Falco Gold's 3rd-quarter earnings tumble, company seeks to buy Falconbridge assets.

Falco Gold's 3rd-quarter earnings tumble, company seeks to buy Falconbridge assets

Higher production costs at Falconbridge Gold's Hoyle Pond operation, seen here, have been cited as one reason for a reduction in the company's third-quarter earnings.

Falco Gold's 3rd-quarter earnings tumble,

company seeks to buy Falconbridge assets

Third-quarter earnings for Falconbridge Gold Corp. tumbled to $590,000 from more than $1.8 million during the same period of 1989.

Net revenue for the period totalled $9.67 million, up from $8.29 million reported during the same period in 1989.

Production levels increased from 16,782 ounces of gold to 22,088 ounces.

Falconbridge Gold chairman B.A. Ferguson attributed the reduction in earnings to higher production costs at the company's Hoyle Pond Mine and to the increase in the value of the Canadian dollar against foreign currencies.

Despite the dramatic decline for the third quarter, earnings reduced only slightly for the first nine months of the year. Net earnings for the period were approximately $4.75 million compared to $5.59 million in 1989.

As of early December, Falconbridge Gold was continuing negotiations to purchase the gold assets, including operating mines, exploration properties and interests, of Falconbridge Ltd.

The proposed sale, originally announced on Oct. 26 of last year, was amended on Nov. 28. Terms of the amendment included provisions that:

- the assets to be acquired would include Falconbridge Ltd.'s 100-per-cent interest in operating mines and exploration properties in Zimbabwe and its 50-per-cent interest in the Signal Hill prospect in Botswana.

- various interests of Falconbridge Limited in 41 Canadian exploration properties would be optioned to Falconbridge Gold for a two-year period at an exercise price of $3 million.

- in payment Falconbridge Gold would issue to Falconbridge Ltd. 1.5 million common shares from treasury valued at $2.40 per share together with a convertible debenture in the principal amount of $7.4 million with a three-year term, an interest rate of 7.375 per cent and convertible into approximately 2.1 million common shares at a convertible price of $3.50 per share.

As a result of the revised transaction, Falconbridge Limited would initially increase its ownership in Falconbridge Gold from 51 to 55 per cent and, upon conversion of the debenture, to 61 per cent.

The proposal was subject to a favorable recommendation from a special committee of the board of Falconbridge Gold, negotiation of a definitive agreement, approval of the majority of the minority shareholders and receipt of all regulatory approvals including approval of the Toronto Stock Exchange.

PHOTO : Higher production costs at Falconbridge Gold's Hoyle Pond operation, seen here, have been cited as one reason for a reduction in the company's third-quarter earnings.