<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Date of Report)
APRIL 21, 1998
COMMISSION FILE NUMBER 0-12207
PEGASUS GOLD INC.
(Exact name of registrant as specified in its charter)
PROVINCE OF BRITISH COLUMBIA NONE
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 W. FIRST AVE., SUITE 1500, SPOKANE, WASHINGTON 99201-3282
(Address of principal executive offices) (Zip Code)
(509) 624-4653
(Registrant's telephone number, including area code)
------------------------------
------------------------------
<PAGE>
ITEM 5. OTHER MATTERS
On April 17, 1998, the Company issued a press release announcing its 1997
year-end results.
On April 20, 1998, the Company filed its second monthly report with the U.S.
Bankruptcy Court in Reno, Nevada for the period from March 1, 1998 through March
31, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION, AND EXHIBITS.
(a) Financial statements - not applicable.
(b) Pro forma financial information - not applicable.
(c) Exhibits:
(99.1) News Release issued by the Company dated April 17,
1998.
(99.2) Financial statements included in the monthly report
filed with the U.S. Bankruptcy Court on April 20, 1998.
The entire monthly report, as filed with the U.S.
Bankruptcy Court for the District of Nevada in Reno,
Nevada, also includes:
- Schedule of Professional Fees
- Operating Statements
- Consolidating Statement of Operations
- Recapitulation of Cash Accounts
- Projected Cash Flows
- Consolidating Balance Sheet
- Accounts Payable Agings
- Payments to Secured Creditors
- Tax Liability/Insurance Coverage/Post-Petition
Payments
- Narrative
- Trustee Fees
- Post-Petition Intercompany Statements
2
<PAGE>
FORM 8-K
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PEGASUS GOLD INC. (Registrant)
Date: April 21, 1998 By: /s/ Michelle G. Viau
---------------------------------
Michelle G. Viau
Vice President, Finance and Chief
Financial Officer
3
<PAGE>
EXHIBIT 99.1
<PAGE>
------------
NEWS RELEASE
------------
PEGASUS GOLD REPORTS 1997 YEAR-END RESULTS
(UNLESS NOTED, ALL DOLLAR AMOUNTS IN THIS RELEASE ARE IN U.S. DOLLARS)
SPOKANE, WA - APRIL 17, 1998 - Pegasus Gold Inc. (PGU - ME; PSGQF - OTC B.B.)
today reported its year-end results. As reported earlier, the Company's six
mines produced 469,952 ounces of gold in 1997 at a total cash cost of $308 per
ounce, compared to 497,340 ounces at a total cash cost of $301 per ounce a year
earlier. During the fourth quarter of 1997, the Company produced a total of
116,902 ounces of gold compared to 146,107 ounces in the fourth quarter of 1996.
Total cash costs in the fourth quarter of 1997 were $339 per ounce compared to
$303 per ounce for the same period in 1996.
For 1997, the Company reported a net loss of $512.8 million or $12.40 per share,
compared to a net loss of $21.6 million or $0.53 per share in 1996. The net
loss for 1997 included $482.1 million, or $11.66 per share, for the effects of
property write-downs, restructuring charges, increased estimates of future
closure and reclamation costs, the write-down of available for sale securities,
and losses on foreign exchange contracts, offset by gains from the closeout of
the hedge portfolio. The net loss for 1996 included the effects of accelerated
depreciation and amortization, increased estimates of future closure and
reclamation costs and property write-downs totaling $19.4 million, or $0.48 per
share. Excluding the effects of the above, the net loss for 1997 would have
been $30.7 million or $0.74 per share, compared to $2.2 million or $0.05 per
share in 1996.
Following a recalculation of the ore reserves using a gold price of $350 per
ounce, a review of the carrying value of its mineral properties, and the
close-out of the entire hedge portfolio, the Company recorded after-tax,
non-cash property write-downs totaling $90.3 million in the fourth quarter 1997.
The write-downs include Florida Canyon ($25.6 million), Montana Tunnels ($24.4
million), Mt. Todd ($25.3 million), and $15.0 million of other property
write-downs at Zortman, Pullalli, and Beal Mountain. As a result, the Company
had a net loss of $76.9 million, or $1.85 per share in the fourth quarter of
1997, compared to a loss of $12.1 million or $0.30 per share in 1996.
PROPERTY WRITE-DOWNS
The Company reassessed the recoverability of the carrying value of its operating
and development properties during the fourth quarter of 1997, in light of the
close-out of the Company's entire hedge portfolio in December 1997 and January
1998. With no price protection for current or future gold production, the
Company adjusted the gold price used in the impairment test to the spot price of
$305 per ounce for 1998 plus the forward curve for future years. As a result of
this reassessment, after-tax, non-cash property write-downs were recorded at
Florida Canyon and Montana Tunnels of $25.6 million and $24.4 million
respectively, in the fourth quarter.
<PAGE>
In addition, the Company received an updated estimate of the fair value of the
Mt. Todd assets. The revised estimate resulted in an additional write-down of
$25.3 million for Mt. Todd.
