Return on assets ensures profitable year for Metal

The 62%-owned subsidiary of German metals giant Metallgesellschaft AG reported net income after extraordinary items of $39.7 million or $1.06 per share for the year ended Dec 31. That represents a substantial increase from net income of $16 million or 43 cents per share in 1987.

Metall attributed the income increase to improved operating results achieved by Vancouver-based affiliates Teck Corp. (TSE) and Cominco Ltd. (TSE) which are part of company’s broad asset base.

The profit increase was obtained even though Metall recently agreed to pay $85 million(US) for all the outstanding shares of Michigan- based copper-silver producer Copper Range Co. Pending shareholder approval, the deal is scheduled to close sometime in May.

In another development, Metall has agreed to earn a 20% stake with subsidiaries of South African resource companies Anglo American Corp. and Rand Mines to develop a Namibian gold property.

Production, at a rate of 60,000 oz annually, is scheduled to begin late this year.

Metall is affiliated with Teck via a 49% stake in Temagami Mining Co. the company that controls the Vancouver resource giant. As reported (N.M., Feb 13/89) Metall also holds a 10% holding in each of Cominco and the Highland Valley Copper group.

Metall’s share of Cominco earnings (before extraordinary items) increased to $18.6 million in 1988 from $4.6 million the previous year. Also up was Metall’s stake in the earnings of Teck. It increased to $8.8 million in 1988 from $1.6 million last year because of increased production at the David Bell gold mine at Hemlo, Ont., and higher earnings reported by Cominco and Lornex Mining Corp.

In addition to its North American interest, Metall has established itself on the Pacific rim via a 9.7% stake in Papua New Guinea-based Ok Tedi Mining Co.

Last year the Ok Tedi operation churned out 52,677 tonnes of copper in addition to 580,000 oz gold (381,000 oz in concentrates and 199,000 oz in bullion). That compares to 584,000 oz gold in 1987.

While the Callion gold project in Australia is much smaller than Ok Tedi, Metall is hoping that its 25% interest in the 90,000 ton-per-year gold project will lead to other opportunities in the region. Metall’s share of production from Callion in 1988 was 7,000 oz.

At the Cayeli Bakir Isletmeleri copper zinc project in Turkey, where reserves stand at 15 million tons grading 4.54% copper, 7.79% zinc and 1.05 oz silver per ton, detailed studies are underway to determine optimal mining and recovery methods, Metall says.

Metall controls the Turkish project through its 49% stake in Cayeli.

The Toronto company ended the year with a long-term debt position of $21 million (compared to $19 million in 1987) and 37.7 million shares outstanding.

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