Boliden sells assets to restore strength

Financially beleaguered Boliden (BOL-T) reported a net loss of US$25.1 million (or 11 per share) for the first quarter of 2001, up from a net loss of US$18.1 million (18 per share) a year earlier.

In hopes of restoring its financial strength, the company is carrying out a capital management program focused on cutting costs, boosting productivity, postponing discretionary spending and selling assets.

The company has already sold a 50% stake in Norzink, owner and operator of the Norzink zinc smelter and refinery and aluminum floride plant near Odda in southwestern Norway. Outokumpu of Finland purchased Boliden’s stake, as well as a half-interest held by Rio Tinto, for US$180 million. Boliden’s net gain of US$30 million will be reflected in its second-quarter results.

Earlier this year, Boliden announced it was selling its Lomas Bayas copper project — a solvent extraction-electrowinning operation in Chile — and adjacent Fortuna de Cobre copper deposit. Noranda (NOR-T) and Falconbridge (FL-N) subsequently agreed to buy the Chilean divisions holding these assets for US$175 million cash, less outstanding third-party debt obligations of US$112.7 million, plus a further US$15 million should they exercise their right to the Fortuna de Cobre copper deposit within five years.

Boliden says its first-quarter results reflect lower metal prices from mining operations (mostly base metal mines in Sweden) and lower treatment and refining charges at its Ronnskar smelter in Sweden. Foreign currency hedge contracts took an US$18-million bite out of operating results in the quarter.

The company’s mines operated at a loss of US$8.4 million, while the smelting division generated operating income of US$2.3 million.