As previously reported, the Company has decided that it will not construct the
Zortman Extension Project and will proceed with the reclamation of the existing
site. Factors contributing to this decision included the IBLA's inaction on the
appeal of the Record of Decision and the recalculation of the ore reserves at
$350 per ounce gold which shows that the project cannot support the $30 to $40
million capital investment necessary to construct the expansion. The Company
determined that at current gold prices, and with a reduced reserve base, the
project is uneconomic, and therefore, the Company wrote down the remaining
development costs and equipment totaling $9.1 million. The Company also
recorded a provision of $41.8 million to accrue the remaining reclamation
liabilities at the site, and $4.4 million to accrue anticipated care and
maintenance costs.
Additionally, in the fourth quarter of 1997, the Company recorded a $5.0 million
write-off of the remaining development costs at the Pullalli Project.
Currently, the Company is attempting to sell the project.
As reported earlier, during the third quarter of 1997, the Company assessed the
recoverability of the carrying value of its investments using a long-term
realized gold price of $385 per ounce, based on its then-current hedge position
and policy. Reductions in the carrying value of the Company's investments were
recorded to the extent the net book value of the investment exceeded the
estimate of future discounted net cash flows. Upon completion of that review
for the third quarter, the Company recorded non-cash property write-downs
totaling $441.1 million, including $397.6 million at Mt. Todd, $26.8 million at
Zortman, $13.9 million at Pullalli and $2.7 million at Beal Mountain in the
third quarter.
In December 1997 and January 1998, the Company closed out all its forward sales
contracts. This was in response to a demand by certain of the Company's lenders
who exercised the right to set-off any proceeds received from the close-out of
forward sales contracts against the balances owing to the lenders under the
Revolving Credit Facility (the "Facility").
In total, the Company has recorded a $88.7 million gain on closeout of these
contracts, comprised of $53.0 million relating to contracts closed out in 1997
and $35.7 million for mark-to-market adjustments for closeouts in January 1998.
$30.5 million of the proceeds on closeout were received in cash with $58.2
million of the proceeds used to offset a portion of the foreign currency losses
and balances owing to the lenders under the Facility.
The Company had losses on disposition of assets and investments in 1997 totaling
$28.1 million including $18.4 million of losses on foreign currency contracts,
$10.4 million of losses on the disposition of investments and mark-to-market
adjustments of investment securities, and $0.7 million of gains on the disposal
of fixed assets.
<PAGE>
1997 OPERATING RESULTS
Revenues in 1997 from the sale of gold and other metals, excluding the effects
of hedging activity, declined 15 percent to $185.4 million, compared to $219.4
million in 1996, as a result of lower production. The Company's average realized
price for gold in 1997 was $415 per ounce, compared to $426 in 1996 and an
average spot gold price of $337 per ounce for 1997. The use of forward sales
and other hedging programs added $41.1 million to revenue in 1997, (excluding
the $88.7 million gain on the closeout of the hedge portfolio), compared to
$20.3 million in 1996.
During the fourth quarter of 1997, revenues from gold and other metals totaled
$49.3 million, compared to $67.5 million in 1996. The Company realized $373 per
ounce of gold in the quarter, compared to $424 per ounce for the same quarter in
1996. The average spot price was $306 per ounce in the last quarter of 1997.
During 1997, revenues from the sale of other metals contributed 14 percent to
the total sales of the Company. Other metal revenues increased in 1997 by 14
percent to $31.7 million compared to $27.9 million in 1996. The higher revenue
is attributable primarily to higher production of zinc and lead combined with an
increased realized price for zinc at Montana Tunnels. Average realized prices
for 1997 were $4.60 per ounce, $0.54 per pound, and $0.26 per pound for silver,
zinc, and lead, respectively, compared to $5.05, $0.49, and $0.28, respectively,
in 1996.
Sales of other metals were $5.7 million in the fourth quarter of 1997, compared
to $5.7 million during the same period of 1996. Fourth quarter 1997 realized
prices were $4.82 per ounce, $0.45 per pound, and $0.19 per pound for silver,
zinc, and lead, respectively, compared to $4.27, $0.50, and $0.29, respectively,
in the fourth quarter of 1996.
During 1997, total production cost, including royalties and non-cash charges,
was $413 per ounce, compared to $409 per ounce a year ago. Total production
cost for the fourth quarter of 1997 averaged $426 per ounce, compared to $440
per ounce for the same quarter a year earlier.
During the fourth quarter of 1997, operations ceased at both Beal Mountain and
Black Pine as ore deposits were mined out. During this time the Mt. Todd Mine
was placed on care and maintenance. The Company's ongoing operations include
Florida Canyon, Montana Tunnels and Diamond Hill which are expected to produce
approximately 300,000 ounces of gold at an average total cash cost of $250 per
ounce in 1998.
Total cash costs per ounce increased 21 percent in 1997 at Florida Canyon as the
result of lower tonnage mined and lower ore grade. Increased depreciation and
amortization charges reflect higher property, plant, and equipment balances from
the addition of mine equipment, and the facility expansion, lower production,
and higher amortization for increased estimates of reclamation and closure
costs.
