For the year ended December 31, 2006, the Company's net loss of $20.8 million, the accumulated deficit of $103.7 million and the working capital deficit of $12.4 million led to a going concern disclosure under Canadian and US generally accepted accounting principles, as described in Note 1 of the Notes to the Company's Consolidated Financial Statements for such year, as filed with the Canadian securities commissions and the US Securities and Exchange Commission. The Company's ability to discharge its liabilities and realize the carrying value of its assets in the normal course of operations is dependent upon, among other things, the resumption of full mill processing capacity during the second quarter of 2007, further extension, payment or conversion of the Auramet loan facility and either successful completion of the proposed merger with YGC or the raising of additional financing.
Operations Review
Full-year 2006 gold production from Jerritt Canyon mined ore was 153,581 ounces, excluding production from ore purchased from Newmont, as compared to 204,091 ounces produced in 2005.
Lower production in 2006 was due to ongoing mechanical issues at the mill and declining ore tons mined, caused by delays in accessing ore from the Smith Mine and Zone 1 of the SSX Mine. The Smith Mine was adversely affected by water inflows in excess of the capacity of the pumping system to dewater. The SSX Mine experienced grade declines from higher mining dilution as a result of the mining of smaller, less contiguous ore blocks. Production from below the water table at the Smith Mine and from Zone 1 of the SSX Mine has been deferred and is not planned during 2007. The Murray Mine was shut down in the second quarter of 2006.
Total ore tons processed in 2006 were 973,593, a decline of 12% from 2005. The reduction in tonnage is due to a combination of fewer ore tons mined, ongoing mill mechanical issues and the Company's original plan to scale-back roaster operations in early 2006. The grade of Queenstake ore milled increased to 0.23 ounce of gold per ton, a 5% improvement from 2005.
