Gold: Do they Pan Out?

Pegasus Gold, Inc.

The Company

The Company's primary business is the mining and processing of gold, and the exploration for and development of gold producing properties. The company operates six mines: five in the western United States and one in the Northern Territory of Australia. The company produced 497,300 ounces of gold during 1996 and expects to produce 570,000 ounces of gold in 1997. Pegasus mines consist of open-pit and underground operations utilizing a combination of heap leaching and conventional milling facilities to extract gold. The company was one of the first to use the heap leaching method of gold recovery and is an industry leader in the technological refinement of the process since the method was first employed in 1979 at the Zortman Mine. The company derives all of its revenue from the sale of gold, silver, zinc, lead, and copper. In 1996, sales of gold and other metals were 88% and 12% of revenues, respectively.

Latest Financials

For the year ended December 31, 1996, the Company recorded a net loss of $21.6 million, or $0.53 per share, compared to a net loss of $3.0 million, or $0.08 per share, in 1995 and a net loss of $58.7 million, or $1.69 per share, in 1994. The net loss for 1996 includes the effects of accelerated depreciation and amortization, increased estimates of future closure and reclamation costs and property write-downs totaling $19.4 million, or $0.48 per share. In 1994, the net loss includes the effect of provisions for closure, reclamation and related costs and property write-downs amounting to $52.9 million or $1.53 per share. Excluding the effects of the above, the net losses for 1996 and 1994 would have been $2.2 million, or $0.05 per share and $5.8 million, or $0.16 per share, respectively.

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