At Montana Tunnels, lower total cash costs in 1997 reflect higher ore grade and
higher by-product credits per ounce. In addition, Montana Tunnels ran two
batches of higher-grade
<PAGE>
ore from Diamond Hill during the year and blended Diamond Hill ore with the
Montana Tunnels ore for several months. Higher gold production resulted in
lower depreciation and amortization costs.
At Mt. Todd, 1997 total cash costs decreased as a result of the completion of
the milling facility combined with higher ore grades mined and higher recovery
from the mill compared to recoveries from the heap leach pad in the previous
year. Despite the lower total cash costs, the total cash costs were
considerably in excess of the feasibility study expectations and exceeded the
spot price of gold by a considerable margin. The mine was placed on care and
maintenance in the fourth quarter. Residual leaching of ore on the heap leach
pad continued through October. The increase in depreciation and amortization
costs is the result of higher asset balances upon completion of the milling
facility.
The total cash costs per ounce at Zortman reflect lower gold production from
residual leaching of ore placed on the heap leach pad in prior years. Costs of
$5.9 million incurred at Zortman as a result of delays in obtaining permits
required for construction and operation of the Extension Project have been
classified as care and maintenance and are therefore excluded from cash costs.
Increased depreciation and amortization charges reflect lower production.
At Beal Mountain and Black Pine, higher ore grades resulted in decreased total
cash costs. At Beal Mountain, decreased depreciation and amortization charges
are the result of prior year accrual of increased estimates of reclamation and
mine closure costs.
Total exploration expenditures for 1997 and 1996 were $10.1 million and $19.0
million, respectively. Expensed exploration and evaluation expenditures
decreased 15 percent in 1997 to $6.5 million, compared to $7.7 million last
year, as the Company focused it efforts on mine site exploration. For 1998, the
total exploration and evaluation program is expected to be $4.3 million of which
$3.9 million is expected to be expensed.
OTHER FINANCIAL INFORMATION
The Company had $22.6 million in cash and cash equivalents and a total of $108.2
million in current assets as of December 31, 1997. The Company currently has
$33.7 million cash on hand after receiving $9.3 million from hedge close-outs in
January 1998 which will be used as its working capital going forward. The
Company expects that its cash and cash equivalents are adequate to meet its cash
requirements through 1998.
General and administrative expenses decreased 27 percent to $9.7 million from
$13.2 million in 1996, primarily because of a reduction in the Company's
workforce, decreased travel and outside service costs, and an effort to conserve
cash, partially offset by higher salary and benefit costs, including the cost of
severance.
<PAGE>
In 1997, operating activities generated cash flow of $25.8 million compared to
$19.7 million during 1996. Increased cash flow is attributable to favorable
changes in working capital accounts, primarily accounts receivable. Decreased
accounts receivable are attributable to decreased production in December 1997,
compared to December 1996, the deconsolidation of the accounts of Pegasus Gold
Australia (PGA), and quicker turnover of accounts receivable compared to 1996.
Cash flow from operations before working capital changes for 1997 was $7.9
million compared to $38.0 million a year ago due to lower production, lower
realized prices and higher cash costs.
Capital expenditures in 1997 totaled $65.1 million, compared to $233.9 million a
year earlier in 1996. The majority of the capital was spent on completing and
commissioning the milling and processing facility at Mt. Todd.
CHAPTER 11 UPDATE
Subsequent to the Company filing for protection under Chapter 11 on January 16,
1998, a Creditors' Committee was formed. The committee consists of nine
creditors, of which three represent lenders under the revolving credit facility,
three represent convertible subordinated note holders and three are trade
creditors. The first meeting of creditors (the "341" meeting) was held in Reno,
Nevada on March 9, 1998.
The Company has asked the court to fix May 26,1998 as the "Bar Date", the
deadline for parties-in-interest to file proofs of claim and interest. A notice
of the Bar Date will be sent to all pre-petition creditors. As well, the
Company has filed a motion, as it continues to work on finalizing a plan of
reorganization, requesting an extension of the exclusive period during which to
file a plan of reorganization through July 31, 1998 and the exclusive period to
solicit acceptances of such plan through September 30, 1998. It is the Company's
goal to propose a plan of reorganization by July 31, 1998 and to conclude these
cases by year-end. The Bankruptcy Court has scheduled a hearing on May 13, 1998
to hear this motion.
PEGASUS GOLD AUSTRALIA VOLUNTARY ADMINISTRATION
The second meeting of creditors of Pegasus Gold Australia (PGA) is scheduled to
be held April 24, 1998 in Darwin, Australia, to decide PGA's future. The
creditors will resolve one of the following:
i) that the administration of PGA should end and control of PGA revert to
its Directors;
ii) that PGA should be wound up by way of a creditors' voluntary winding
up; or
iii) that PGA execute a Deed of Company Arrangement (DCA).
The Directors of PGA have proposed a DCA which allows for the sale of the assets
of, or shares in, PGA as a going concern. The Administrators believe it is in
PGA's creditors' best interests to accept the proposed DCA.
