Coeur d’Alene Mines Corp. moved closer Monday to deciding whether to develop its massive Kensington gold mine in Alaska after receiving crucial permits for the project.
The news follows the company’s fourth quarter 1996 and year-long earnings report, which showed an improving cost outlook at its gold and silver mines.
Coeur now has final environmental permits from Alaskan state agencies and awaits approvals from local officials to begin building the mine, which could produce up to 200,000 ounces of gold for Coeur. The company produced a total of 214,000 ounces in 1996.
On the earnings front, Coeur showed a small profit of $300,000 for the fourth quarter compared with a $1.1 million loss during the same three months of 1995.
For 1996, Coeur earnings were hurt by a $54.4 million write-down for environmental problems at its Golden Cross mine in New Zealand. Underground movement beneath the mine’s tailing pond has cost the company more than $10 million to fix.
Since that expenditure makes Golden Cross a money-loser for the company, Coeur removed its carrying value from its books. That was the force behind the company’s $54.6 million loss for the year, compared with 1995 income of $1.2 million.
Record gold and silver production highlighted 1996 for Coeur. The company projects more record totals of both metals in 1997: 285,000 ounces of gold and 9.8 million ounces of silver.
The startup of the Silver Valley Resources Corp. in Idaho’s Silver Valley contributed low-cost silver to Coeur’s books. The reopening of the Coeur and Galena mines produced 833,000 ounces of silver, and should bring Coeur - half-owners of the mines with Asarco Inc. - about 1.5 million ounces this year. Total costs of producing the metal were record lows for the two mines.
For Kensington, a final feasibility study on the mine should put the project to Coeur’s board of directors this year, said Tony Ebersole, head of investor relations for Coeur. Gold prices must improve for the project to be profitable. The company has begun to explore eight areas around the original find to hunt for more gold.
The future of Golden Cross is uncertain beyond this year, Ebersole said. He refuted reports from New Zealand quoting mine officials who said the mine would close in April 1998, several years before the reserves run out. The problem is that Coeur could run out of room for its processed tailings.
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