Aur Resources’ earnings up, production down

Aur Resources (AUR-T) managed to post sharply higher second-quarter earnings despite lower copper production form the Louvicourt, Andacollo and Quebrada Blanca mines.

During the three months ended June 30, Aur earned US$16 million (or US17 per share) on revenue of US$70 million. That’s well ahead of US$1.2 million (US1 per share) it earned on US$50.3 million a year earlier. Still, the latest quarter’s earnings are off 40% from the first quarter of 2004, while revenues are down 21%, owing mostly to a lower realized price for copper.

Cash flow from operations during the recent quarter more than doubled from a year ago to US$34.1 million; during the first three months of the year, operations generated US$40.5 million.

Second-quarter production from the Louvicourt, Andacollo and Quebrada Blanca mines came to 25,130 tonnes copper (versus 26,898 tonnes a year earlier), 1,905 tonnes zinc (1,406 tonnes), 55,000 oz. of silver (49,000 oz.) and 1,900 oz. of gold (1,600 oz.). Copper production suffered due to a scheduled reduction in production at Louvicourt, a 13 -day strike at Andacollo, and harsh winter weather at Quebrada Blanca.

The company’s average cash operating cost during the quarter was US54 per lb. of copper. On the sales side, Aur realized US$1.27 for each lb. of copper sold, up 48 per lb. from a year ago, but off a dime per lb. from the first quarter.

The Louvicourt copper-zinc mine in northwestern Quebec, in its last two years of production, produced 6,759 tonnes of copper (about 10% less than a year ago), while zinc production jumped by a third to 6,305 tonnes. Cash operating costs of US28 per lb. of copper (net of byproduct credits) were US32 lower than expected thanks to increased byproduct credits and lower smelting and refining costs. Aur says the operation performed better than expected thanks to higher head grades and mill throughput.

Aur has a 30% interest Louvicourt, which it operates for Novicourt (NOV-T) and Teck Cominco (TEK-T). Aur expects to take home about 9,200 tonnes of copper form the mine in 2004; cash operating cost are pegged at US43 per lb. Louvicourt is slated to close in the third quarter of 2005.

At Andacollo in Chile, production of LME Grade A cathode copper totalled 4,227 tonnes, off 20% from the first quarter, and about 820 tonne below target. Cash operating costs fell US3 to US51 per lb. The company inked workers at the mine to a new four-year labour deal in June. Production for the year is projected at about 21,320 tonnes at a cash cost of US53 per lb.

Cathode production at Quebrada Blanca, also in Chile, was about 8% below budget at 18,461 tonnes. Aur says an abnormally wet winter meant that fewer tonnes were crushed and stacked for leaching. Cash costs were higher than budgeted at US58 per lb. The mine’s full-year copper production target has been scaled back by about 1,800 tonnes to around 77,500 tonnes. Cash cost are pegged at US55 per lb.

At the end of June, Aur’s cash and working capital had increased to US$134 million and US$155 million.