By Mark Reynolds
Gold and Resource Developments, the company that now owns the Macraes gold mine in East Otago, will pay $A3 million to settle a dispute with a former mining contractor.
The payment will be made to Doug Hood Ltd. Macraes had a mining contract with Hood that it curtailed in
1995.
The decision to settle the dispute without further appeal has been made after Macraes lost a long-running arbitration case.
Macraes had allowed only $A1 million in its profit and loss account to settle the dispute, and the remaining $A2 million will be partly paid for from the proceeds of gold hedging positions that will be cashed in.
Macraes will also pay interest and costs associated with the settlement. These costs will be detailed in the financial results of Gold and Resources for the year to the end of December, which will be issued early in April.
Andrew Bantock, finance director for Gold and Resources, said yesterday that the overall results for the company for the December year would show a loss of $A22.5 million. That will include a big allowance relating to a writedown of Gold and Resources' investment in Macraes.
Gold and Resources controversially took over Macraes last year, by swapping convertible notes in itself for shares in Macraes.
Gold and Resources used its 35 per cent shareholding in Macraes to push through the amalgamation, and this raised the ire of smaller Macraes shareholders.
Mr Bantock said Gold and Resources expected to report an operating loss of $A2.2 million for the December year.
He said Macraes Mining broke even for the year, but is forecast to lift earnings this year. A bullion and foreign exchange hedging book that Gold and Resources has taken over from Macraes had a net value of $A52 million at the end of December, and that will be partly cashed in to add $A2.5 million to operating revenue in the first quarter of 1999.
That will help lift Gold and Resources' net operating profit to more than $A12.5 million for the financial year.
