Cash-rich Lornex Mining looking to new opportunities

When a mining company turns into a holding company what’s to be done but pay dividends and wait for the cash flow to keep coming?

That’s exactly what Lornex Mining (TSE), the 45% partner in Highland Valley Copper partnership is doing.

But it is also looking for new opportunities and mining investments, Chairman Ross Turner told shareholders at the annual meeting. Turner said that the company has a cash balance of $113 million and a low debt-to-equity ratio. “This puts us in a solid financial position from which we can continue to look for new investment opportunities.”

President Ray Ballmer reported net earnings for the first quarter of $12 million or $1.46 per share up 67% from $7.2 million or 87 cents per share for the same period in 1987.

Net revenue from mine production was $55.7 million, up from $42.6 million in 1987. The company declared a dividend of 75 cents per common share payable May 20. This will be reviewed on a semi- annual basis, Ballmer said.

He attributes the company’s good results to increased copper prices which have averaged $1.11(US) per lb during 1988 compared with 63 cents for the same period in 1987. The partnership earns an extra $1.2 million for every 1 cents increase in copper prices over the course of the year.

Late in 1987 Highland Valley Copper completed a $55-million construction program integrating the large Lornex mill and high grade Valley orebody. The program involved installing two large semi- mobile crushers in the Valley open pit mine and construction of two conveyors from the crushers to the mill.

A $70-million program was initiated in January to relocate the Highmont mill to a site adjacent to the Lornex mill. When the relocation is completed late in 1989, daily milling capacity will increase to 131,000 tonnes per day. The partnership produced 89,000 payable lb copper in the first quarter.

Also contributing to Lornex’s earnings is its 39% interest in the Bullmoose mine in northeastern British Columbia with partners Teck Corp. TSE (51%) and Nissho Iwai Coal Development (Canada) (10%).