Coast goldminer stops working after loss

Press, 28 January 1986, Page 22

Coast goldminer stops working after loss

By

NEVIN TOPP,

PAT TAYLOR, in Greymouth

and

A broken boom on a specially imported SI.4M digger at the Rimu Flat claim, near Hokitika, appears to have been the straw that broke the back of the Goliath Mining Company, Ltd.

The directors announced yesterday that the company had incurred a loss of $843,000 in the six months to September 30, compared with a loss of $225,000 in the corresponding period last year. Mining ceased at all its claims from midnight on Sunday. In addition, plans for a capital construction, were under consideration, and a further statement would be Issued in mid-February on the future of the company, they said.

The end to the company’s goldmining activities at the Rimu Flat claim and at Greenstone, near Kumara, has meant the loss of 19 jobs, but the company has promised to pay redundancies.

A director of Goliath, Mr Milne Jellie, who is a Greymouth accountant, said yesterday that “we gave the whole project our best. We are not in liquidation or receivership, and we will be paying all our bills.”

“We have not been able to get our budgeted income” he said. This was because the gold-bearing ground was not up expectations and there had been excessive breakdowns of equipment. A specially imported SI.4M digger, brought in for the Rimu Flat claim had kept breaking down. "The boom finally broke in half a couple of weeks ago. It will be seven 'weeks before it can be repaired, and there will be no guarantee that it will operate as it should,” Mr Jellie said. “So we decided to cut our losses.” Goliath had decided to sell off its mining equipment, "tidy things up and then look at things again.”

However, this did not mean that the company might not look at mining

again in the future, he said.

“There can be no suggestion of the company being mismanaged. Everyone gave of their best, but we were beaten,” Mr Jellie said. Gold returns in the latest period were $1,167,000, compared with $1,305,000 in the previous corresponding period, but the profit from the company’s Kaniere service station rose 74.7 per cent to $982,000. The service station will continue to trade.

The directors said that gold recovery had been upset by machinery breakdowns. Poorer ground was encountered at Rimu Flat which was not consistent with previous bore tests. A decision was taken to cease working the Hatters Gully claim when the ground became unecono*’ mic and the Hatters screening plant was moved to the Greenstone licence, where work began in November. Although the recommendations of the company’s geologist in regard to test boring had been followed, gold recovery at both test sites (Rimu Flat and Hatters Gully) had continued to be disappointing. A severe plant breakdown at Rimu Flat early in January had halted' production there for several weeks. “The directors have decided, in the light of all circumstances, to terminate mining operations,” they said. In the pospectus, registered on September 26, 1984, the directors predicted a net profit of $308,000 in the year to March 31, 1985, and $977,000 this year.

But the company announced a trading loss of $451,778, before writing off extraordinary items of $577,394. •? The prospectus was for 14 million 25c shares, raising a total of $3.5M, part of which was used to pay the interim advances made by South Pacific Merchant Finance, Ltd. In addition, South Pacific has a secured debenture. Goliath has a term debt of $1.65M with South Pacific Merchant Finance, which underwrote the public float, and the finance company holds about IM shares in Goliath.