Glass Earth exploration writedowns push annual loss to $11.1M

Monday 15th April 2013

Gold explorer Glass Earth Gold has reported an $11.14 million loss for the year to Dec. 31 after writing down $7.68 million of accumulated exploration costs relating to opportunities explored and superceded between 2005 and 2008.

A fourfold increase in production from its small-scale placer mining (mining by washing or dredging) saw total revenue rise to $2.98 million from $752,000 a year before. However, capital costs associated with ramping up mining activities saw the cost of sales rise to $4.12 million ($523,000 the previous year) to produce an operating loss of $1.15 million for the year.

The company also substantially increased stock-based remuneration to a value of $620,000 during the year, up from $43,000 a year earlier. The NZAX-listed shares were unchanged at 13 cents.

The latest financial year saw Glass Earth shift its focus to more exclusively seek greenfields opportunities where it can work up prospects for investment by larger partners.

"Endorsement of this approach was obtained by Glass Earth entering into joint ventures with Newmont Mining Corp on the company's Waihi West exploration permit alongside the Martha mine and the Hauraki region permit portfolio," a management discussion and analysis released with the results says.

"The worldwide exploration industry has been severely diminished by acquisition and merger, which has dramatically reduced the commitment to greenfields exploration."

Glass Earth is now seeking to "exploit a potential valuable gap by generating and managing the early stages of resource identification and development of world-class gold deposits" to allow "significant premium and value-add at the exploration stage."

It warns the company's efforts "will depend heavily on how it manages its funding requirements, either through joint venture, placer cash generation or equity fund raising."

Glass Earth raised $6.2 million in non-brokered private placements during the year and had cash on hand of $2.62 million at balance date.

The company is concentrating most two Hauraki region plays, the Waihi West venture where Newmont is on an earn-in arrangement, while the Hauraki joint venture is a 65/35 Glass Earth/Newmont deal. This includes the recently discovered WKP prospect, and Glass Earth's recent acquisition of option rights to the Neavesville gold and silver prospect to the north of WKP.

BusinessDesk.co.nz

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