August 4, 1995 in Nation/World

Gold Glitters For Local Mining Companies Yellow Metal Helps Boost Profits During Slump In Silver Prices

Eric Torbenson Staff writer
 

Local mining companies historically linked to silver are looking more to gold to keep their bottom lines shining.

Companies like Coeur d’Alene Mines Corp. and Hecla Mining Co. have added gold mines and set records for gold production last quarter.

Coeur brought in a record 78,000 ounces of gold last quarter, helping the company turn a profit.

“On a revenue basis, gold has been more of a revenue generator for us than silver,” said Tony Ebersole, director of investor relations for the Coeur d’Alene-based company. “You don’t have to produce as much.”

An ounce of gold worth $380 provides a much greater profit margin than a $5 ounce of silver. Plus, the price of gold has remained relatively steady between $380 and $390 in recent years. Silver has swooned as low as $4.30 and has risen as high as $6 an ounce, a more than 30 percent swing.

Hecla has benefited from its La Choya gold mine in Mexico and its large Grouse Creek gold project in central Idaho. Both increased production and lowered the cost of producing gold in the first half of the year, according to company reports.

“Since the margin on gold can be wider, it makes economic sense for us to take advantage of our gold properties,” said Vicki Veltkamp, manager of corporate communications for Hecla.

A look at the kinds of properties local mining companies are buying suggests that gold will play increasingly larger roles in their futures.

Coeur has purchased two Chilean gold/silver mines, the Golden Cross gold mine in New Zealand and recently bought out Echo Bay Mines’ share of the promising Kensington gold property in Alaska.

Hecla has the Rosebud project in Nevada and American Girl gold property in Southern California to complement Grouse Creek and La Choya.

“We’re always going to be associated with being a silver producer,” Veltkamp said. “But we’re going to continue to have that balance of gold properties as well.”

Sunshine Mining & Refining Co. mines only silver now at its Sunshine Mine in Big Creek, Idaho. That is reflected in Sunshine’s earnings, which have suffered compared with more diversified mining companies.

But Sunshine has opened exploration offices in South America and has won claims to gold properties in Peru and Argentina.

Likewise, Spokane-based Pegasus Gold has increased its gold reserves to break out of an earnings slump. Pegasus recently bought out the remaining interest in the Mount Todd gold mine in Australia, which will produce an expected 85,000 ounces of gold this year.

Ebersole said another reason for the acquisition of gold properties is the lack of true silver mines. Coeur and Asarco Inc. own two idled mines in Idaho’s Silver Valley that may reopen if prices improve.

“Silver more and more is becoming a byproduct of mining other metals,” he said. “There’s just a lot more gold properties out there. We think of ourselves as both a silver and gold producer.”

, DataTimes ILLUSTRATION: Graphic: Golden earnings

MEMO: This graphic appeared with the story: GOLDEN EARNINGS Mining companies with significant gold operations have shown improved earnings this year, reflecting higher gold prices and increased production.

HECLA MINING CO. Earnings (in millions) 2nd Quarter 1994: -$1.3 2nd Quarter 1995: $0.2 First half 1994: -$9.0 First half 1995: -$4.2

Gold production (in thousands of ounces) 2nd Quarter 1994: 36.6 2nd Quarter 1995: 30.4 First half 1994: 50.2 First half 1995: 75.6

COEUR D’ALENE MINES CORP. Earnings (in millions) 2nd Quarter 1994: -$1.3 2nd Quarter 1995: $3.4 First half 1994: -$3.9 First half 1995: $0.2

Gold production (in thousands of ounces) 2rd Quarter 1994: 31.5 2nd Quarter 1995: 41.8 First half 1994: 63.1 First half 1995: 78.4

PEGASUS GOLD CORP. Earnings (in millions) * 2nd Quarter 1994: -$57.1 2nd Quarter 1995: -$1.2 * First half 1994: -$58.8 First half 1995: -$3.0

Gold production (in thousands of ounces) 2nd Quarter 1994: 129.3 2nd Quarter 1995: 132.1 First half 1994: 215.8 First half 1995: 254.3

ASARCO INC. Earnings (in millions) 2nd Quarter 1994: $5.4 2nd Quarter 1995: $56.4 First half 1994: $32.0 First half 1995: $122.0

Gold Production In thousands of ounces) 2nd Quarter 1994: 64 2nd Quarter 1995: 76.7 First half 1994: 130.4 First half 1995: 149.9

SUNSHINE MINING & REFINING CO. Earnings (in millions) 2nd Quarter 1994: -$1.1 2nd Quarter 1995: -$4.6 First half 1994: $2.1 First half 1995: -$8.2

NOTE: Sunshine Mining & Refining Co. has no gold production. Sunshine makes only silver.

* Pegasus Gold Corp. ‘94 quarter reflects one-time charge of $52.9 million

Source: Quarterly earnings reports Staff graphic

This graphic appeared with the story: GOLDEN EARNINGS Mining companies with significant gold operations have shown improved earnings this year, reflecting higher gold prices and increased production.

HECLA MINING CO. Earnings (in millions) 2nd Quarter 1994: -$1.3 2nd Quarter 1995: $0.2 First half 1994: -$9.0 First half 1995: -$4.2

Gold production (in thousands of ounces) 2nd Quarter 1994: 36.6 2nd Quarter 1995: 30.4 First half 1994: 50.2 First half 1995: 75.6

COEUR D’ALENE MINES CORP. Earnings (in millions) 2nd Quarter 1994: -$1.3 2nd Quarter 1995: $3.4 First half 1994: -$3.9 First half 1995: $0.2

Gold production (in thousands of ounces) 2rd Quarter 1994: 31.5 2nd Quarter 1995: 41.8 First half 1994: 63.1 First half 1995: 78.4

PEGASUS GOLD CORP. Earnings (in millions) * 2nd Quarter 1994: -$57.1 2nd Quarter 1995: -$1.2 * First half 1994: -$58.8 First half 1995: -$3.0

Gold production (in thousands of ounces) 2nd Quarter 1994: 129.3 2nd Quarter 1995: 132.1 First half 1994: 215.8 First half 1995: 254.3

ASARCO INC. Earnings (in millions) 2nd Quarter 1994: $5.4 2nd Quarter 1995: $56.4 First half 1994: $32.0 First half 1995: $122.0

Gold Production In thousands of ounces) 2nd Quarter 1994: 64 2nd Quarter 1995: 76.7 First half 1994: 130.4 First half 1995: 149.9

SUNSHINE MINING & REFINING CO. Earnings (in millions) 2nd Quarter 1994: -$1.1 2nd Quarter 1995: -$4.6 First half 1994: $2.1 First half 1995: -$8.2

NOTE: Sunshine Mining & Refining Co. has no gold production. Sunshine makes only silver.

* Pegasus Gold Corp. ‘94 quarter reflects one-time charge of $52.9 million

Source: Quarterly earnings reports Staff graphic


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