Base metal reactivation a success for Brenda

The reactivation of Brenda Mines’ base metal operation near Peachland, B.C., is proving to be quite a success story. Net earnings for 1986 totalled $1.84 million or 40 cents per share and the situation is looking even better this year. In the first quarter Brenda reported a net income of $1.77 million or 37 cents per share.

At the annual meeting John M. Gordon, president, noted that metal production last year was the highest ever achieved and molybdenum sales were 95% of production. In recent years poor demand has forced Brenda to stockpile moly concentrate.

The 1986 results represented the first profit since 1981, Gordon R. Harris, mine manager, pointed out. At today’s prices, reserves are sufficient to operate the mine until mid-1989 but he said the company “would try to find more economic reserves” before that time.

Historically low metal prices have forced Brenda to pursue an aggressive cost-cutting program which included intervention by the B.C. government’s Critical Industries Commission in 1985. The commission has since been wound up.

With its help, Brenda negotiated reduced hydro rates and property taxes over a 3-year period. Unionized workers also played a pivotal role in reopening the mine by accepting a wage freeze until June 30 this year. Negotiations for a new contract have taken place and are set to resume at the end of the month, he said. Employees participate in a profit sharing plan and last year on average they each received $2,820. During 1986, mill throughput totalled 11.2 million tons or an average of 30,750 tons per calendar day. The average rose to 33,740 tons in the fourth quarter when operating costs were $3.59 per ton milled. The company says that use of the Brenda-developed Brencom mine planning program “assisted in the mining of higher grade ores.”

The emphasis on low-cost production resulted in a positive cash flow of $9.5 million and a reduction in debt to $38.2 million. That debt was eliminated when the company sold its 16.7% interest in Kerr Addison Mines for $70.8 million and the remainder was put in the treasury. In the annual report, Brenda noted that the quoted market value of its shareholding in Kerr as of Dec. 31, 1986, was $44.1 million. So it managed to sell the shares near Kerr’s 52-week high.

Cash flow from oil and gas operations was up slightly last year to $3.5 million and first quarter results suggest a further improvement in 1987. Operating cash flow for the three months was $1.5 million and net earnings were $500,000.