Steady production and beneficial hedging allowed
Aur’s share of combined second-quarter production from the Quebrada Blanca (QB) and Andocollo mines in Chile and the Louvicourt mine in Quebec consisted of 58.9 million lbs. copper (compared with 20.3 million lbs. during the second quarter of 2000, prior to the acquisition of QB in November 2000), 1.6 million lbs. zinc (2.4 million lbs. a year earlier), 52,000 oz. silver (54,000 oz.), and 2,200 oz. gold (1,900 oz.).
Aur earned its US$8 million (US7 per share) on operating revenue of US$57.3 million, compared with earnings of just US$434,000 (US1 per share) on revenue of US$17.8 million a year earlier.
Although copper averaged US75 per lb. on the London Metal Exchange during the quarter, Aur continued to benefit from the hedging of 62% of its 2001 production at US87 per lb., whereby deliveries are spread out evenly over the 12 months of the year.
The hedging allowed Aur to sell its second-quarter production at an average of US86 per lb, which translates into an extra US$4.7 million in revenue for the period.
Aur’s cash operating costs per pound of copper sold, net of byproduct credits, rose US5 to US49 per lb. during the 3-month period, primarily because of the inclusion of QB’s cash costs, which will likely average US51 per lb. for the full year.
“We’re quite pleased with the results we’ve had in the second quarter,” says President James Gill. “I think they are a reflection of our optimism about the Quebrada Blanca acquisition, as well as the quality of our other mining operations.”
In the first half of 2001, Aur spent US$1.4 million on capital projects and has since revised downwards its capital-cost estimate for all of 2001 to US$10.4 million, or about half the original budget.
Most of the savings are being realized as a result of eliminating US$4 million in planned expenditures at QB, as well as by rescheduling, to 2002, some US$7.2 million in costs relating to improvements in power-grid and leach facilities at QB.
Aur ended the period with US$54.9 million in cash and US$73.5 million in working capital, and Gill notes that the company has “no major new acquisitions on the horizon at this time.”
In June, Aur made the first principal repayment of US$4.2 million on debt related to the QB purchase. The company will make another mandatory prepayment of US$5.6 million on Aug. 15, thereby reducing the outstanding balance of this debt to US$160.2 million.
Broken down by asset, Aur has: a 76.5% interest in the QB copper mine, which is 23.5%-held by Chilean interests; a 70% stake in the Andacollo copper mine, which is 30%-owned by Chilean interests; and a 30% stake in the Louvicourt polymetallic mine, which is 45%-owned by Noranda-subsidiary
In exploration news, a three-dimensional seismic survey, completed this spring around the Louvicourt mine, has revealed several anomalies that may be caused by sulphide mineralization. The partners are evaluating the data and plan to conduct follow-up drilling.
Aur has completed a previously announced conversion of some $723,000 in loans to
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