Queenstake Resources, Ltd. operates as a gold mining and exploration company. It engages in the mining, processing, production, and sale of gold. The company owns a 100% interest in Jerritt Canyon gold mine that is located 50 miles north of Elko, Nevada. Jerritt Canyon is an operating gold complex with four producing underground mines and a 1.5 million ton per year capacity processing plant. As of February 7, 2005, Queenstake Resources’ estimated proven and probable reserves were approximately 875,000 contained ounces. The company was incorporated in 1977 and is based in Denver, Colorado.
Third quarter revenue from gold sales totaled $23.7 million compared with $28.0 million for the year ago quarter. This was due to less gold ounces sold, as was expected under the redevelopment plan, partially offset by a higher realized gold price of $442 per ounce in the third quarter of 2005 compared with $402 a year ago. Third quarter 2005 operating costs were $22.4 million as expected under the redevelopment plan. Cash operating costs at $401 per ounce for the third quarter were in line with the redevelopment plan as ounces produced and ore tons processed were better than expected, offsetting higher energy and commodity costs.
Depreciation, depletion and amortization decreased 34% from the 2004 quarter to $3.5 million in the third quarter of 2005 as a result of lower production. General and administrative costs of $890,000 were 25% lower than the year ago quarter as a result of the reduction of staff at the corporate office during 2005. Queenstake has one of the lowest corporate overhead costs among emerging gold producers.
Cash generated from operating activities improved to $5.4 million compared to the second quarter of 2005 of negative $3.3 million and was 80% higher than the $3.0 million generated in the third quarter of 2004. Cash from operating activities includes cash provided by working capital assets, which during the third quarter was primarily due to a draw down of finished goods inventory. Working capital assets in the 2004 quarter were augmented by a temporary increase in accounts payable.
The Company's balance sheet remains strong with cash and cash equivalents of approximately $14.0 million at the end of the third quarter, compared with $16.9 million at the end of the second quarter of 2005 and $6.1 million at the end of 2004. The Company has no long-term debt other than capital leases for mining equipment.