PIEDMONT MINING COMPANY, INC. REPORTS RESULTS FOR 1991 DRILLING RESUMES AS MAY 1ST DEADLINE APPROACHES
PIEDMONT MINING COMPANY, INC. REPORTS RESULTS FOR 1991 DRILLING RESUMES AS MAY 1ST DEADLINE APPROACHES CHARLOTTE, N.C., March 11 /PRNewswire/ -- Piedmont Mining Company, Inc. (NASDAQ: PIED), engaged in exploration and production of gold in the Southeast, reported a loss of $2,890,000, or $0.20 per share, in the year ended Dec. 31, 1991, compared with net income of $210,000, or $0.01 per share, in the year ended Dec. 31, 1990. In the fourth quarter of 1991 Piedmont lost $1,611,000, or $0.11 per share, compared with a loss of $734,000, or $0.05 per share, in the fourth quarter of 1990. This fourth quarter loss includes write-downs of equipment and facilities relating to the suspension of mining operations and accruals for stock appreciation rights. This loss does not reflect $1,861,000 of option payments from Amax Gold Exploration, Inc. (AGEI), a wholly-owned subsidiary of Amax Gold Inc. (NYSE: AU). These option payments are reported as a deferred credit and are not reflected in the income statement. Despite this loss, Piedmont's year-end financial condition improved due primarily to increases in liquidity and working capital. From Dec. 31, 1990 to Dec. 31, 1991, accounts payable were reduced from $683,000 to only $28,000 and the outstanding principal balance on notes payable was reduced from $1,968,000 to $1,172,000, while cash and cash equivalents increased from $423,000 to $1,483,000. Consistent with the Company's plans to suspend its shallow open pit mining operation at the Haile property during 1991, mining and stacking ceased in August. Accordingly, gold production decreased to 10,517 ounces in 1991, compared with 22,402 ounces in 1990. Leaching and gold production are continuing in early 1992. The 1991 exploration program with AGEI at Piedmont's Haile property, which was fully funded by AGEI, resulted in a 130 percent increase in the mineable ounces of gold on the property. A Preliminary Feasibility Study prepared by Amax Gold Inc. in December 1991 shows that the estimated extended probable mineral inventory mineable by open pit mining methods at the Haile property is now about 8,500,000 tons averaging 0.08 ounces of gold per ton, containing a total of about 680,000 ounces of gold. In this study the cutoff grade is about 0.025 ounces per ton and the stripping ratio is about 4.3 to 1. This study is based on a proposed facility processing approximately 4,000 to 5,000 tons of ore per day producing roughly 100,000 ounces of gold per year with projected average total operating costs of less than $200 per ounce of gold produced. This study substantially confirms the November 1991 Preliminary Economic Evaluation by American Mine Services of Aurora, Colorado showing estimated proven and probable reserves of approximately 10,533,000 tons averaging 0.061 ounces of gold per ton containing a total of about 640,000 ounces of gold. Piedmont entered into an option and earn-in agreement with AGEI on March 15, 1991 granting AGEI an option until May 1, 1992 to earn a 62 1/2 percent interest in the Haile property. Drilling recommenced in late February, and there are now three diamond core drill rigs operating on the property, fully funded by AGEI. If AGEI elects to exercise its option, Piedmont would receive $1,750,000 in cash and 1,000,000 shares of the common stock of Amax Gold Inc.
Piedmont would have piggyback registration rights for two years from the date of issuance of these shares, and Amax Gold Inc. would be obligated, at Piedmont's request, to lend Piedmont up to $2,000,000 against these shares until they are registered or repurchased by Amax Gold Inc. Piedmont and AGEI would then form a joint venture to further explore and develop the Haile property and Piedmont would be required to fund its 37 1/2 percent interest. AGEI has not yet advised Piedmont whether it will exercise the option.
Piedmont pioneered the resumption of gold mining in the Southeast in early 1985 at its Haile Gold Mine near Kershaw, South Carolina, employing for the first time the heap leaching process in the humid southeastern climate. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Full Year Ended Dec. 31, Dec. 31, 1991 1990 1991 1990 NET SALES $ 669,000 $1,759,000 $4,463,000 $8,707,000 COST OF SALES: Mine operating costs 695,000 1,368,000 3,715,000 4,558,000 Depreciation and amortization 736,000 408,000 1,881,000 1,756,000 1,431,000 1,776,000 5,596,000 6,314,000 GROSS PROFIT (LOSS) FROM OPERATIONS (762,000) (17,000) (1,133,000) 2,393,000 OTHER (INCOME) EXPENSES: General and admin- istrative 353,000 402,000 1,025,000 1,219,000 SAR expense 435,000 48,000 429,000 107,000 Exploration 18,000 161,000 86,000 667,000 Amortization of non-compete agreement 25,000 25,000 100,000 67,000 Other expense (income) 15,000 91,000 114,000 123,000 INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM (1,608,000) (744,000) (2,887,000) 210,000 Provision for income taxes (3,000) 287,000 (3,000) (83,000) INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (1,611,000) (457,000) (2,890,000) 127,000 Extraordinary item- utilization of operating loss carryforwards -- (277,000) -- 83,000 NET INCOME (LOSS) $(1,611,000) $ (734,000) $(2,890,000) 210,000 NET INCOME (LOSS) PER COMMON SHARE: Before extraordinary item $ (0.11) $ (0.03) $ (0.20) $ 0.01 Extraordinary item -- (0.02) -- 0.00 PER COMMON SHARE $ (0.11) $ (0.05) $ (0.20) $ 0.01 CASH DIVIDENDS PER SHARE NONE NONE NONE NONE WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 14,355,632 14,310,741 14,328,299 14,299,585 BALANCE SHEET DATA at December 31: 1991 1990 Cash and Cash Equivalents $ 1,483,000 $ 423,000 Working capital 1,363,000 492,000 Total Assets 9,872,000 11,748,000 Long Term Debt 672,000 1,172,000 Shareholders' Equity 6,082,000 8,889,000 COMMON SHARES OUTSTANDING 14,373,027 14,310,741 -0- 3/11/92 /CONTACT: Thomas L. Ross, III, Piedmont Mining Company, Inc., 704-523-6866/ (PIED AU) CO: Piedmont Mining Company, Inc.; Amax Gold Inc. ST: North Carolina, South Carolina IN: MNG SU: ERN
CM-JM -- CH009 -- 7373 03/11/92 14:46 EST
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|Date:||Mar 11, 1992|
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