Cominco drilling expands zone at Red Dog

Exploration drilling at Cominco’s (CLT-T) Red Dog zinc mine in northern Alaska has expanded a partially defined mineralized zone that was discovered in 1996, immediately north of the Aqqaluk deposit.

Seven holes in 1996 intersected significant zinc sulphide mineralization.

Two of the best intercepts were 60 metres grading 12% zinc, 3.9% lead and 82 grams silver per tonne, and 33.5 metres grading 20.7% zinc, 4.2% lead and 116 grams silver. The zone was estimated to contain a possible 7-million-tonne resource grading 16% zinc, 3% lead and 100 grams silver.

In 1997, eight of 18 holes are said to have encountered significant mineralization, extending the length of the zone by 600 metres. Drilling to date has partially outlined a zone 1,100 metres long and 200 metres wide. The structure, which remains open to the north and west, lies between 200 and 350 metres below surface. An updated tonnage and grade calculation will be completed by year-end.

Higher zinc prices during the third quarter resulted in a record operating profit of $50 million for the open-pit operation, compared with $10 million for the comparable period in 1996.

During the first nine months of 1997, the mine produced 457,700 tonnes of zinc concentrate and 83,400 tonnes of lead concentrate for an operating profit of $88 million on sales of $249 million.

Annual production capacity is being increased by 40% to 910,000 tonnes of zinc concentrate and 180,000 tonnes of lead concentrate at a cost of US$104 million. The expanded production is expected to begin in the third quarter of 1998.

At the end of 1996, Cominco established that the Red Dog contained a measured and indicated reserve of 50.1 million tonnes grading 19.5% zinc, 5.3% lead and 100 grams silver, as well as an inferred reserve of 76 million tonnes grading 13.7% zinc, 3.6% lead and 66 grams silver. An additional probable resource was estimated at 9.6 million tonnes grading 17.8% zinc, 5.5% lead and 117 grams silver.

Cominco earned $37.5 million (or 44cents per share) on sales of $484 million in the third quarter, compared with earnings of $5.2 million (6cents per share) on sales of $448 million for the same period in 1996.

For the first nine months of 1997, earnings amounted to $75.2 million (or 88cents per share) on sales of $1.37 billion, compared with earnings before special items of $53 million (60cents per share) on sales of $1.3 billion in 1996.

With 85.4 million shares outstanding, Cominco has working capital of $470 million and a total debt of $674 million.

The following is a breakdown of how the company’s other major assets have performed:

* Polaris — At Cominco’s zinc-lead mine in the Northwest Territories, third-quarter concentrate production was 6% higher than in the previous year.

An operating profit of $16 million during the quarter represented an $11-million increase from the comparable period in 1996. The increase was attributable to higher zinc prices.

* Trail — The operating profit at the Trail smelting and refining operation, situated in the British Columbian town of the same name, remained at $16 million, unchanged from last year’s third quarter. The new Kivcet lead smelter and slag fuming furnace, which were phased into production during the first quarter, have not yet achieved a constant operating output. The new plants are being fine-tuned.

* Cajamarquilla — The Cajamarquilla zinc refinery, near Lima, Peru, generated an operating profit of $15 million for the third quarter, compared with $6 million for the similar period in 1996. Annual production capacity is being increased by 20,000 tonnes to 120,000 tonnes by mid-1998 at a cost of US$30 million.

A second-stage, US$311-million expansion has already been approved for the refinery, the objective being to double annual capacity to 240,000 from 120,000 tonnes. The expansion is scheduled for completion in the first quarter of the year 2000.

* Highland Valley Copper — At Highland Valley, near Kamloops, B.C., higher production volumes, along with a higher copper price, resulted in a 33% increase in operating profit between this year’s and last year’s third quarter. The mine is a joint venture involving Rio Algom, Teck and Highmont Mining. Cominco’s 50% share was $8 million.

* Quebrada Blanca — The company’s 47.25% proportionate share of third-quarter operating profit at its Chilean copper mine totalled $6 million — a 50% increase from the comparable period last year.

* Glenbrook — The Glenbrook nickel smelter in Oregon recorded a third-quarter operating loss of $5 million, reflecting low nickel prices.