Aur digests QB purchase

As the dust settles following last fall’s purchase of the large Quebrada Blanca mine in Chile, junior copper producer Aur Resources (AUR-T) is reporting a loss for 2000.

Aur posted a net loss of US$15 million (or 19 per share) from operating revenues of US$89.5 million, compared with a profit of US$1.1 million (2 per share) from revenue of US$73.1 million in 1999.

In the fourth quarter, the net loss was US$18.9 million (24 per share) on revenues of US$34.2 million, compared with a loss of US$156,000 (nil per share) on revenue of US$20.8 million during the coresponding period in 1999.

Aur has interests in three mines: a 30% stake in the Louvicourt polymetallic mine in Quebec; a 70% stake in the Andacollo copper mine in Chile; and, since November, a 76.5% interest in the Quebrada Blanca copper mine in Chile. Aur serves as operator at all three mines.

During 2000, Aur’s share of production was 84.4 million lbs. copper (compared with 76.7 million lbs. in 1999), 12.1 million lbs. zinc (11.2 million lbs. in 1999), 261,000 oz. silver (320,000 oz.) and 9,400 oz. gold (11,300 oz.). Total cash costs rose US2 to US46 per lb. copper, after byproduct credits.

In 2001, Aur expects its attributable copper production to reach a record 216 million lbs. copper plus byproduct zinc, silver and gold, at a cash operating cost of US51 per lb. copper, after credits.

Aur acquired its stake in Quebrada Blanca (QB) from Teck and Cominco (CLT-T) for an aggregate US$180.6 million paid to Teck and Cominco, including US$56.5 million of QB senior project debt owed to Teck. A further US$35 million in cash or Aur shares must be paid to the two partners by the end of 2003.

Aur also purchased US$69.1 million of senior project debt owed by QB to certain third-party lenders other than Teck, bringing the total cash and non-cash consideration for the QB purchase to a hefty US$304 million. Included in the deal was an issuance by Aur of an aggregate 5 million shares to Teck and Cominco priced at $2.49 per share, for proceeds of $12.45 million.

Also, until 2012, Teck and Cominco are entitled to payments of up to US$40 million if average yearly copper prices (or, after 2006, quarterly prices) equal or exceed an inflation-adjusted US$1.10 per lb., to a maximum of US$10 million in any year.

Looking forward, Aur and its partners have earmarked US$50 million over the next three years for capital expenditures at QB, with an eye toward improving copper quality, lowering operating costs and boosting annual output from 165 million lbs. of copper cathode in 2001 to 176 million lbs.

Aur paid for most of the QB purchase by using US$92 million in cash and drawing down a US$170-million credit facility underwritten by Barclays Bank, CIBC and Deutsche Bank.

Taking into account the QB transactions, Aur’s outstanding shares rose to 90.7 million at the end of 2000, up from 75.7 million a year earlier. Its cash position fell US$26 million to US$29 million over the same period.