Correct me if I'm wrong, combined companies plus additional equity issues will leave Kinross with about 276 million shares outstanding. At a price of C$5.05 (Closed Deal Price) a share, the acquisition of Amax is valued at about C$818 million (US$572 million). According to AMAX 1997 statements they have US$865 million in assets, US$600 million in debt, US$335 million of debt will be retired, leaving US$265 million. Thus US$865-US$265=US$600 million net assets, US$572-US$335 = US$237 net purchase price. Looks like a good deal for Kinross . I have included AMAX statements in message, it is interesting to see Cyprus AMAX is owed US$74 million listed in current liabilities.
Amax Gold Mines Result In Record 1997 Gold
Production And Lower Cash Costs
DENVER, Jan. 21 /PRNewswire/ -- Amax Gold Inc. (NYSE: AU - news; Toronto: AXG - news)
today announced that 1997 gold production and operating cash flow rose significantly while cash
operating costs fell by 22 percent compared with 1996. However, lower gold realizations and higher
interest expense resulted in increased net losses. The Company reported a 1997 net loss of $33.4
million, or $.37 per share, on revenue of $259.5 million compared with a 1996 net loss of $39.2
million, or $.48 per share on revenue of $108.2 million. The 1997 results included a $4.5 million
benefit for a first quarter inventory accounting change while the 1996 results included a $35.5 million
write-down of the Guanaco mine and an unrelated $10 million deferred tax benefit. Excluding special
items, the 1997 net loss was $37.9 million, or $.41 per share, compared with a 1996 net loss of
$13.7 million, or $.21 per share.
For the fourth quarter of 1997, the Company's net loss was $13.3 million, or $.13 per share, on
revenue of $68.2 million compared with a 1996 fourth quarter net loss of $25.4 million, or $.28 per
share on revenue of $33.6 million. Excluding the special items mentioned above, the Company's
1996 fourth quarter net income was $0.1 million, or a $.02 loss per share, after preferred stock
dividends. As a result of lower cash costs and improved production and despite the significantly
lower gold prices, operating income improved to $1.9 million for 1997 compared with a 1996
operating loss of $7.4 million, excluding the Guanaco write-down. Also as a result of lower cash
costs and higher production, 1997 operating cash flow of $67.2 million was about four times higher
than 1996. The full year and fourth quarter of 1996 have been restated to reflect the effect of a first
quarter 1997 LIFO to average cost inventory accounting change, which increased the previously
reported full year 1996 net loss by $5.0 million, or $.06 per share, and decreased the previously
reported fourth quarter 1996 net loss by $1.1 million, or $.01 per share.
Milton H. Ward, Amax Gold's Chairman and Chief Executive Officer, said, ''Amax Gold achieved
several important goals during 1997, including the completion of the Fort Knox and Kubaka mines.
These two mines have proven that they can consistently produce gold at cash costs under $200 per
ounce, which will be an advantage for the Company during the current period of low gold prices.
Although Refugio continues to recover from the El Nino winter storms, we anticipate significant
improvement in production rates and cash costs at that mine during 1998.''
Ward continued, ''Additionally, we were able to add approximately 450,000 contained ounces to
our Fort Knox reserves at a gold price of $375 per ounce. This reserve addition more than replaced
1997 Fort Knox production and will lower our depreciation and depletion rate at the mine by about
$20 per ounce. Lowering the gold price used to calculate ore reserves from $400 per ounce to
$375 per ounce did not have a significant impact on Kubaka or Refugio reserves.''
Ward concluded, ''With gold prices reaching an 18 year low, the Company has tightened its
spending in all areas in order to preserve cash. Our hedging program resulted in gold realizations that
were $29 per ounce above the 1997 average spot price, adding more than $20 million of additional
revenue. If 1998 gold prices were to remain at the current price of approximately $290 per ounce,
the Company would expect to achieve similar realizations above spot prices. Amax Gold would
have earned an additional $37 million during 1997 had we been able to realize the same $412 per
ounce that we realized during 1996. However, with our improved production and cost profile, we
believe that we are well positioned to weather the current low gold price.''
Amax Gold's average realized price for the full year and fourth quarter of 1997 was $360 per ounce
and $339 per ounce, respectively, compared with $412 per ounce and $410 per ounce in the
comparable 1996 periods. This compares with an average spot gold price of $331 per ounce and
$307 per ounce for the full year and fourth quarter of 1997. Higher full year and fourth quarter gold
sales of 720,889 ounces and 201,526 ounces, respectively, resulted from the commencement of
commercial production at Fort Knox and Kubaka and a full year of production at Refugio, offset by
the closure of the Sleeper mine.
