Higher operating profits at the Red Dog mine and the Trail smelter allowed
Cash flow during the 3-month period was $91 million (or $1.06 per share), versus $51 million (59 per share) in the corresponding period of 1999. As a result, the major was able to slash its net debt by $90 million, to $540 million. Moreover, the debt is expected to fall still further, to $350 million, as a result of proceeds generated by the anticipated sale of Cominco’s 47.25% stake in the Quebrada Blanca copper mine in Peru to
Cominco earned $19 million (23 per share) in the recent first quarter on revenue of $419 million, compared with year-ago earnings of $4 million (5 per share) on $384 million. Operating profits between the two periods doubled to $58 million.
At the Red Dog mine in northern Alaska, operating profits rose to $34 million from $13 million between the two first quarters. The operation benefited from higher metal prices and an increase in concentrate sales. The mine produced 228,000 tonnes zinc concentrate and 32,100 tonnes lead concentrate in the first three months of 2000, compared with 233,000 and 33,500 tonnes, respectively, in the year-ago period.
At the Trail smelter, in British Columbia, operating profit rose to $20 million from $18 million between the two first quarters. Sales from the refinery in southeastern British Columbia were 71,200 tonnes zinc and 20,200 tonnes lead, compared with 69,900 and 21,100 tonnes, respectively, a year earlier. (Zinc production in the second quarter of 2000 is expected to be 7,000 tonnes lower than normal, owing to a scheduled maintenance shutdown in May and damage caused by a fire in mid-April.)
The Sullivan mine in southeastern British Columbia incurred an operating loss of $11 million, compared with a loss of $3 million in the first quarter of 1999. The loss is blamed on ground control problems that lowered the grade and curtailed ore feed to the mill. The mine produced 41,400 tonnes zinc concentrate and 14,300 tonnes lead concentrate in the period, compared with 47,500 and 17,300 tonnes a year ago.
Although the mine’s performance has improved in recent months, CEO David Thompson says Cominco is reviewing the life expectancy of Sullivan and its impact on Trail. The mine is in the final two years of its planned operation. If an alternative source of concentrate for Trail can be found (perhaps in the form of additional feed from Red Dog), the Sullivan mine could be closed earlier than planned.
In 1999, Red Dog shipped 250,000 tonnes of concentrate to Trail for processing by roasting. Recent tests indicate that Red Dog concentrate can be treated by means of pressure leaching, and Cominco is considering increasing, by as much as 400,000 tonnes, the amount shipped to Trail.
Meanwhile, the Cajamarquilla zinc refinery near Lima, Peru, produced 30,700 tonnes zinc in the first quarter — down from its record-setting 32,200 tonnes in the fourth quarter of 1999.
Quarterly production at Cominco’s 77.5%-owned Polaris mine, on Little Cornwallis Island, Nunavut, fell to 44,300 tonnes zinc concentrate and 8,300 tonnes lead concentrate, down from 46,700 and 9,900 tonnes, respectively, in the first three months of last year. The shortfall is attributed to lower grades.
At the Highland Valley copper mine, near Kamloops, B.C., 23,500 tonnes of copper were produced, up from 21,900 tonnes a year ago. Highland Valley Copper is a partnership controlled 50% by Cominco, 33.6% by
Thompson says he is encouraged by the recent upswing in zinc markets, especially in Taiwan, Korea, Italy and Germany. He adds that the U.S. market remains strong and that Latin America has improved in recent months.
“Overall, we see a pretty strong market ahead,” he says
At March 31, 2000, Cominco had $424 million in working capital and 85.6 million shares outstanding.
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