Brenda quits oil, seeks other interests

It’s probably safe to say the demise of Brenda Mines (TSE) has been greatly exaggerated. The low grade copper producer near Peachland, B.C., has endured two mine closures in recent years and it only reopened after gaining concessions from the provincial government and organized labor.

But higher metal prices have pushed Brenda solidly into the black once again and last year’s net earnings of $16.2 million were the highest since 1979. Company employees haven’t been doing too badly either. Under a profit-sharing scheme, Brenda shelled out approximately $1.5 million last year, representing about $3,750 per individual and one-third higher than 1986.

Brenda’s mining division generated an operating profit of $10.1 million and it appears that Canadian business activities will be almost totally focused on minerals in the future.

At the annual meeting, John M. Gordon, president, announced the sale of Brenda’s oil and gas division to Calgary-based Bankeno Resources for a cash consideration of $31.5 million plus working capital. Excluded from the sale is Brenda’s small (1%) interest in an oil and gas prospect in the Timor Sea off the northwest coast of Australia.

The funds will be added to working capital which at year-end totalled $38.4 million. Pointing out that Brenda has no bank debt, Gordon emphasized the company was “in a position to make an acquisition to replace the Brenda mine.”

He said that Brenda recently bought one million shares of a small United States gold producer for $4 million which will give it a toehold in the U.S. The deal includes an agreement to joint venture several other gold properties in the western U.S., he added.

Like most other base metal producers, Brenda isn’t overly optimistic that copper and molybdenum prices will remain at present levels. But Gordon predicted another good year “with operating results similar to last.” First quarter results were $2.5 million compared to $1.8 million in 1986 because of today’s favorable metal prices, he said.

Gordon R. Harris, Brenda mine manager, said that mining operations will last until mid-1990 and he added that reclamation and mine abandonment plans are being prepared for the closure. An agreement with B.C. Hydro to reduce power rates will make the mine viable until then. The impact of the closure on employees is a key concern to Brenda and some will have to be retrained in other areas, he stated. Harris will be relinquishing his post as mine manager but will remain with Brenda in a consulting capacity.

Mill throughput last year was a record 11.3 million tons or 31,080 tons per day. The 68,980 tons of copper concentrate produced was also a record but molybdenum output (7,271 tons) was down from the previous year because of lower grades. Definition drilling in the pit outlined an extension of the Brenda orebody under the south wall which at current production rates constitutes another year of reserves.

Commenting on the agreement with Vancouver-based Fargo Resources to explore and possibly develop its kaolin deposit near Powell River, John Gordon said: “We aren’t sure what we have there yet.” An extended exploration program has been developed for 1988, he said. Brenda has formed a process technology group which is examining a molybdenum recovery process for Hemlo Gold Mines (TSE). The columnar flotation process should be finalized this year and it would probably be applicable to other operations besides Hemlo. Molybdenum occurs in many ore types mined in the Hemlo area.