Yamana Resources Inc -
3mo results
Yamana Resources Inc YRIShares issued 27,316,9901998-08-06 close $0.72Thursday Aug 6 1998Mr. Victor Bradley and Mr. Richard Walters review the company For the quarter ended May 31, 1998 (All references are to U.S. dollars except where stated otherwise.) FINANCIAL For the three months ended May 31, 1998, Yamana incurred a net loss of $735,744, compared to $1,057,737 for the same period in 1997. Overall, expenses decreased dramatically between periods due to sharp cutbacks in program and administrative spending, across-the-board salary reductions, and extensive layoffs. Legal fees increased due to costs of the recently canceled financing. Expenditures for salaries, general and administrative expenses, and investor relations decreased by 56 per cent during the first quarter of 1998, compared with the same period a year earlier. Exploration spending was also reduced to a maintenance only level on all Yamana projects, with the exception of Santa Cruz Vanguardia, Argentina. In order to continue exploration activities, Yamana must access additional financing. Cost economies from Yamana's continued stringent fiscal restraint, as noted in the consolidated statements of loss and deficit, are providing Yamana time to pursue vigorously a variety of financing alternatives. On April 22, 1998, Yamana filed a preliminary prospectus covering an offering of units consisting of shares and warrants. As a result of global market conditions for the exploration sector of the mineral industry, these financing efforts were terminated without success. Recently, Yamana announced that it has filed a preliminary short form prospectus with the Ontario Securities Commission in connection with a proposed best efforts placement of at least $3-million in eight per cent senior secured convertible notes with attached warrants. It is anticipated that the final prospectus will be filed in July. Proceeds from this issue will be added to current cash reserves and used to finance the company's exploration operations with specific focus on western Santa Cruz Province, Argentina, as well as for general corporate purposes. It is Yamana's firm resolve to return to Santa Cruz to conduct further exploration, especially diamond core drilling, on the recent high-grade silver with gold and base-metals discovery at Lejano and on the high-grade silver and gold discovery at Bacon, and to continue to explore other promising properties in the area. Development of these discoveries will enable Yamana to remain ahead of the pack in this exciting new district that is a long term play with exceptional potential. Yamana owns 100 per cent of its extensive land position in Santa Cruz. Maintenance of this full ownership position, combined with equity financing for immediate development programs, will maximize the building of shareholder value. OPERATIONS Yamana continues its focus on the promising Santa Cruz Vanguardia, Argentina, project, with all other programs being deactivated. Emphasis remains on cash conservation, with the international property portfolio being pared down and offices closed or reduced to a minimum in Indonesia, Papua New Guinea, and Paraguay. The Santa Cruz project shows marked potential for accelerated development of economic metal deposits with considerable commodity diversity. Beyond the emphasis on Santa Cruz, Yamana is evaluating the viability of enhancing value by spinning off some assets into other public companies, and is seeking financing partners for dormant projects. Santa Cruz Vanguardia - Argentina Recent exploration of the Santa Cruz Vanguardia precious-metals province was carried out entirely within the western silver district. Drilling at Bacon and Lejano has produced mineral deposit discoveries, and reconnaissance work has established an excellent prospect for a precious-metals deposit at Ciclon West. Yamana's Santa Cruz property package now includes 21 properties for 1,347 sq km, including two manifestations of discovery, about 75 per cent of which is concentrated in the western silver district. Yamana plans to prove up the Lejano and Bacon discoveries during the upcoming field season, starting in August/September. Diamond core drill rigs are expected to be simultaneously deployed to both properties, while Yamana's reverse-circulation drill will make initial tests of Ciclon West and other properties. Lejano Lejano contains polymetallic mineralization with exceptionally high silver values. Fissure-controlled sulphide mineralization is hosted within rhyolitic volcanics, over an arcuate zone more than 1km wide and 4km long, and is most pronounced within the Western Lejano and Eastern Lejano prospect areas. Eighty-one drill holes, totalling 3,260m, have been completed in two campaigns, with 66 per cent of the drilling conducted in Western Lejano, where a discovery has been established on South Ridge. Reconnaissance drilling also probed promising mineral shows within Eastern Lejano. The structurally controlled epithermal mineral deposit on South Ridge exhibits potential to host more then 100 million ounces of silver with ore-grade base metals values. Semi-massive sulphides of iron, lead, zinc and copper fill quartz fault-veins and cement associated fault breccia. This sulphidized fissure system is manifested on the surface by a large gossan (leached sulphides). So far, 41 shallow drill holes in conjunction with a geophysical survey identify a mineralized body, which varies from four to more than 35m thick, dips 45 to 65 degrees, is open to depth, and shows potential for being more than 1km long. One of the better drill intercepts encountered so far in the oxidized zone is hole 11, showing 12m of 642 g/t Ag, with 1.78 g/t Au, and 6.1 per cent Pb, including 4m of 1,155 g/t Ag, with 3.77 g/t Au, and 8.1 per cent Pb. Two holes have encountered sulphides, averaging 384 g/t Ag, with 2.12 g/t Au, 4.5 per cent Pb, 4.2 per cent Zn, and 0.35 per cent Cu over a true thickness of 4m. Geologic factors and limited shallow drilling indicate Yamana has a mineralized core zone of 4m true thickness (tt) averaging 550 g/t Ag, 1.56 g/t Au, and 6.1 per cent Pb, all within a 1km long zone of about 20m (tt), averaging about 200 g/t Ag, 0.50 g/t Au and 2.5 per cent Pb. Yamana believes that there is good potential here for it to develop a deposit in the order of 10 to 30 million tonnes of ore containing 100 to 200 million ounces of silver.
