Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Indochina Goldfields ltd -- Ignore unavailable to you. Want to Upgrade?

To: Peter Neidhardt who wrote (56)	5/7/1998 12:29:00 AM
From: Lilian Debray	Read Replies (1) \| Respond to of 109

Thursday, May 7, 1998 Indochina's gold loses US$90M in glister By DAN WESTELL The Financial Post Indochina Goldfields Ltd. has taken a US$90.3-million writedown in recognition of the fall in value of its gold properties and investments. But the Vancouver-based company, controlled by promoter Robert Friedland, also said its balance sheet is strong with US$66 million in cash and it expects its S&K mine in Myanmar will start producing copper cathode on schedule in July. The copper project, with annual capacity of 25,000 tonnes, represents a large part of the company's US$250-million-plus in assets, president Edward Flood said. While copper prices have dropped along with gold, there was no writedown of the S&K mine. "The low cash cost protects that value even at today's prices," Flood said. While the writedown was announced with the year-end results yesterday, the market has valued the stock (ING/TSE) as a junior gold company, knocking it down from a 52-week high of $13 a year ago to a 52-week low of $1.80 yesterday, off 4›. The company went public at $15 a share with a high-profile, $270-million issue in the summer of 1996. Indochina said it wrote down the value of its 80%-owned Bakyrchik project in Kazakhstan by US$40 million.

To: Peter Neidhardt who wrote (56)	5/7/1998 7:12:00 AM
From: Pierre J. LeBel	Read Replies (1) \| Respond to of 109

NEWS RELEASE INDOCHINA GOLDFIELDS LTD. ANNOUNCES 1997 YEAR-END FINANCIAL RESULTS AND WRITE-DOWN OF INVESTMENTS AND PROPERTIES SINGAPORE, May 6 /CNW/ - R. Edward Flood, President, and Robert M. Friedland, Chairman, today released Indochina Goldfields Ltd.'s financial results which reported a net loss of US$116.9 million for the year ended December 31, 1997. The loss was due primarily to a US$90.3 million write-down in the carrying value of gold-related investments and properties. Indochina Goldfields Ltd. reported a total loss per share of US$1.68 compared to a loss of US$0.32 per share for the financial year ended December 31, 1996. ''We have taken this opportunity to reassess the economic impact of the presently depressed gold market on the Bakyrchik gold operation in Kazakhstan, as well as valuing our equity investments to accurately reflect the current market. This action also will provide a stronger foundation for future earnings potential and preserve our strong balance sheet as we cross the threshold to commercial production at the Monywa copper project,'' Mr. Flood said. Approximately US$40.0 million of the total write-down was attributable to the revaluation of the Bakyrchik project. In late 1997, Kvaerner Metals Davy of Toronto, Canada, completed a basic engineering study and reserve evaluation on Bakyrchik, assuming a long-term gold price of US$362.50. Based on the operating, capital, production and reserve numbers from the study, and using a reduced gold price of US$320 an ounce, the project economics were reassessed to arrive at a value of US$62.0 million for Indochina Goldfields' 80% interest. ''Bakyrchik remains a viable, world-class gold project,'' Mr. Flood said. ''We are currently operating a US$5.5 million pilot plant, designed by Drinkard Metalox, Inc. and built and operated with the assistance of Kvaerner Metals, to prove the application of a proprietary hydro-metallurgical process. Operating at atmospheric temperatures and pressures, the plant has achieved gold recoveries of up to 94% in certification runs. We will continue to test various ore-feed blends at the pilot plant through mid-year and, with positive results, commission an amended feasibility study which would incorporate the benefits of lower capital costs and increased recoveries associated with the process. We are taking these steps in response to the current gold price environment to strengthen the project's financial viability at US$320 gold.'' The company also wrote down the value of its investments in BKG Resources PLC, a London-listed gold mining company and owner of 20% of the Bakyrchik gold project. Indochina Goldfields is currently the largest single shareholder in BKG Resources owning approximately 27.9% of the company which it acquired over the past two and one half years primarily for Indochina shares valued at approximately CDN$10.30/share. At year-end, the value of the BKG Resources shares was US$1.8 million and resulted in a US$37.9 million write-down. An additional write-down was completed for the value of Indochina Goldfields' investment in Emperor Mines Limited, an Australian-listed gold mining company that owns the Emperor Gold Mine in Fiji. Indochina Goldfields is currently the largest single shareholder in Emperor Mines, owning approximately 15% of Emperor's outstanding shares. The shares in Emperor Mines were acquired over the past three years for cash at a total cost of US$17.8 million. The recent market value of those shares was US$5.4 million and resulted in a US$12.4 million write-down. It is also the policy of Indochina Goldfields to expense all exploration and general and administrative costs during the period in which they occurred. During 1997, the company attributed a US$25.4 million net loss to exploration and general and administrative costs, compared to US$21.1 million in 1996. This increase reflects the expanded exploration programs and increased levels of activity associated with project development, construction and financing. Indochina Goldfields completed the year with a cash balance of US$44.5 million. In the first quarter of 1998, the company liquidated its gold put options for gross proceeds of US$25.0 million increasing its cash position to approximately US$70.0 million (CDN$100 million). The net gain on the hedge transaction after fees was US$10.4 million. The gold put options were purchased during 1997 to aid in efforts to secure project financing for the Bakyrchik gold project, anticipating that construction would commence in early 1998. In an update on the company's major copper project in Myanmar, Mr. Flood said that the company remains on target for a start to production of copper cathode in July 1998. The Phase I S&K Mine will have the capacity to produce 25,000 tonnes of copper cathode per year. Information about the company and its projects is available on its web site, goldfields.com. -30-