went through some significant changes in 1990. The year marked the first full year of production for the company’s new mill at the Ptarmigan underground gold mine in the Northwest Territories, as well as the acquisition of the Silvana zinc-lead-silver mine in southeastern British Columbia.

The Ptarmigan operation milled 63,000 tons of ore to produce 17,955 oz. of gold for an operating profit of $1.6 million on revenues of $7.2 million. The company was somewhat disappointed in the results however, as it had forecast production of 24,000 oz. for the year.

The shortfall was a result of lower than expected head grades and tonnages. Head grades averaged 0.30 oz. per ton over the year, compared with 0.46 oz. in 1989. Lower than targeted tonnage was related to what the company referred to as the difficulties inherent in developing and mining narrow vein deposits.

Roland Trenaman, president of the company, projected gold production will reach 22,000 oz. this year. He said the development of the C vein should alleviate production shortfalls from the mine. The C vein is about half a mile from the main Ptarmigan vein and has been accessible by a ramp to the 400-ft. level.

Production for the year was more than covered by the addition of 110,000 tons to reserves which at year-end totalled 162,000 tons grading 0.32 oz. gold per ton.

The Silvana mine, purchased in November, 1989, realized an operating profit of $1.2 million on revenues of $9 million. The operation milled 24,000 tons of ore at an average grade of 7% zinc, 7% lead, and 15.2 oz. silver. Metal production totalled 3.03 million lb. zinc, 3.18 million lb. lead, and 342,000 oz. silver.

Reserves at the Silvana as at July 31, 1990, stood at 42,700 tons grading an average of 5.4% zinc, 4.1% lead, and 10.5 oz. silver.

A major objective of the company in the coming year will be to outline new reserves on the property. If reserves are not replaced, at current mining rates the mine will be exhausted by mid-1991.

Treminco recently completed the purchase of the Willa property near New Denver, B.C., from Northair Mines (TSE). The company plans to conduct a test mining program on the property this year to test grade and continuity between the 1025 and 1100 levels (about 250 ft.). The Willa is estimated to contain a core of reserves totalling 200,000 tons grading 0.25 oz. gold.

If the test program is successful, Trenaman estimated a mine and mill could be up and running within a year at a cost of about $2 million.

With the additional debt from the purchase of the Silvana mine and the construction of a mill at Ptarmigan, interest costs for the year jumped over $300,000 to about $380,000.

After paying down $409,000 in debt in 1990 and $126,000 in the first quarter of fiscal 1991, as at Oct. 31, long-term debt stands at $396,000 and the company has a working capital deficit of about $1.4 million. Treminco Resources (TSE) 12 months ended July 31 1990 1989 Revenue $13,281 $7,838 Net earnings (loss) (70) 317

per share (0.01) 0.05 3 months ended Oct. 31 Revenue $3,738 $1,513 Net earnings (loss) (21) (243)

per share nil (0.04)