When the Voluntary Administrator was appointed in December 1997, PGA was
involved in a number of disputes with the general contractor, BKK, who completed
the feasibility study and designed and built the Phase II milling facility at
Mt. Todd. BKK is a joint venture
<PAGE>
between Bateman Kinhill (a partnership between Bateman Project Engineering Pty
and Kinhill Pacific Pty Ltd) and Kilborn Engineering Pacific Pty Ltd.
Following-up on groundwork laid by the Company prior to Administration, the
Administrators filed a writ prior to December 31,1997 in Australia in the
Northern Territory Supreme Court seeking damages upwards of A$250 million
against BKK. Those claims relate to the failure of the Phase II mill facility
at the Mt. Todd Mine, as designed and constructed by BKK under the EPCM
contract, to meet the specifications set out in the feasibility study prepared
by BKK.
The Directors of PGA have proposed in the DCA that the litigation against BKK be
pursued subject to the discretion of the Deed Administrators. It is the
Administrators' preliminary view that the litigation should be pursued.
Pegasus and the revolving credit lending group are PGA's largest creditors.
They would receive the majority of any proceeds from the sale of PGA's assets
and the BKK litigation under the proposed DCA.
PEGASUS GOLD INC 1998 PLANS
Gold production in 1998 is expected to be 300,000 ounces from the Florida
Canyon, Montana Tunnels and Diamond Hill mines. Pegasus anticipates that total
cash costs for 1998 will be $250 per ounce.
For 1998, the Company has planned a $4.3 million exploration program. The focus
in 1998 will be at existing mines where the highest potential exists to move
ounces into reserves.
Due to the Company's current financial position capital spending in 1998 will be
limited to essential projects totaling approximately $4.4 million primarily at
Florida Canyon and Diamond Hill.
Statements in this release which are not historical data are forward looking and
involve a number of risks and uncertainties, including but not limited to the
price of gold and other commodities and currencies, production, construction and
permitting or regulatory delays, reserve estimation of tonnage, grade and
metallurgical recoveries, exploration success and reserve growth, litigation,
capital costs, and other risks that are detailed in the Company's SEC filings.
Pegasus Gold Inc. is an international gold mining company, headquartered in
Spokane, Washington. The Company carries out exploration internationally
through offices located in Santiago, Chile; and Panama City, Panama. The common
shares of Pegasus are traded under the symbol PGU on the Montreal Exchange. The
common shares also trade over the counter in the United States under the symbol
PSGQF.
<PAGE>
SIX TABLES FOLLOW
FOR FURTHER INFORMATION, CONTACT:
John W. Pearson
Vice President, Investor and Public Relations
509-624-4653
- 30 -
<PAGE>
PEGASUS GOLD INC.
OPERATIONS STATISTICS(1)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
FLORIDA CANYON
Production: Gold (Ounces) . . . . . . . . 35,196 64,513 163,320 183,176
Silver (Ounces) . . . . . . . 28,178 34,397 146,567 104,684
Ore Mined tonnes (000's). . . . . . . . 2,344 4,027 10,795 13,881
Cash Operating Cost. . . . . . . . . . . . . 363 236 310 250
Total Cash Cost. . . . . . . . . . . . . . . 378 256 323 266
Total Production Cost. . . . . . . . . . . . 475 353 424 342
MONTANA TUNNELS(2)
Production: Gold (Ounces) . . . . . . . . 35,761 24,849 120,226 81,558
Silver (Ounces) . . . . . . . 154,208 231,331 796,003 921,512
Lead (Tons) . . . . . . . . . 1,800 1,845 8,499 7,049
Zinc (Tons) . . . . . . . . . 4,568 3,276 20,861 18,312
Ore Milled tonnes (000's). . . . . . . . 1,066 1,232 4,823 5,006
Cash Operating Cost. . . . . . . . . . . . . 360 367 234 286
Total Cash Cost. . . . . . . . . . . . . . . 372 401 259 326
Total Production Cost. . . . . . . . . . . . 433 570 373 491
MT. TODD
Production: Gold (Ounces) . . . . . . . . 25,315 12,129 100,300 62,613
Silver (Ounces) . . . . . . . 3,303 -- 11,968 --
Ore Milled tonnes (000's). . . . . . . . 876 491 2,611 4,004
Cash Operating Cost. . . . . . . . . . . . . 322 306 338 370
Total Cash Cost. . . . . . . . . . . . . . . 320 306 338 371
Total Production Cost. . . . . . . . . . . . 458 826 480 553
ZORTMAN
Production: Gold (Ounces) . . . . . . . . 1,507 7,820 11,286 37,043
Silver (Ounces) . . . . . . . 1,440 30,904 19,464 129,807
Ore Mined tonnes (000's). . . . . . . . -- -- -- 126
Cash Operating Cost. . . . . . . . . . . . . 283 300 327 309
Total Cash Cost. . . . . . . . . . . . . . . 302 319 343 322
Total Production Cost. . . . . . . . . . . . 465 454 503 445
BEAL MOUNTAIN
Production: Gold (Ounces) . . . . . . . . 9,455 13,157 30,740 45,067
Silver (Ounces) . . . . . . . 1,226 2,523 4,878 7,834
Ore Mined tonnes (000's). . . . . . . . -- 473 672 1,718
Cash Operating Cost. . . . . . . . . . . . . 332 352 289 339
Total Cash Cost. . . . . . . . . . . . . . . 365 383 320 365
