ERG's gold tailings reclamation idle for at least all of this year.

• Author: Bickford, Paul
• Position: ERG Resources Inc. - Gold Mining Report

ERG's gold tailings reclamation idle for at least all of this year

The much-troubled ERG Resources Inc.'s gold tailings recovery project in Timmins remains at a standstill.

It has not operated since being shut down for the winter on Nov. 9 of last year.

ERG losses for the nine months ending March 31 totalled $10 million after deferring net operating costs of $8.6 million for the period.

As of March 31 its liabilities included a gold loan of $38.9 million and $29.2 million in accounts payable and accrued liabilities.

Its total current assets were $1.4 million.

The corporation also continues to incur interest payable on its outstanding debt, although no payments are being made.

"An examination of the balance sheet, however, makes it quite clear that without a financial reorganization and recapitalization, the corporation is not in a financial position to continue operations," wrote chief executive officer A.W. Fleming in a report to shareholders dated May 4.

The corporation's physical assets in Timmins are being kept on a care-and-maintenance basis.

The site activities have been directed to environmental issues and monitoring of the tailings ponds. A plan has been developed which will ensure that the quality of any water discharged from the tailings ponds is in accordance with the guidelines established by the Ministry of the Environment.

However, Fleming reported, "Even this minimal activity is rapidly using up the available cash on hand."

According to the March 31 report, ERG had $163,000 in cash.

The corporation's common shares were suspended from trading on the Toronto Stock Exchange on April 16 because of the corporation's financial condition.

However, the Ontario Securities Commission subsequently approved the trading of the shares on the over-the-counter market and they are currently quoted on COATS under the symbol EDGR.

Giant Resources Limited of Sydney, Australia, is in the process of selling its Canadian assets, including its 67.1-per-cent ownership of Pamour Inc., which is ERG's major shareholder.

This process began late last year and is...