Pure Gold year-end financial review
Pure Gold Minerals Inc
PUG
Shares issued 33,724,033
1999-11-08 close $0.14
Tuesday Nov 9 1999
Mr. Donald Sheldon reviews the company
Financial results for the year ended May 31, 1999, were as follows:
The millennium continues to hold excellent prospects for Pure Gold
in diamonds.
New kimberlites discovered in Nunavut -- 80 kilometres from the
Diavik mine
This is expected to be expanded into a new kimberlite field which
may provide an economic diamond pipe.
Alberta exploration continues as Ashton and Alberta Energy spend
on Pure Gold's behalf on the Cayo lands and the joint venture lands.
Drilling will be conducted in the winter season.
The company controls 100 per cent of 16 million acres in Alberta
and an exploration initiative may provide Pure Gold its own
diamond venture.
New opportunity
The directors have decided to use Pure Gold's risk venture profile to
enter into an exciting gas exploration play in Ireland. Once again, the
company is partnered with an excellent technical team (Antrim
International Inc.) and the venture has gigantic upside.
The Larne project
Pure Gold entered into an agreement with CVL Resources Ltd. to
acquire a 25-per-cent working interest in the onshore
350-square-kilometre Larne licence, Northern Ireland. CVL
acquired the right to earn a 50-per-cent interest in the licence from
Antrim International Inc., an ASK-listed company, with extensive
international oil and gas holdings. The agreement also includes an
area of mutual interest, which encompasses a much larger area of
potential.
The Irish gas market is expanding rapidly. Over $2.0-million has
been spent to date on seismic and subsurface geology related to the
Larne licence and similar oil and gas pools in the East Irish Sea, the
south coast of England and offshore Ireland. All of these oil and gas
pools produce from a thick section of the Sherwood sandstone. The
reservoirs are sealed by the Mercia mudstone and occur in large
fault bound structures. They prove the potential to define very large
reserves and high productivity at a relatively shallow depth.
Examples include: the Morcambe Bay field (original reserves of
seven trillion cubic feet and daily natural gas production of one to
two billion cubic feet); the Wytch Farm field (original reserves of
365 million barrel oil and daily production of 100,000 barrels) and
the Liverpool Bay fields (original reserves of 200 to 400 million
barrels and daily production of over 70 million barrels).
A well drilled by the Irish government in 1981 adjacent to the Larne
licence had a good gas show in a 648-metre section of the Sherwood
sandstone in the same geological section as the oil and gas pools
above. Extensive seismic surveys have defined numerous fault
bound structures on the Larne licence that appear to be similar to
those related to these pools. Three and possibly four of these
structures will be tested by a slim hole drilling program. This will
allow for continuous coring, gas detection, drill stem testing and
logging. This is a very cost-effective method to evaluate several of
the best targets within the licence. The holes will be to a depth of up
to 1,200 metres and will penetrate the Sherwood sandstone. Drilling
is expected to be completed this fall.
The acquisition of the Larne project is the company's first oil and
gas project. While diamond exploration will continue in both Alberta
and the Northwest Territories, the board of directors recognizes the
potential within the Larne project to define giant gas reserves in an
area of excellent infrastructure and low development costs. Pure
Gold will also acquire a large working interest in this very large
project for a modest investment. This will provide the potential for
immediate and significant growth in both cash flow and reserves and
stability for the company as it continues its quest for an economic
diamond find.
To enable the company to evaluate and develop oil and gas
properties, including the Larne project, Gordon Keevil (geologist)
has been appointed as a consultant to the company. Mr. Keevil has
over 20 years of experience with both oil and gas, and mineral
exploration and development companies. His experience is
particularly well suited to Pure Gold as he will be able to assist the
company in all aspects of its operation and development.
Equipment write-offs
The company entered the Alberta diamond project with Ashton as a
partner in the northern part of the province, however, projects were
operated south of Edmonton solely by Pure Gold staff.
In anticipation of the potential, the company purchased the
Terramin Lab in Calgary which had a basic cash flow from gold
analyses and an expertise for diamond exploration analysis. The
decline in the gold market necessitated closing the gold assay lab as
no work was being secured. Furthermore, a processing facility was
optioned from Monopros that previously had over $3-million in
capital expenditures and was set up in Grand Prairie.
The exploration conducted in the Medicine Hat area, where
$300,000 was spent by Pure Gold, was not successful in identifying
economic kimberlites. Therefore the Monopros equipment and the
Terramin Lab have been mothballed pending better exploration
results. The company has received an offer for the equipment,
however management has decided to store the equipment pending
the winter exploration. The book value of the equipment has been
written down pending revival of independent process by Pure Gold.
Corporate -- rights offering
Pure Gold looks to 2000 with optimism. Diamond projects are
maturing and the technical expertise of Ashton is providing
encouragement for a new discovery in the Northwest Territories and
Alberta.
The entry into the Larne gas project in Ireland lends a new element
of potential cash flow for the company. Cash requirements should
be met with the rights offering, maximum net proceeds of
approximately $1,125,632, a portion of which Canaccord Capital
Corporation has guaranteed to a maximum of $562,816.
In 1999, the company expended $900,000 on its own land and
project participants expended in excess of $1-million on behalf of
Pure Gold. The company will be carried for a portion of $1-million
in Alberta exploration expenditure through the winter drilling season.
CONSOLIDATED STATEMENT OF OPERATIONS
Year ended May 31
1999 1998
Administrative
expenses
Amortization $ 17,084 $ 8,100
Audit and
accounting 29,375 58,296
Contract services 362,686 507,477
General corporate
expenses 1,660 914
Legal 24,490 122,931
Management
fees 240,000 189,133
Office facilities
and admin 201,332 222,703
Property
investigation 21,600 98,492
Shareholder
informaton and
printing 55,804 240,998
Telephone 8,376 1,820
Transfer agent,
filing and
stock exchange
fees 34,749 98,683
Travel and
promotion 35,663 152,539
----------- -----------
1,032,819 1,702,086
----------- -----------
Income (loss)
before other
items (1,032,819) (1,702,086)
Other income
(loss)
Management fees - 28,515
Interest income 7,753 12,337
Gain (loss) on
trade debt
settlements 119,725 -
Writedown of
mineral
properties (801,953) (495,967)
Income (loss) on
writedown of
capital assets (377,284) -
Sale of research
material 81,000 -
Income (loss) on
disposal of assets (3,888) -
Allowance on
capital asset
deposit (220,100) -
----------- -----------
(1,194,747) (455,115)
----------- -----------
Net income
(loss) for
the year $(2,227,566) $(2,157,201)
=========== ===========
Income (loss)
per share (7 cents) (9 cents)
(c) Copyright 1999 Canjex Publishing Ltd.
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