Total Production Cost. . . . . . . . . . . . 449 484 407 524
BLACK PINE
Production: Gold (Ounces) . . . . . . . . 9,668 23,639 44,080 87,883
Silver (Ounces) . . . . . . . 3,205 6,121 16,204 30,995
Ore Mined tonnes (000's). . . . . . . . 1,069 2,135 2,654 8,726
Cash Operating Cost. . . . . . . . . . . . . 302 250 276 258
Total Cash Cost. . . . . . . . . . . . . . . 316 276 296 284
Total Production Cost. . . . . . . . . . . . 326 311 307 320
CONSOLIDATED TOTALS
Production: Gold (Ounces) - 100%. . . . . 116,902 146,107 469,952 497,340
Silver (Ounces) . . . . . . . 191,560 305,276 995,084 1,194,832
Lead (Tons) . . . . . . . . . 1,800 1,845 8,499 7,049
Zinc (Tons) . . . . . . . . . 4,568 3,276 20,861 18,312
Ore Mined/Milled tonnes (000's). . . . . . . 5,355 8,358 21,555 33,461
Cash Operating Cost. . . . . . . . . . . . . 327 280 292 280
Total Cash Cost. . . . . . . . . . . . . . . 339 303 308 301
Total Production Cost. . . . . . . . . . . . 426 440 413 409
</TABLE>
(1) Cash Operating costs calculated include all operating costs at the mine
sites, but exclude royalties, production taxes and reclamation. Total cash
costs include royalties and production taxes, but exclude reclamation.
Total production costs include reclamation and depreciation, depletion and
amortization.
(2) Includes production from Diamond Hill, net of by-product credits.
12
<PAGE>
PEGASUS GOLD INC.
GOLD RESERVES(1) AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Tonnage Grade Contained
(Tonnes (grams/ Ounces
PROVEN AND PROBABLE 000's) tonne) (000's)
------- ------- -------
<S> <C> <C> <C>
Florida Canyon . . . . . . . . 39,498 0.69 877
Montana Tunnels. . . . . . . . 17,589 0.55 308
Diamond Hill . . . . . . . . . 198 8.10 51
------- ------- -------
TOTAL . . . . . . . . . . 57,285 0.67 1,236
------- ------- -------
------- ------- -------
MINERALIZED MATERIAL
Florida Canyon . . . . . . . . 6,903 0.72 159
Montana Tunnels. . . . . . . . 18,603 0.57 343
Diamond Hill . . . . . . . . . 110 8.76 31
------- ------- -------
SUBTOTAL. . . . . . . . . 25,616 0.65 533
Mt. Todd(2). . . . . . . . . . 23,190 1.27 949
Zortman(3) . . . . . . . . . . 22,026 0.58 410
Pullalli(4). . . . . . . . . . 9,135 1.60 470
------- ------- -------
TOTAL . . . . . . . . . . 79,967 0.92 2,362
------- ------- -------
------- ------- -------
ADDITIONAL MINERALIZATION
Florida Canyon . . . . . . . . 104,531 0.63 2,120
Montana Tunnels. . . . . . . . 14,043 0.52 233
Diamond Hill . . . . . . . . . 645 7.89 164
------- ------- -------
SUB TOTAL . . . . . . . . 119,219 0.66 2,517
Mt. Todd(2). . . . . . . . . . 43,191 1.14 1,581
Zortman(3) . . . . . . . . . . 53,269 0.54 919
Pullalli(4). . . . . . . . . . 4,067 0.89 117
------- ------- -------
TOTAL . . . . . . . . . . 219,746 0.73 5,134
------- ------- -------
------- ------- -------
</TABLE>
(1) Ore reserves are calculated using a $350 per ounce gold price(2) Mt. Todd
was placed in voluntary administration in Australia in December 1997
(3) The Company is not going ahead with the Zortman Extension at this time
(4) The Company may sell the Pullalli property
13
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Years Ended December 31, 1997 and 1996
(In Thousands of U.S. Dollars, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales. . . . . . . . . . . . . . . . . . . . . . . $ 49,316 $ 67,531 $ 226,463 $ 239,720
--------- --------- --------- ---------
Cost of sales. . . . . . . . . . . . . . . . . . . 45,395 49,893 176,324 177,520
Depreciation and amortization. . . . . . . . . . . 9,895 19,999 49,414 53,792
--------- --------- --------- ---------
55,290 69,892 225,738 231,312
--------- --------- --------- ---------
Gross profit (loss). . . . . . . . . . . . . . . . (5,974) (2,361) 725 8,408
--------- --------- --------- ---------
Operating expenses:
General and administrative . . . . . . . . . . . 2,409 2,777 9,672 13,202
Exploration and evaluation . . . . . . . . . . . 2,724 2,628 6,480 7,728
Closure, reclamation and related costs . . . . . 42,320 3,000 51,820 10,742
Care and maintenance . . . . . . . . . . . . . . 6,180 120 11,350 963
Property write-downs . . . . . . . . . . . . . . 90,286 1,029 531,359 1,029
Restructuring charges. . . . . . . . . . . . . . 1,939 --- 4,125 ---
--------- --------- --------- ---------
145,858 9,554 614,806 33,664
--------- --------- --------- ---------
Loss from operations . . . . . . . . . . . . . . . (151,832) (11,915) (614,081) (25,256)
--------- --------- --------- ---------
Other income (expense):
Interest and other income. . . . . . . . . . . . 1,594 573 3,474 3,696
Interest expense, net of amount capitalized .. . (3,886) 85 (9,410) (2,421)
Loss on disposition of assets & investments .. . (11,416) 137 (28,097) (19)
Gain on forward contract close-outs. . . . . . . 88,668 --- 88,668 ---
Equity in net income (loss) of affiliates. . . . --- (1,002) 2,012 2,587
--------- --------- --------- ---------
74,960 (207) 56,647 3,843
--------- --------- --------- ---------