The Company's 1997 annual gold production was a record 729,831 ounces, compared with
268,331 ounces in 1996. Production for the fourth quarter of 1997 increased to 216,325 ounces
compared with 87,890 ounces for the 1996 fourth quarter. Fort Knox, Kubaka and Refugio
contributed a total of 524,035 ounces, or more than 70 percent of 1997 production and a total of
174,089 ounces for the fourth quarter of 1997, or more than 80 percent of fourth quarter 1997
production. For 1998, these three mines are expected to contribute more than 90 percent of the
Company's total production as Hayden Hill and Guanaco complete operations. Fort Knox and
Kubaka continue to outperform expectations as mill throughput at both mines was higher than plan
for the year, which resulted in higher than anticipated production. Refugio continues to recover from
the severe winter weather caused by El Nino earlier in the year, which resulted in the suspension of
crushing operations for nearly three months. The Company's 50 percent share of quarterly
production was 19,450 ounces compared with 30,612 ounces for the 1996 fourth quarter and
9,788 ounces for the third quarter of 1997. Production at Refugio is expected to improve during the
first quarter of 1998 as the weather related problems and other operational inefficiencies are
addressed. Mining was completed at Guanaco during July 1997, which resulted in the decrease in
production to 13,904 ounces in the fourth quarter of 1997 compared with 31,323 ounces in the
fourth quarter of 1996. Production at Guanaco will decline further during 1998 as residual leaching
continues. Hayden Hill produced 28,332 ounces in the fourth quarter of 1997, a nine percent
increase over the 1996 fourth quarter, and a record 112,202 ounces for the full year 1997, an eight
percent increase over 1996 due to higher ore grades, crusher throughput and recovery rate. Hayden
Hill completed mining in December 1997 and production is expected to decline substantially during
1998 as residual leaching commences.
The Company's fourth quarter 1997 cost of sales more than doubled over the fourth quarter of 1996
to $42.3 million due to the increase in gold production and sales. However, cost of sales increased
less than the increase in production, reflecting significantly lower average total cash costs.
Consolidated total cash costs fell by approximately 13 percent to $193 per ounce for the fourth
quarter of 1997 from $222 per ounce in the fourth quarter of 1996. Fort Knox's cash costs of $176
per ounce for the 1997 fourth quarter continue to be lower than expected as crusher and mill
throughput and ore grade have been higher than anticipated. As a result of higher mill throughput,
Kubaka's fourth quarter 1997 cash costs of $173 per ounce are also lower than anticipated.
Refugio's cash costs for the 1997 fourth quarter were $350 per ounce, primarily due to the
continued adverse impact of the abnormal winter weather, partially offset by a $1.4 million insurance
payment received relating to business interruption caused by the El Nino storms. Cash costs at
Refugio are expected to improve significantly during 1998. Guanaco's cash costs of $240 per ounce
were higher than 1996 fourth quarter cash costs of $210 per ounce due to lower production as the
mine nears the end of its life. Cash costs at Hayden Hill improved 26 percent to $158 per ounce as a
result of the higher production and lower spending as operations are scaled back in preparation for
the mine's closure.
During December 1997, the Company refinanced its $34 million portion of the Refugio gold loan
with approximately $28 million borrowed under a new $40 million credit facility. The decline in gold
prices since the gold was borrowed in early 1995 resulted in a gain of approximately $6 million
which will be amortized, net of approximately $2 million in deferred financing costs, over the four
remaining years of the original loan life. The Company also received repayment of $10 million from
the other 50 percent owner of Refugio. These amounts were used for debt service and to fund
working capital requirements.
No additional net funds were borrowed under the Cyprus Amax demand loan facility during the
fourth quarter of 1997. Scheduled Fort Knox debt repayments of approximately $14.7 million
during the fourth quarter of 1997 were made with cash flow from operations. With capital spending
expected to decrease further in 1998 and with the anticipated higher production and lower cash
costs, the Company expects to generate sufficient funds for general corporate purposes, capital
expenditures and interest payments. However, assuming the price of gold remains at current levels,
the Company anticipates borrowing additional amounts under the Cyprus Amax demand loan facility
for a portion of its 1998 debt service. The Company is currently considering other opportunities to
restructure its debt and capital. The Company is also actively reviewing merger opportunities.