Santa Cruz, Argentina-Lejano Drilling
SOUTH RIDCE DRILL HOLES
Inter-
Hole Interval cept Au Ag Pb
No. (m) (m) g/t g/t %
1 0 - 8 8 0.46 621 9.7
incl. 2 - 6 4 0.72 1,066 16.3
11 0 - 12 12 1.78 642 6.1
incl. 4 - 8 4 3.77 1,155 8.1
71 50 - 86 36 0.30 86 0.2
incl. 60 - 70 10 0.87 238 0.3
75 2 - 42 40 0.06 75 0.7
incl. 22 - 36 14 0.13 170 1.3
79 32 - 38 6 1.39 376 4.2
incl. 32 - 34 2 2.29 901 10.9
Within Western Lejano, reconnaissance drilling in a second target area on North Ridge intercepted several mineralized structures of limited thickness. The highest potential for developing a significant deposit is indicated by hole 22, showing 4m of 716 g/t Ag, associated with a structure at least 300m in strike length. Reconnaissance drilling over a broad zone in Eastern Lejano encountered a number of narrow zones of mineralization, the best of which is hole 44 on East Ridge, 2m of 653 g/t Ag, 1.05 g/t Au, and 2.7 per cent Pb. However, all of the mineralization detected by these drill holes, except one, occurs along the periphery of a large geophysical induced polarization anomaly, thought to reflect a major sulphide system which has yet to be tested by drilling. Only one of the 27 holes (hole 60) was drilled into the geophysical anomaly, and it returned 10m of 110 g/t Ag, including 4m of 190 g/t Ag, with 0.35 g/t Au, and 1.2 per cent Pb. Bacon Previous drilling resulted in a precious-metals discovery on North Bacon. One of the more spectacular intercepts ever publicly reported for the Santa Cruz province, 24m (approximate true thickness) of 664 g/t Ag and 0.68 g/t Au, including 6m of 2,579 g/t Ag and 2.62 g/t Au, comes from hole 16. Eighteen reverse-circulation drill holes, of which 13 were completed, tested approximately 1km strike length of an epithermal quartz fault-vein (i.e., a quartz-injected fault). Ten holes hit ore-grade silver and gold mineralization. However, drilling is insufficient to quantify this discovery. Segments of the mineralized structure within the discovery zone, yielding surface samples as high as 7,000 g/t Ag with 5 g/t Au across 2m, remain to be drill-tested. The large fissure zone containing the discovery runs for 9km across Bacon and contains other mineralized showings that have yet to be explored. North Bacon is geologically similar to the nearby Manantial Espejo deposit, with a reported mineral resource of 1,431,100 ounces gold equivalent (Au equiv.) in three deposits, at a grade of 9.8 g/t Au equiv. The precious-metals values at Manantial Espejo come from the mineral electrum (native gold-silver mixture); whereas, the high silver values at Bacon are largely in ruby silver minerals, suggesting that North Bacon represents a less eroded and more completely preserved epithermal system. The quartz fault veins of North Bacon and Manantial Espejo both occur within a favourable geologic sequence of brittle rhyolitic volcanic rocks, excellent for the development of big vein systems. The formation is estimated to be about 400m thick at Manantial Espejo and over 600m thick in the North Bacon area, pointing up the excellent potential of the North Bacon discovery. Geology and mineralization are analogous to that of the Tonopah, Nevada, mining district, which produced 174 million ounces of silver and 1.86 million ounces of gold around the turn of this century. Ciclon West Ciclon West is a new precious-metals property, 20 miles west of Lejano, where Yamana has found significant epithermal mineralization within a major nonth-south structural corridor at least 6km wide and many tens of kilometres long. Limited reconnaissance rock-chip sampling returning values in the range of 50 to 500 g/t Ag and 0.1 to 5.6 g/t Au, with up to three per cent Pb, along with an IP survey showing a strong anomaly of immense size, indicate that Ciclon West has the earmarks of a mineral deposit of company-maker size.
STATEMENT OF LOSS
Three months ended May 31
(in U.S. dollars)
1998 1997
Revenue
Interest income $ 32,656 $ 214,265
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Expenses
Salaries and
consulting fees 243,137 530,986
General and
admin 149,587 328,770
Investor
relations 50,259 152,657
Professional
fees 274,689 151,455
Depreciation 16,282 15,172
Federal, state
and provincial
taxes 15,947 44,279
Bank charges and
foreign exchange 9,006 28,217
General
exploration 5,147 11,295
Mineral
properties
written off 2,636 -
Filing and
transfer
agent fees 1,710 6,796
Relocation
expenses - 2,375
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768,400 1,272,002
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Net earnings
(loss) $ (735,744) $(1,057,737)
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Earnings (loss)
per share (3 cents) (4 cents)
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