Loss before income taxes . . . . . . . . . . . . . (76,872) 12,122 (557,434) (21,413)
Income tax provision (benefit) . . . . . . . . . . --- (11) (44,602) 190
--------- --------- --------- ---------
Net loss . . . . . . . . . . . . . . . . . . . . . $ (76,872) $ (12,111) $(512,832) $ (21,603)
--------- --------- --------- ---------
--------- --------- --------- ---------
Net loss per share . . . . . . . . . . . . . . . . $ (1.85) $ (0.30) $ (12.40) $ (0.53)
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average common shares outstanding . . . . 41,729 41,085 41,345 40,757
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
14
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1996
(In Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
ASSETS
1997 1996
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 22,638 $ 8,566
Forward contracts . . . . . . . . . . . . . . . . . . . . . 35,665 ---
Due from sales of products. . . . . . . . . . . . . . . . . 18,766 36,748
Inventories . . . . . . . . . . . . . . . . . . . . . . . . 25,086 51,997
Receivable from unconsolidated subsidiary . . . . . . . . . 1,754 ---
Other current assets. . . . . . . . . . . . . . . . . . . . 4,282 10,164
--------- ---------
Total current assets . . . . . . . . . . . . . . . . . 108,191 107,475
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,795 20,987
Property, plant, and equipment, net. . . . . . . . . . . . . . . 84,700 618,940
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 7,036 6,806
--------- ---------
Total Assets . . . . . . . . . . . . . . . . . . . . . $ 201,722 $ 754,208
--------- ---------
--------- ---------
LIABILITIES
Current liabilities:
Accounts payable and other current liabilities. . . . . . . $ 10,632 $ 23,641
Accrued salaries, wages, and benefits . . . . . . . . . . . 3,061 10,350
Mining taxes payable. . . . . . . . . . . . . . . . . . . . 3,737 4,610
Accrued losses on foreign currency contracts. . . . . . . . 15,975 ---
Accrued care and maintenance. . . . . . . . . . . . . . . . 4,413 ---
Current portion of obligations under capital lease. . . . . 3,872 3,626
Current portion of long-term debt . . . . . . . . . . . . . 203,266 ---
--------- ---------
Total current liabilities. . . . . . . . . . . . . . . 244,956 42,227
Capital lease obligations. . . . . . . . . . . . . . . . . . . . 18,693 22,466
Deferred site closure and reclamation. . . . . . . . . . . . . . 87,697 50,878
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . --- 215,086
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . --- 44,602
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . --- 8,074
Other deferred liabilities . . . . . . . . . . . . . . . . . . . 6,153 7,598
--------- ---------
Total liabilities. . . . . . . . . . . . . . . . . . . 357,499 390,931
--------- ---------
SHAREHOLDERS' EQUITY (DEFICIT)
Class A preferred shares, Series 1, C$10 par value:
Authorized - 20,000,000 shares; none issued
Common shares, no par value:
Authorized - 200,000,000 shares; issued
and outstanding, 1997 - 41,833,751 shares
and 1996 - 41,092,342 shares. . . . . . . . . . . . . . . . 428,810 425,382
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . (583,566) (70,734)
Foreign currency translation adjustment. . . . . . . . . . . . . (1,021) 8,629
--------- ---------
Total shareholders' equity (deficit) . . . . . . . . . (155,777) 363,277
--------- ---------
Total liabilities and shareholders' equity (deficit) . $ 201,722 $ 754,208
--------- ---------
--------- ---------
</TABLE>
15
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1997 and 1996
(In Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Operating activities:
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . $(512,832) $ (21,603)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . 44,801 54,499
Property write-downs. . . . . . . . . . . . . . . . . . . . 531,359 1,029
Loss on disposition of assets and investments . . . . . . . 28,097 ---
Gain on forward contract closeouts. . . . . . . . . . . . . (88,668) ---
Provision for closure, reclamation, and related costs . . . 51,820 10,742
Payments for closure and reclamation. . . . . . . . . . . . (16,429) (9,750)
Deferred amounts. . . . . . . . . . . . . . . . . . . . . . (45,360) 1,571
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . 15,069 1,515
Change in due from sale of products. . . . . . . . . . . . . . . 17,899 (8,116)
Change in inventories. . . . . . . . . . . . . . . . . . . . . . 2,923 (12,845)
Change in other current assets . . . . . . . . . . . . . . . . . 3,610 (519)
Change in accounts payable and accrued liabilities . . . . . . . (6,514) 3,207
--------- ---------
Net cash provided by operating activities. . . . . . . . . . . . 25,775 19,730
--------- ---------
Investing activities:
Additions to property, plant, and equipment . . . . . . . . (65,054) (233,861)
Proceeds from sale of other investments . . . . . . . . . . 1,460 8,614
Proceeds from sale of property, plant, and equipment. . . . --- 3,881
