Improved Louvicourt bolsters Novicourt and Aur

A combination of higher production and lower processing charges at the Louvicourt mine, east of Val d’Or, Que., substantially improved Novicourt‘s (NOV-T) year-end financial results.

The company, which holds a 45% interest in the copper-zinc-gold producer, earned $9.4 million in 1999, an improvement of nearly $7 million over the previous year. Revenue between the two periods rose to $57.1 million from $46.3 million. Fourth-quarter and year-end profits translated into common share dividends of 11 and 23, respectively.

Year-end results were buoyed by strong fourth-quarter earnings. The company made a profit of $4.6 million on sales of $17.4 million during the recent 3-month period, much-improved over the corresponding period of 1998, when the company lost $300,000 on sales of $10.4 million.

Novicourt credits its improved performance to increased copper production at Louvicourt, its sole asset; the remaining interest is shared by Aur Resources (AUR-T), with 30%, and Teck (TEK-T), with 25%. Tonnage milled held steady between 1998 and 1999 at about 1.6 million tonnes, but copper head grades jumped to 4.2% in 1999 from 3.6% in 1998. Head grades for silver also increased, to 72.2 grams from 68.8 grams. Overall, the mine produced 229,274 tonnes of copper concentrate in 1999 versus 195,842 tonnes in 1998. However, zinc production dropped to 30,417 tonnes from 33,215 tonnes.

Lower processing charges reflected “lower global benchmark smelting terms,” the company reports.

Prices paid for the metals produced at Louvicourt improved during the fourth quarter. However, average prices for those metals were lower in 1999 than in 1998, except zinc, which rose 3 to 49 per lb. Copper was down 4 at 71 per lb.; gold fell $15 to $279 per oz.; and silver slipped 28 to $5.25 per oz.

Louvicourt’s part-owner Aur Resources also saw improved earnings, with a profit of $7.2 million (3 per share) on revenues of $97.7 million in the nine months ended Dec. 31. In the comparable period in 1998, Aur lost $2.5 million on revenues of $91.1 million, partly as a consequence of large writedowns.

Apart from Louvicourt’s improved year, Aur saw its Andacollo copper mine in northern Chile produce 21,800 tonnes of cathode at an average cost of US52 per lb. (US$1,150 per tonne). Andacollo, operated by Aur in a joint venture with 30% owner Minera del Pacifico, converted to owner-operation from contract mining in 1999 and Aur expects costs to fall as a result.

With $83.5 million in cash, part of a total working capital sum of $102.2 million, Aur has been looking for acquisitions. The company first approached liquidity-challenged Cambior (CBJ-T), which was looking for possible buyers of assets to put out the fire in its hedge book, but has since started looking for other places to put its cash, warning that if it succeeded in striking another deal elsewhere it would abandon the Cambior bid.

Among the properties currently looking for a buyer is the Virgen gold project in northern Peru, held by Gitennes Exploration (GIT-T). Cambior recently dropped an option on the project.

Cambior has agreed to give Aur access to confidential information surrounding the current hedging troubles but its board recommended shareholders reject Aur’s bid of 0.91 Aur shares for each Cambior share.