The earnings translate into 30 per share, and compare favourably with a year-earlier profit of $38.5 million, or 20 a share. Consolidated revenue between the two periods climbed by $60.6 million, to $695 million, on increased nickel volumes and a 20% increase in the company’s realized nickel price. Similarly, cash flow from operations (after working capital) climbed $33 million, to $155.4 million.
So far this year, Falco has nearly doubled its earnings to $116.5 million, or 62 a share; revenue climbed 20% to $1.4 billion, while operating income soared 76% to $167.6 million. Again, higher nickel prices (up 27% to $3.85 per lb.) and volumes are behind the improvement. The company also enjoyed slightly higher realized prices for its other metals. Cash flow from operations climbed 37% to $219.1 million.
Falco’s mined metal volumes during the quarter amounted to 20,311 tonnes nickel (versus 20,354 tonnes in the second quarter of 2002), 6,557 tonnes ferronickel (7,152 tonnes), 79,864 tonnes copper (83,343 tonnes), 16,476 tonnes zinc (26,858 tonnes), and 548,000 oz. silver (774,000 oz.). Refined production totalled 26,697 tonnes nickel (25,476 tonnes a year earlier), 68,259 tonnes copper (65,618 tonnes), and 30,966 tonnes zinc (34,654 tonnes).
That performance is mimicked during the year so far, except for ferronickel production, which rose 3,180 tonnes to 13,444 tonnes.
For the quarter, Falco realized an average of US$3.87 per lb. of nickel (up 20% from a year earlier), US$3.79 per lb. ferronickel (up 21%), and US76 per lb. copper (up a penny). Zinc was unchanged at US39 a lb., and realized silver prices fell US8 to US$4.62 per oz.
“Our production and overall financial results for the quarter were positive; however, we continue to be challenged by the strengthening of the Canadian currency relative to the U.S. dollar and by cost pressures resulting from high energy prices,” says President Aaron Regent. “Metal prices have been steady with the exception of nickel, which has been a strong performer. The economy remains a concern, but we’re cautiously optimistic for the balance of the year.”
Looking ahead, Falco expects nickel output from its integrated nickel operations to fall in the third quarter, as a result of scheduled shutdowns at Lockerby, Thayer Lindsley, and the Strathcona mill.
With an eye toward replacing dwindling resources in the Sudbury region, the company has approved development of the $100-million Montcalm nickel-copper project, 70 km northwest of Timmins, Ont. An ongoing feasibility study at Montcalm has outlined a sulphide reserve of 5.1 million tonnes grading 1.46% nickel, 0.7% copper, and minor cobalt credits. Reserves can support annual production of 8,000 tonnes nickel over an 8.5-year mine life.
At the Nickel Rim South property, near Sudbury, tonnage has been boosted by 27% from the beginning of the year to 7.9 million tonnes grading 1.7% nickel and 4.4% copper, plus 2.3 grams platinum, 2.8 grams palladium and 0.9 gram gold per tonne.
At the quarter’s end, Falco had $427 million in cash, up from $260 million at the end of 2002.
The company has declared a dividend of 10 per common share, 2 per Series 1 preferred share, and 36.72 per Series 2 preferred share. The dividends are payable between the end of July and mid-August.
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