Sale (purchase) of short-term investments . . . . . . . . . --- 20,083
Purchase of other investments . . . . . . . . . . . . . . . --- (8,551)
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . --- (793)
Acquisition of additional investment in subsidiary. . . . . --- ---
--------- ---------
Net cash used in investing activities. . . . . . . . . . . . . . (63,594) (210,627)
--------- ---------
Financing activities:
Proceeds from issuance of long-term debt, net . . . . . . . 39,446 97,017
Proceeds from issuance of common shares . . . . . . . . . . 907 91,168
Proceeds from forward contract closeouts. . . . . . . . . . 48,410 ---
Payments of long-term debt. . . . . . . . . . . . . . . . . (29,434) (19,189)
Payments made on foreign currency contracts . . . . . . . . (2,400) ---
Payments of obligations under capital lease . . . . . . . . (3,527) (3,139)
--------- ---------
Net cash provided by financing activities. . . . . . . . . . . . 53,402 165,857
--------- ---------
Effect of exchange rate changes on cash and
cash equivalents . . . . . . . . . . . . . . . . . . . . . . . (1,511) 699
--------- ---------
Net increase (decrease) in cash and cash equivalents . . . . . . 14,072 (24,341)
Cash and cash equivalents, beginning of year . . . . . . . . . . 8,566 32,907
--------- ---------
Cash and cash equivalents, end of year . . . . . . . . . . . . . $ 22,638 $ 8,566
--------- ---------
--------- ---------
</TABLE>
16
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Years Ended December 31, 1997, 1996, and 1995
(In Thousands of U.S. Dollars)
<TABLE>
<CAPTION>
Common Shares Foreign
-------------------------- Currency
Number Accumulated Translation
of Shares Amount Deficit Adjustment
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 . . . . . . . . . . . . 34,629,523 $ 332,110 $ (46,178) $ 6,410
Net loss . . . . . . . . . . . . . . . . . . . . . (2,953)
Common shares issued for:
Stock option plan . . . . . . . . . . . . . . . 157,925 1,686
Employee savings plan and other . . . . . . . . 37,755 418
Foreign currency translation adjustment. . . . . . (2,789)
---------- ----------- ----------- -----------
Balance, December 31, 1995 . . . . . . . . . . . . 34,825,203 $ 334,214 $ (49,131) $ 3,621
Net loss . . . . . . . . . . . . . . . . . . . . . (21,603)
Common shares issued for:
Cash. . . . . . . . . . . . . . . . . . . . . . 6,000,000 88,175
Stock option plan . . . . . . . . . . . . . . . 234,217 2,612
Employee savings plan and other . . . . . . . . 32,922 381
Foreign currency translation adjustment. . . . . . 5,008
---------- ----------- ----------- -----------
Balance, December 31, 1996 . . . . . . . . . . . . 41,092,342 $ 425,382 $ (70,734) $ 8,629
Net loss . . . . . . . . . . . . . . . . . . . . . (512,832)
Common shares issued for:
Employee severance. . . . . . . . . . . . . . . 578,809 2,541
Stock option plan . . . . . . . . . . . . . . . 41,100 311
Employee savings plan and other . . . . . . . . 121,500 576
Foreign currency translation adjustment. . . . . . (9,650)
---------- ----------- ----------- -----------
Balance, December 31, 1997 . . . . . . . . . . . . 41,833,751 $ 428,810 $ (583,566) $ (1,021)
---------- ----------- ----------- -----------
---------- ----------- ----------- -----------
</TABLE>
17
<PAGE>
EXHIBIT 99.2
18
<PAGE>
PEGASUS GOLD CORPORATION AND SUBSIDIARIES
MONTHLY REPORT
FINANCIAL STATEMENTS -- INDEX
MARCH 1 - MARCH 31, 1998
CONSOLIDATED STATEMENT OF OPERATIONS, MARCH 1, 1998 - MARCH 31, 1998
CONSOLIDATED STATEMENT OF CASH FLOWS, MARCH 1, 1998 - MARCH 31, 1998
CONSOLIDATED BALANCE SHEET, MARCH 31, 1998
19
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED STATEMENT OF OPERATIONS
JANUARY 16 - MARCH 31, 1998
<TABLE>
<CAPTION>
PTD March
----------------------
<S> <C> <C>
Sales $24,113 $ 9,184
----------------------
Cost of Sales 19,578 7,486
Depreciation and amortization 4,526 1,635
----------------------
24,104 9,121
----------------------
Gross profit 10 62
----------------------
Operating expenses:
General and administrative 1,472 717
Royalties 392 156
Exploration and evaluation 773 208
Care and maintenance 132 61
Property write-downs 3 3
Restructuring charges 19 (10)
----------------------
2,791 1,134
----------------------
Income (loss) from operations (2,782) (1,072)
----------------------
Other income (expense):
Interest and other income 667 502
Interest expense, net of amounts capitalized (2,654) (1,082)
Gain (loss) on disposition of assets (246) (0)
----------------------
(2,233) (581)
----------------------
Income (loss) before income taxes (5,014) (1,652)
Income tax provision (benefit) 0 (0)
----------------------
Net Income (loss) $(5,014) $(1,652)
----------------------
----------------------
</TABLE>
NOTE: The consolidated statement of operations includes
non-bankrupt subsidiaries. Losses from non-bankrupt subsidiaries were
$139,000 in March and $489,000 for the period-to-date. These losses
represent exploration expense.
