ALASKA & THE YUKON — Cominco hot on Red Dog target — Latest results warrant follow-up drilling in 2000

Based on drill results from a new target 6 miles north of its Red Dog zinc-lead mine in northern Alaska, Cominco (CLT-T) has decided to proceed with an extensive follow-up program next summer.

Highlights of the recent program include hole 810, which returned 240 ft. grading 20% zinc and 5% lead, plus 4 oz. silver per tonne. Also, a previously reported hole intersected 160 ft. of 18% zinc and 5% lead.

To date, Cominco has drilled nine holes on 400-ft. centres, with only one miss. Two additional holes were stopped short of their targeted depth and will be completed when drilling resumes next year. Significant flat-lying zones of zinc-lead-silver mineralization were encountered in an area measuring roughly 1,300 by 1,200 ft. The mineralization remains open to the northeast, northwest and southwest.

“We have been drilling under a large barite cap, since nearly all zinc mineralization at Red Dog occurs under such caps,” says Cominco President David Thompson, who adds: “A lot more drilling is required.”

Red Dog reported an operating profit of $36 million in the recent third quarter — $15 million more than a year ago. The mine produced 246,700 tonnes zinc concentrate and 42,400 tonnes lead concentrate during the period, representing an increase of 15% and 38%, respectively, over the third quarter of 1998. The higher output was the result of a concerted effort to boost the production rate.

Red Dog’s 1999 shipments, which began late, in mid-July, are forecast at 950,000 tonnes zinc concentrate and 155,000 tonnes lead concentrate.

“We are nearing the 1-million-tonne mark,” says a confident Thompson.

A resurgence in base metal prices and record zinc production contributed to Cominco’s third-quarter earnings of $31 million (or 36 cents per share) on revenue of $424 million, compared with a loss of $11 million (13 cents per share) on $401 million a year ago.

Operations generated cash flow (before non-cash working capital items) of $70 million (81 cents per share) during the three months ended Sept. 30, 1999, versus $1 million in the year-ago quarter. At last report, the company had $456 million in working capital and a net debt of $752 million.

The quarter was marked by record quarterly production from Red Dog, the Cajamarquilla zinc refinery in Peru, and the Trail smelter in British Columbia. Cominco also benefitted from a 12% increase in zinc prices and a 9% rise in the price of copper during the quarter.

Trail added $22 million to Cominco’s coffers, thanks partly to the improved performance of the Kivcet lead smelter, which operated at 95% capacity, compared with 55% in the third quarter of 1998.

The 82%-owned Cajamarquilla refinery generated an operating profit of $9 million in the quarter, compared with $6 million a year ago. The improvement is partly due to a 37% rise in the volume of refined zinc sale. The refinery produced 31,000 tonnes of zinc in the recent period.

Meanwhile, Cominco’s 77.5%-owned Polaris mine in the Canadian Arctic produced 44,800 tonnes zinc concentrate and 9,400 tonnes lead concentrate in the recent quarter, similar to year-ago levels. Concentrate shipments are expected to total 245,000 tonnes zinc and 56,000 tonnes lead. Polaris posted an operating profit of $12 million, compared with $8 million a year ago.

The Sullivan mine in southern British Columbia suffered an operating loss of $1 million, versus a $5-million loss a year ago. Quarterly production totalled 35,200 tonnes zinc concentrate and 10,600 tonnes lead concentrate.

At the Highland Valley copper mine, in the same province, Cominco was able to resume operations after reaching a labour agreement that ties wage rates to the price of copper.

Highland Valley Copper (HVC) is a partnership controlled 50% by Cominco, 33.6% by Rio Algom (rom-t), 13.9% by Teck (tek-t) and 2.5% by Highmont Mining.

HVC contributed $28 million in revenue to Cominco in the recent quarter, down $21 million from a year ago. Since operations did not resume until September, no operating profit or loss was reported during the quarter.

Cominco’s 47.25%-owned Quebrada Blanca copper mine in northern Chile produced an operating loss of $1 million, unchanged from a year ago.