Amax Gold Inc. produces gold in the United States, Russia and Chile and explores for gold in the
Americas, Russia, Australia and Africa. Amax Gold is 58.8 percent owned by Cyprus Amax
Minerals Company [NYSE:CYM - news]. Amax Gold's common stock is listed on the New York
Stock Exchange (AU) and the Toronto Stock Exchange (AXG). The $3.75 Series B Convertible
Preferred Stock is listed on the New York Stock Exchange under the symbol AUPrB.
Actual results may vary materially from any forward-looking statements the Company makes. Refer
to the Cautionary Statement in the Company's latest Form 10-Q.
AMAX GOLD INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in millions except per share amounts)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Revenues $68.2 $33.6 $259.5 $108.2
Costs and expenses:
Cost of sales 42.3 17.8 157.3 74.0
Depreciation and depletion 24.0 10.4 88.4 29.8
Asset write-down -- 35.5 -- 35.5
General and administrative 0.7 1.9 6.4 8.3
Exploration 2.4 1.2 5.5 3.5
Total costs and expenses 69.4 66.8 257.6 151.1
Income (loss) from operations (1.2) (33.2) 1.9 (42.9)
Interest expense (11.4) (9.7) (42.5) (29.7)
Capitalized interest -- 6.1 4.2 22.8
Interest income 0.5 0.3 1.9 1.6
Other (1.0) 1.1 (3.0) (1.0)
Loss before income taxes and
cumulative
effect of accounting change (13.1) (35.4) (37.5) (49.2)
Income tax benefit (expense) (0.2) 10.0 (0.4) 10.0
Loss before cumulative effect of
accounting change (13.3) (25.4) (37.9) (39.2)
Cumulative effect of
accounting change -- -- 4.5 --
Net loss (13.3) (25.4) (33.4) (39.2)
Preferred stock dividends (1.8) (1.8) (6.9) (6.9)
Loss attributable to
common shares $(15.1) $(27.2) $(40.3) $(46.1)
Per common share:
Loss before cumulative effect of
accounting change $(.13) $(.28) $(.41) $(.48)
Cumulative effect of
accounting change -- -- .04 --
Loss per common share $(.13) $(.28) $(.37) $(.48)
Weighted average common
shares outstanding 114.8 98.0 108.2 96.9
Excluding write-downs,
special items and
accounting change
Net income (loss) $(13.3) $0.1 $(37.9) $(13.7)
Preferred stock dividends (1.8) (1.8) (6.9) (6.9)
Loss attributable to
common shares $(15.1) $(1.7) $(44.8) $(20.6)
Loss per common share $(.13) $(.02) $(.41) $(.21)
AMAX GOLD INC.
CONSOLIDATED BALANCE SHEET
(Dollars in millions except share amounts)
December 31, December 31,
1997 1996
(Unaudited)
ASSETS
Cash and equivalents, including
restricted cash of $3.5 million
at December 31, 1997 $18.7 $11.1
Inventories 51.8 28.5
Receivables 27.9 3.2
Other 20.2 17.9
Current assets 118.6 60.7
Property, plant and
equipment, net 729.4 667.1
Other 17.6 34.4
Total assets $865.6 $762.2
LIABILITIES AND SHAREHOLDERS' EQUITY
Cyprus Amax demand loan $ 73.3 $130.0
Current maturities of
long-term debt 81.4 39.3
Accounts payable, trade 24.2 14.7
Accrued and other current
liabilities 34.1 23.8
Reclamation reserve,
current portion 8.0 4.5
Current liabilities 221.0 212.3
Long-term debt 345.7 272.6
Reclamation reserve,
noncurrent portion 13.8 11.2
Other 11.3 6.7
Total liabilities 591.8 502.8
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock, par value $1.00
per share, authorized 10,000,000
shares, of which 2,000,000 shares
have been designated as $2.25 Series
A Convertible Preferred Stock, no
shares issued and outstanding; and
1,840,000 shares have been designated
as $3.75 Series B Convertible Preferred Stock,
issued and outstanding 1,840,000 shares 1.8 1.8
Common stock, par value $.01 per share,
authorized 200,000,000 shares, issued
and outstanding 114,850,103 shares in
1997 and 99,308,979 shares in 1996 1.1 1.0
Paid-in capital 408.5 355.7
Accumulated deficit (130.7) (90.5)
Unearned equity-financing costs (6.9) (8.6)
Total shareholders' equity 273.8 259.4
Total liabilities and
shareholders' equity $865.6 $762.2