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
JANUARY 16 - MARCH 31, 1998
<TABLE>
<CAPTION>
PTD March
-----------------------
<S> <C> <C>
Operating activities:
Net income (loss) ($5,015) ($1,653)
Adjustments to reconcile:
Depreciation 5,486 2,515
Amortization of debt issuance costs 109 0
Loss on sale of investments 331 0
Provision for closure, enviro., & legal 0 0
Payments for closure, enviro., & legal (146) (146)
Deferred items (443) (75)
Other, net (1,632) (915)
Change in receivables (5,352) (1,076)
Change in inventories (1,004) (1,359)
Change in accounts payable and accruals 8,071 (8,826)
Change in intercompany accounts 0 0
Change in other current assets 36,930 593
-----------------------
Net cash provided by operating activities 37,335 (10,942)
-----------------------
Investing activities:
Additions to property plant, and
equipment, net (1,295) 9,769
Sale of property plant, and equipment 0 0
Purchase of investments 0 0
Proceeds from the sale or maturity
of investments 181 181
-----------------------
Net cash applied to investing activities (1,114) 9,950
-----------------------
Financing activities:
Proceeds from issuance of common stock 0 0
Payments of obligations under capital lease (143) (87)
Proceeds from issuance of long-term debt 0 0
Payments of long term debt (26,336) 0
Debt issuance costs 0 0
-----------------------
Net cash provided by (applied to) financing
activities (26,479) (87)
-----------------------
Net increase (decrease) in cash and cash
equivalents 9,742 (1,079)
Cash and cash equivalents, beginning of period 20,871 31,692
-----------------------
-----------------------
Cash and cash equivalents, end of period $30,613 $30,613
-----------------------
-----------------------
</TABLE>
NOTE: This consolidated statement of cash flows includes non-bankrupt
subsidiaries.
<PAGE>
PEGASUS GOLD INC.
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Current Assets:
Cash and cash equivalents $30,613
Due from sales of products 19,202
Receivable from unconsolidated subsidiary 2,574
Inventories 26,884
Other Current Assets 2,837
----------------
Total current assets 82,089
Investments 1,283
Property, plant and equipment, net 80,846
Other Assets 7,585
----------------
Total Assets $171,804
----------------
----------------
LIABILITIES
Liabilities subject to compromise $ 23,494
Current Liabilities:
Accounts payable and other current 7,492
Accrued salaries, wages, and benefits 3,547
Mining taxes payable 4,583
Dividends Payable 0
Current portion of capital lease obligations 3,891
----------------
Total current liabilities 19,812
----------------
Long-term debt 176,930
Capital lease obligations 18,307
Accrued care & maintenance 3,096
Deferred site closure and remediation 88,167
Deferred revenue 0
Other deferred liabilities 5,836
----------------
Total Liabilities $35,642
----------------
SHAREHOLDERS' EQUITY
Class A preferred stock, Series 1, C$10 par value:
Authorized - 20,000,000 shares; none issued
Common stock no par value:
Authorized - 200,000,000 shares; issued and
outstanding, 1997 - 41,834,086 shares 428,810
Accumulated deficit (591,657)
Foreign currency translation adjustment (992)
Unrealized Gain/(Loss) on Available for Sale Investments 0
----------------
Total shareholders' equity (163,838)
----------------
Total liabilities and shareholders' equity $171,804
----------------
----------------
</TABLE>
NOTE: This consolidated balance sheet includes the non-bankrupt subsidiaries.
Total assets and liabilities of non-bankrupt subsidiaries were $964,000
and $286,000, respectively, at March 31 1998.
The consolidating balance sheet only includes the bankrupt subsidiaries.
It differs from this balance sheet by the items mentioned above, the
intercompany balances between bankrupt and non-bankrupt subsidiaries,
($84,362,069), which do not eliminate, and investments by bankrupt
companies in non-bankrupt subsidiaries ($28,418,000) which also do not
eliminate.
