Kerr Addison plans to reap rewards from new projects

Net income reported by the 50.1%-owned Noranda Inc. (TSE) subsidiary dropped to $10.5 million or 60 cents per share in 1988 from $23.9 million or $1.38 per share at the same time last year.

Nevertheless, Kerr Addison treasurer Arthur Cross said the company was reasonably happy with its performance last year.

The reason, he explained, is that 1987 earnings of $1.38 per share were almost entirely derived from a $24-million gain on the sale of investments in Noranda Inc. and M.F.C. Mining Finance Corp.

Kerr Addison is planning to divest itself of a 4% (7.3 million common shares) stake in Noranda over the next four years, according to Cross.

Kerr Addison’s metal sales increased during 1988 as a result of zinc and copper production from the new Winston Lake zinc mine at Schreiber, Ont. Operated by Kerr Addison’s 50.2%-owned subsidiary, Minnova Inc. (TSE), the Winston Lake mine produced 74 million lb zinc and 3 million lb copper last year.

Output from Kerr’s 9.8%-owned Canadian Electrolytic Zinc reduction plant at Valleyfield, Que., also contributed to 1988 income.

If base metal prices remain at current levels, the commissioning of at least two other projects is expected to strengthen Kerr Addison’s financial position over the next couple of years.

The rehabilitated Norbec concentrator will start to treat copper ore from Minnova’s Ansil deposit in Rouyn-Noranda, Que., in the second quarter of 1989. The project is expected to produce 62.1 million lb copper this year.

Construction is also on schedule at the Samatosum precious and base metals deposit north of Kamloops, B.C., where commercial production is scheduled to start in the fourth quarter of 1989. Samatosum is a joint venture involving Minnova with 70% and Rea Gold Corp. (TSE) with 30%.

Investment income was substantially higher in 1988 as dividends paid on Kerr Addison’s holding of Noranda common shares increased by 55% over the previous year. Kerr Addison was able to recommence recording these dividends as income in 1988.

Capital expenditures during the year amounted to $56.6 million, including $43.5 million on mining projects and $13.1 million on oil and gas prope rties. Investment in subsidiary and associated companies totalled $12.1 million.

Long-term debt was reduced by $10 million to $125 million at year- end, the company said. Cash and short term investments declined by $74.2 million during the year, to a balance of $128.2 million on Dec 31.

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