AMAX GOLD INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in millions)
(Unaudited)
Year Ended
December 31,
1997 1996
Cash Flows from Operating Activities:
Net loss $ (33.4) $ (39.2)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and depletion 88.4 29.8
Asset write-downs -- 35.5
Cumulative effect of accounting change (4.5) --
Increase (decrease) in
reclamation reserves 6.1 (0.2)
Decrease in deferred taxes 0.4 (10.0)
(Increase) decrease in
working capital items (2.0) (9.6)
Other 12.2 10.2
Net cash provided by
operating activities 67.2 16.5
Investing Activities:
Capital expenditures (30.8) (187.7)
Capitalized interest (4.2) (22.8)
Loan to joint venture partner -- (2.0)
Net cash used by investing
activities (35.0) (212.5)
Financing Activities:
Proceeds from financings 160.5 204.3
Repayments of financings (181.5) (13.1)
Deferred financing costs (3.7) (2.8)
Cash acquired in connection with
purchase of Kubaka investment 7.0 --
Cash dividends paid (6.9) (6.9)
Net cash (used by) provided
by financing activities (24.6) 181.5
Net increase (decrease)
in cash and equivalents 7.6 (14.5)
Cash and equivalents at January 1 11.1 25.6
Cash and equivalents at December 31 $18.7 $11.1
Non-cash Transaction:
Issuance of common stock for purchase of
Kubaka investment, net of cash acquired:
Working capital, other than cash $ (10.3) $--
Property, plant and equipment (114.2) --
Debt 79.5 --
$ (45.0) $--
Results of Operations
The following table sets forth the Company's gold production, production costs, ounces of gold sold
and average realized prices for the periods indicated.
Three Months Ended Year Ended
December 31, December 31,
1997 1996 1997 1996
Gold production (ounces)(a)
Fort Knox 94,837 -- 320,522 --
Kubaka 59,802 -- 129,970 --
Refugio 19,450 30,612 73,543 30,612
Guanaco 13,904 31,323 93,594 96,018
Hayden Hill 28,332 25,955 112,202 103,502
Sleeper -- -- -- 38,199
Total gold production 216,325 87,890 729,831 268,331
Cash operating costs
($ per ounce of gold
produced)(b)
Fort Knox $176 $-- $170 $--
Kubaka 152 -- 153 --
Refugio 332 224 324 224
Guanaco 227 198 216 278
Hayden Hill 150 201 178 219
Sleeper -- -- -- 241
Average cash operating costs $183 $208 $190 $244
Total cash costs ($ per ounce
of gold produced)(b)
Fort Knox $176 $-- $170 $--
Kubaka 173 -- 175 --
Refugio 350 242 341 242
Guanaco 240 210 229 290
Hayden Hill 158 213 186 229
Sleeper -- -- -- 247
Average total cash costs $193 $222 $198 $255
Total production costs ($ per
ounce of gold produced)(b)
Fort Knox $349 $-- $342 $--
Kubaka 273 -- 275 --
Refugio 450 337 438 337
Guanaco 296 373 349 450
Hayden Hill 252 338 279 346
Sleeper -- -- -- 333
Average total production costs$321 $350 $331 $381
Ounces of gold sold 201,526 81,842 720,889 262,975
Average price per ounce sold $339 $410 $360 $412
(a) Commercial production commenced at Kubaka on June 1, 1997, at Fort Knox on March
1, 1997, and at Refugio on October 1, 1996. Consolidated total cash costs exclude the
impact of the write-down of heap leach inventories at Guanaco in 1996. Mining at Guanaco
was completed in July 1997 and mining at Hayden Hill was completed during the fourth
quarter of 1997, with residual leaching at both mines continuing into 1998. Mining at Sleeper
was completed in September 1996.
(b) Cash operating costs at the mine sites including overhead, net of credits for silver
by-products. Total cash costs include cash operating costs plus royalties and applicable
production taxes. Total production costs include total cash costs plus reclamation and
depreciation and depletion.
SOURCE: Amax Gold Inc.
More Quotes
and News:
AMAX Gold Inc (NYSE:AU - news; Toronto:AXG.TO - news;
Toronto:AXG.TO - news)
Cyprus Amax Minerals Co (NYSE:CYM - news)
Related News Categories: mining/metals |
