Breakwater eyes improved 2002

With zinc prices coming off record lows, Breakwater Resources (BWR-T) is starting to produce more of the bluish grey metal.

During the first three months of 2002, the company produced 60,470 tonnes zinc in concentrate, up 15% from the 52,647 tonnes produced a year earlier. That puts the Toronto-based company on pace to eclipse its original 2002 production forecast of just less than 220,000 tonnes.

The Nanisivik mine, on Baffin Island, cranked out 18,769 tonnes of contained zinc, 55% more than during the year-earlier period. Nanisivik benefited from mill head grades that climbed to 10.6% from 6.3%, reflecting the mining of higher grade pillars.

The mine is due to close in September.

The increase in overall zinc output helped drop total cash costs by 16% to US31 per lb. of payable zinc.

Output was also higher at the Bouchard-Hebert mine in Quebec, El Mochito in Honduras, and El Toqui in Chile.

Fuelling the improvement in costs are improved smelter treatment charges and shipping rates and lower minesite operating costs. The Bougrine, El Mochito and El Toqui mines also saw increased recoveries and concentrate grades.

As for the company’s other metals, copper production was off 402 tonnes at 1,391 tonnes, lead production rose 496 tonnes to 3.690 tonnes, silver production climbed 192,210 oz. to 937,545 oz., and gold output was 4,957 oz. lower at 7,474 oz.

The company realized an average zinc price of US37 per lb. (US$813 per tonne) in the recent quarter, up from the forecast US35 per lb. (US$780 per tonne).

Last year, with zinc prices hitting record lows, Breakwater posted a $111-million ($1.20-per-share) loss, compared with a loss of $8.7 million (10 per share) for 2000. Revenue between the two periods climbed slightly to $302 million from $300 million. The 2001 loss included $70.3 million in non-cash writedowns on properties and fixed assets.

At the end of 2001, working capital stood at $5 million; cash and cash equivalents were $3.3 million.