Breakwater hit by falling prices

Lower zinc prices left Breakwater Resources (BWR-T) with a loss of $2.1 million on revenue of $80.8 million for the three months ended March 31.

Breakwater’s loss, which translates to 2 per share, compares with earnings of $4.8 million in the first quarter of 2000. Revenues in that period were $64.6 million; the higher figure in 2001 reflects Breakwater’s purchase of the Bouchard-Hbert base metal mine, north of Rouyn, Que., which closed in May of last year.

The company’s realized price for zinc, its principal product, fell to US44 per lb. (US$970 per tonne) from US51 per lb. (US$1,125 per tonne) in the corresponding quarter in 2000. Average zinc prices on the London Metal Exchange were around US$1,023 per tonne (US46 per lb.) during the quarter.

Breakwater held the line on overhead costs in the first quarter of 2001, but interest charges rose to $2 million from $668,000 the year before, and foreign-exchange accounts lost $3.1 million, compared with a gain of $32,000 in the first quarter of 2000. Set against this was an increase of more than $2.3 million in investment income.

Bouchard-Hbert was the company’s most profitable mine in the quarter, generating an operating profit of $5.2 million. The Bougrine mine in Tunisia and the El Toqui mine in Chile were also moneymakers (El Toqui only marginally so), and Nanisivik, in Nunavut, and El Mochito, in Honduras, were both in the red. Nanisivik mined lower-grade ore during the quarter, whereas El Mochito, despite better grades and mill throughput, suffered for lower zinc prices.