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Pegasus Output Hits Record High Company Trims Annual Loss, Breaks Even In Final Quarter

Eric Torbenson Staff writer

Spokane-based Pegasus Gold Thursday reported lower losses for 1995 after breaking even for the last quarter of the year.

The mining company produced a record 550,000 ounces of gold, compared with 494,000 ounces produced in 1994.

However, the company expects to produce only 495,000 ounces of gold in 1996 due to new construction at its Mount Todd mine in Australia and the mining out of the Zortman project in Montana.

Pegasus’ break-even fourth quarter compares with a loss of $732,000, or 2 cents a share, during the last quarter of 1994.

For 1995, Pegasus lost $3 million, or 8 cents a share, compared with a 1994 loss of $58.7 million, or $1.69 a share. The 1994 losses included a write-down of $53 million for several mines that would not produce for the company and environmental costs in cleaning up several mine sites.

Pegasus’ cost for producing an ounce of gold dropped from $277 in 1994 to $262 last year. Record production at Pegasus’ five domestic mines offset higher costs at Mount Todd in Australia.

Pegasus acquired all of Mount Todd’s holding company in 1995, increasing its gold reserves substantially. However, a slightly lower gold grade at the mine and the need to idle its mill during a construction project will lower 1996 production to 70,000 ounces. The mine had been expected to produce up to 100,000 ounces.

While Pegasus’ gold production is likely to dip this year, the company will invest in projects and improvements that will move the production well above the 1995 record level by 1998, said Werner G. Nennecker, president and chief executive officer.

Pegasus remains pleased with the progress on settling litigation over its Zortman complex. The state of Montana and several Indian tribes have sued the company over alleged water quality violations. The parties continue to move toward a settlement, the company reported.

The suit will likely be settled in two or three months, Pegasus said. That could allow the company to begin construction on the Zortman Extension project.

, DataTimes